Establishment of a Polish housing community council – procedure, powers and most common problems

The establishment of a Polish housing community council is an issue that raises a number of legal doubts in practice, both among property owners and, often, property managers. Although the Polish Act on Ownership of Premises (hereinafter: ‘AOP’) seems to allow for the creation of such a body, the provisions of the Act do not specify in detail the rules of operation of the council and its competences. In practice, however, questions often arise:

• how to appoint a housing community council?
• are the decisions of the housing community council binding on the management board?
• what powers does the council have?

In practice, the appointment of a housing community council often leads to disputes, which are sometimes resolved by the courts, especially in the context of lawsuits to repeal a housing community resolution appointing the council.

In this article, we discuss the rules for appointing a housing community council and its powers, referring to the practice of housing communities and relevant case law.

What is the purpose of appointing a housing community council?

he purpose of establishing a Polish housing community council is to give property owners greater influence over the management of common property, decisions made by the management board or housing community administrator, and ongoing control over the activities of the management board or administrator. The housing community council therefore primarily performs an advisory and consultative function, supporting the management board in making decisions regarding investments, renovations and financial matters. It can also play an important role in building transparency in the community’s activities and increasing the involvement of its members in current property-related matters.

In practice, the community council also acts as a kind of ‘link’ between the owners of the premises and the body managing the community. This is particularly justified in large housing communities, where communication between owners can be difficult and a significant proportion of the premises remain rented.  Due to their competences, members of the housing community council often also assist in making decisions that require specialist knowledge, e.g. in the field of renovations or energy modernisation of the building.

With this in mind, it is important to remember that, in the light of case law concerning the functioning of housing communities, the housing community council:

1) has no decision-making powers,

2) should be properly appointed in order to be able to perform its function in accordance with the Polish Act on Housing Communities.

The management board as the sole statutory body of the housing community

Pursuant to the Polish Act on Ownership of Premises, the owners of premises forming a housing community are obliged to appoint a single-person or multi-person management board. The management board manages the affairs of the housing community and represents it externally and in relations between the community and individual owners of premises (Article 21(1) of the Polish Act on Ownership of Premises). As a rule, the management board consists of one or more co-owners of the property, but the Act on Ownership of Premises also allows for the appointment of persons from outside the group of owners to the management board, although in practice this rarely happens. Due to the need to ensure the proper functioning of the managed property and to protect the interests of the owners, it is desirable that this person be capable of caring for the common property and safeguarding the interests of the owners of the premises.

The owners of premises may, of course, also specify the manner of managing the common property in the agreement establishing separate ownership of premises or in an agreement concluded later in the form of a notarial deed, and in particular, they may entrust the management to a natural or legal person.

A practical example from Polish case law:

“The Act leaves it largely to the owners of premises to determine how the common property is managed” (Polish Supreme Court resolution of 9 February 2017, ref. no. III CZP 106/16).

Consequently, pursuant to the Polish Act on Housing Communities, the management board of the housing community or the appointed administrator remains the sole statutory body of the housing community.

Legal basis for the appointment and functioning of the housing community council

Case law and doctrine indicate that the possibility of a housing community in Poland creating bodies other than the management board provided for in the Polish Housing Community Act is debatable. However, it should be remembered that this view refers only to the effects referred to in Article 38 of the Civil Code, according to which a legal person acts through its bodies in the manner provided for in the Act and in the statutes based on it.

Consequently, this means that:

1. the mere establishment of a new body by the owners of premises in an agreement (statutes) seems to be permissible,
2. however, a body that is not a statutory body does not have a statutory scope of competence (I. Szymczak (in:) Własność lokali. Komentarz [Ownership of premises. Commentary], Warsaw 2020, Article 18), and therefore
3. the community council, as a body established in the agreement (statutes) of the housing community and not having its authority in the Polish Act on Ownership of Premises, cannot act with effect for the housing community.

In practice, the above considerations mean that since the housing community council is not provided for in the Polish Act on Ownership of Premises, it cannot make decisions binding on the community or act on its behalf vis-à-vis third parties. Such a body has no statutory authority, and its powers do not derive from the provisions of law, in particular from the Polish Act on Ownership of Premises. This means that the council cannot, for example, conclude contracts, represent the community in court or sign financial documents.

However, this does not mean that the establishment of a housing community council is unlawful and pointless. The owners of the premises may provide for the existence of such an advisory, supervisory or opinion-giving body in the statutes or a resolution. The council may therefore participate in management board meetings, analyse financial statements, supervise renovation works or submit its own proposals and recommendations. 

All these activities are internal in nature and have no legal effect on third parties, but they can realistically improve transparency and communication within the housing community. This solution is also in line with Article 29(3) of the Polish Act on Ownership of Premises, according to which flat owners have the right to control the activities of the housing community’s management board.

How to properly appoint a housing community council?

Case law indicates that the appointment of a housing community council requires certain formal and substantive conditions to be met.

Formal appointment of a housing community council

Firstly, the scope of the council’s powers should be clearly defined in a community resolution or the community’s statutes. A housing community council cannot be established ad hoc, without formal appointment and approval of its existence by the owners of the premises. Case law even indicates that the resolution on the appointment should be recorded by a notary public, which ensures its formal validity and avoids subsequent doubts as to the legality of the appointment of the body and the scope of its powers.

Precise definition of the duties and powers of the housing community council

Secondly, the duties and powers of the housing community council should be precisely defined in order to exclude the risk of disputes with the administrator over competences and to avoid interfering with the management of the common property. It should be clearly stated that the housing community council in Poland has an advisory, consultative and supervisory role in relation to the management, but never a decision-making role. Therefore, it cannot be specified that the competences of the housing community council include, for example, concluding contracts with service providers, confirming completed works, accepting invoices, participating in the selection of contractors carrying out construction works for the community, or even collecting votes for resolutions. These activities go well beyond the advisory, supervisory and consultative functions and therefore fall within the competence of the housing community’s management board and not the council.

The courts also emphasise that, due to the lack of detailed regulations on housing community councils in the Polish Act on Ownership of Premises, it is extremely important to define the powers of the council as precisely as possible, as only then can it be determined whether such a body has been established in accordance with the law and whether the actions it takes fall within the powers granted to it by the community.

In practice, as long as the cooperation between the council and the management board is conflict-free, the general regulation of competences does not pose a problem. However, in the event of a conflict or divergent interests, the lack of precise provisions may lead to a situation where the council itself begins to specify its duties and encroach on the sphere of activity of the management board. In practice, such unclear regulations give rise to the risk of disputes over competences, misunderstandings in decision-making and conflicts between council members and the community manager. Therefore, it is important to specify in the resolution or statutes of the community the nature of the council, its tasks and the limits of its powers in relation to the management board.

Transparent procedure for electing members of the housing community council

Thirdly, a transparent procedure for electing members of the housing community in Poland council should be maintained, ensuring that the owners of the premises have a real influence on its composition. In practice, this means that each member should be able to vote individually for individual candidates for the council, rather than simply accepting or rejecting the entire list of nominated persons (so-called ‘en bloc voting’). The procedure should also precisely define the manner of nominating candidates, the criteria for selecting candidates, the duration of the term of office and any rules for dismissing council members in the event of improper performance of their duties. A transparent selection process increases the involvement of owners, reduces the risk of competence disputes and ensures that the council acts in a manner representative of the interests of the entire community.

A practical example from Polish case law:

‘The resolution does not sufficiently regulate the issue of the ’Community Council” body. As the doctrine rightly points out, when establishing community bodies that are not known to the law, it is necessary to specify in detail their nature, competences and the procedure for selecting their members. Only a comprehensive approach to the above issues will allow for the transparent functioning of such a body. The omission of detailed regulations in this regard leads to a situation where the established body remains, de facto, beyond any control of the owners of the premises forming the housing community. Since there are no provisions regarding its appointment and specific competences, it is not possible to clearly determine whether the body – in this case, the Community Council – was appointed in accordance with the law, and furthermore, whether the actions it takes fall within its competence (judgment of the Polish Regional Court in Toruń, 1st Civil Division, of 5 April 2022, ref. no. I C 1084/21).

“The decision to establish a council should therefore take the form of a resolution recorded by a notary public. If, however, (…) the functioning of the council is solely to improve cooperation with the administrator and is limited to conveying the opinions of the members of the community, these tasks should be strictly and exhaustively listed in the resolution. The creation of a structure with inconsistently defined powers constitutes a circumvention of the law, i.e. Article 18(2) of the Act on the Ownership of Premises.” (judgment of the Polish Regional Court in Wrocław, 1st Civil Division, of 17 February 2015, ref. no. I C 1256/14).

Consequences of the improper appointment of a housing community council

The defective appointment of a housing community council in Poland may lead to a number of legal and organisational problems. First of all, a council whose powers or procedure for electing members have not been clearly defined in a resolution or statute cannot act in a manner binding on the community. This may result in disputes with the management board, uncertainty in decision-making, and the risk of council members being held liable for actions exceeding their powers. In practice, this may lead to difficulties or even paralysis in the functioning of the community.

The defective appointment of a housing community council may also result in the court repealing the housing community’s resolution on the appointment of the community council. According to the Polish Act on the Ownership of Premises, resolutions of the community may be challenged if they violate the law or the community’s statutes, including in the case of incorrect determination of the powers of a body or the procedure for its appointment. Case law indicates that a court may consider a resolution to be defective if there are no clear provisions regarding the scope of the council’s activities, the method of selecting its members or the rules of communication with flat owners.

Summary

The establishment of a housing community council can be an effective tool supporting the management board in the day-to-day operation of the common property, improving communication between property owners and increasing the transparency of decisions made. However, it should be remembered that the council is not a statutory body and has no decision-making powers – its role is limited to advisory, supervisory and consultative functions.

In order to avoid disputes and the risk of a resolution being invalid, the establishment of a council requires, among other things:

• a precise definition of its powers in a resolution or the community’s statutes,
• a transparent procedure for selecting members, ensuring that the owners of the premises have a real influence,
• a formal appointment, preferably recorded by a notary public,
• a clear indication of the rules of cooperation with the management board and the limits of the council’s powers.

Incorrect appointment of the council may lead to disputes over competences, violation of legal provisions and revocation of the resolution on the appointment of the council by the court. Therefore, it is crucial that all decisions regarding the appointment of the council are carefully considered, comply with the Polish Act on the Ownership of Premises and the status of the community, and protect the interests of all owners of premises.