First, I need to say some words about why Owners association is so important. If you read this you have probably bought at least one property in Bulgaria. May be 80% of you have communication problems and other legal difficulties with the seller of your property. Since the property bubble was quite huge, almost every "construction entrepreneur" in Bulgaria got greedy when they saw the cashflow. Construction quality got poor, client-seller relation got poor. The result is angry property owners constantly opposed by the developer.
As a short initial summary (for those who doesn't like to read long texts), here are the benefits of having registered Owners Association:
- All state and local authorities take the owners seriously if represented by registered legal entity
- Everybody has good attitude towards Nonprofit organizations, which protect civil rights.
- The rights of the association members can be legally defended by OA's representatives. Regulation authorities which respect OA litigation actions are courts, Commission for Consumer protection etc.
- Joint actions against developer bad practices can be performed by OAs
Normally, in almost every investment property project there are more than one premises, sold to different individuals. These individuals join informal associations, mainly in web forums and discussion boards. They share the bad experience they had with the seller/developer and talk about maintenance woes. Talking and sharing information is good, but action is better.
Bulgaria is a country where bureaucracy is blossoming. Every authority will ask you for some kind of identification, whether it is a document (signed and stamped of course!!) or some reference from other authority. Many state and local employees won't even talk to you until you introduce yourself as representative of something that is formally existing in their entity records. Even the developer/seller is not recognizing representatives of informal owners groups (or action groups, as often called)
In our solicitor practice in Bulgaria, we found that this authority behavior can be opposed by simply forming a NonProfit association. This is a formal legal entity, registered in the District court. It has company file number, registered address, management bodies etc. The management basically follows the rules of a company management, but the association is not a trading entity. It is used only to protect its members rights and not to gain profit.
As a case study on the benefits of having a legitimate Owners Association I can provide some examples from our practice. Our law office was helping owners of villas in one particular investment project. The developer has constant conflicts with the local cityhall and the only victims of this fight are the owners. They have addressed the issues to different authorities, but only as individuals, or in their capacity of informal web formed association. No authority took the problems seriously. As their solicitors, we suggested that all owners formally register a legal entity in Sofia City Court. This would have made the association formal with all legal attributes.
The Owners association was formed successfully. It is managed by Management Committee and represented by the Chairman of the management. The representative addressed several letters regarding the problem to different authorities, such as the SofiaDistrict Governor, the National Construction Audit Directorate, Bulgaria Investment Agency etc. All of the said authorities have not only responded to the official correspondence, but even have agreed to meet the Owners association representative and discuss the problems of its members.
Another successful story is the formation of couple of Owners Associations of owners in Bansko apartment complexes. The developer is virtually "blackmailing" the foreign owners, but forging the common parts percentage and voting for his own company to be the maintenance company of the complexes. Of course no accountability whatsoever is provided by both the maintenance company and the developer. The owners association have been acting as intermediary between the developer and the owners in order to resolve the problems without any complications.