Owners Associations

An owners’ association is a formal arrangement between the owners of your building. It arranges regular meetings to discuss how your building will be managed and maintained. By “formal” we mean having a constitution – an agreed set of rules and procedures.

Advantages

Having an Owners Association gives a number of advantages, even if you have a property manager:

  • If you want to open a Maintenance Account, the bank may insist that you have a constituted owners association
  • Research indicates that owners’ associations make owners more satisfied with the way their flats are managed
  • It can make speedier and better decisions
  • It gives leadership to the repairs process
  • It provides a single source of contact and better communication.

The Rules

The Owners Association rules should cover:

  • The purpose of the Association
  • Who can be members
  • Subscriptions
  • Office bearers
  • How meetings are conducted
  • Finances
  • How to make changes to the Association Rules.

The Owners Association can make decisions about:

  • Appointing or changing property managers
  • “House Rules”
  • Getting regular surveys carried out
  • Planning repairs and maintenance
  • Which contractors to use
  • Arrangements for saving and paying for repairs.

Download a model constitution for a simple Owners Association.

 

 

Owners Associations and contracts

An Owners Association is not normally a legal entity in its own right. This means it does not have powers to take legal action in its own name.  So if you want to sign a contract with a builder or architect or property manager or take an owner to court for non-payment, it will need to be individual owners that do this. (Consider using an escrow account).

If someone wants to sue owners for non-payment of a bill or negligence, they cannot take action against the Owners Association but will need to take action against individual owners. You must be sure to follow proper procedures and contract builders correctly to protect yourselves and get the best job.

If you are a larger development with many flats and owners, then it would be worth considering establishing a Development Management Association (DMA). A number of new developments already have DMAs. These are more costly to run, need to be set up by a professional adviser such as a solicitor and incorporated into your Title Deeds. But it does have the advantage of being a legal entity in its own right and can sign contracts or take legal action in its own name. This gives more protection to individual owners. 

More about Building Contracts   

Setting up a Development Management Association

A Development Management Association can be set up under s71 of Title Conditions (Scotland) Act 2003