You check a VvE by reviewing its legal rules, meeting documents, finances and maintenance plans together. Simply being told that the VvE is ‘active’, has a high bank balance or charges a low monthly contribution does not tell you enough.
The key question is: what costs and work are coming up, how much money is available for them and what share will you have to pay? Ideally, request the documents before you make a final decision about your offer and purchase conditions.
Which VvE documents do you need?
Request at least the following documents:
- the deed of division and division drawing;
- the applicable model regulations and any deeds of amendment;
- the house rules;
- the minutes of several recent meetings;
- the current budget and several recent annual accounts;
- an overview of the reserve fund and bank accounts;
- the long-term maintenance plan, usually abbreviated to MJOP;
- current insurance policy schedules;
- information about payment arrears, loans and additional contributions;
- recent quotes, reports and decisions about major maintenance.
If a document is missing, that is not automatically evidence of a problem. It is a reason to ask further questions. Also ask whether any meetings, damage, quotes or new decisions have occurred since the sales documents were compiled.
Start with the deed of division and regulations
When you buy an apartment, you buy an apartment right: the right to use your home as well as a share in the communal building. The deed of division, division drawing and regulations determine where your private section ends and what is communal.
Check, among other things:
- the ownership share and number of votes attached to the apartment;
- how maintenance costs and other VvE costs are divided;
- whether the roof, façade, window frames, balconies and installations are private or communal;
- which rules apply to renting out the home, renovations, flooring and use;
- whether there is a main VvE and one or more subsidiary VvEs.
Do not assume that costs are divided equally. A building with forty apartments does not automatically mean that you pay one-fortieth of every bill. Different ownership shares or separate cost categories may apply.
Read several sets of minutes, not just the latest
Meeting minutes show what is happening behind the figures. Ideally, review several years and look for recurring topics such as leaks, façade problems, foundation surveys, lifts, shared installations, sustainability measures and insurance claims.
Pay particular attention to work that is repeatedly postponed. A survey or quote without a final decision may also be financially relevant. If the VvE has been discussing façade repairs for years, that risk does not disappear just because the costs are not yet included in the budget.
Other warning signs include long-running disputes, decisions that are not implemented, missing minutes, frequent changes to the board or one owner holding a large share of the votes. A professional property manager is helpful, but does not guarantee that the VvE functions well.
Assess the budget and annual accounts together
The budget shows what the VvE plans to collect and spend in the coming year. The annual accounts show what actually happened. Compare these documents.
Look at the regular costs, the annual contribution to the reserve fund and any interest and repayments on loans. Also check for payment arrears, unpaid invoices and the reasons why spending differs from the budget.
A low monthly VvE contribution is only beneficial if it covers both ongoing costs and a realistic maintenance reserve. An artificially low contribution may later lead to a substantial increase or a one-off additional contribution.
Compare the reserve fund with the MJOP
For residential buildings, the annual reserve must legally be based on an MJOP approved by the meeting that is no more than five years old and looks ahead by at least ten years, or on at least 0.5% of the building’s reinstatement value. In principle, the reserve money must be held in a separate VvE account. The law allows for exceptions.
Following this reserve method does not necessarily mean that enough money is available. An MJOP may be based on outdated prices, incomplete inspections or work that has since become more urgent.
Check which parts of the building are covered by the MJOP, when work is scheduled and how much has been budgeted. Also check whether VAT, consultancy fees and price increases are clearly included, and whether previously scheduled work was actually completed.
Example: a high balance can still be too low
Suppose a VvE has €400,000 in its reserve fund. That sounds substantial. However, the MJOP and recent quotes show that the roof and façade work will cost €600,000 in total. This leaves a shortfall of €200,000.
If your share under the deed of division is one-fortieth, your share of that shortfall could be €5,000. If the costs are divided differently, your amount will also change. The reserve balance only becomes meaningful when you compare it with the plans and your ownership share.
Check additional contributions and VvE loans
Do not only ask about additional contributions that have already been invoiced. Also ask about contributions that have been approved, proposed or are expected to be needed. For each measure, note the total amount, your share and the expected payment date.
If a decision has already been made, make sure it is clearly recorded whether the buyer or seller will pay the contribution. After the transfer, the VvE can hold you responsible as the owner; the purchase agreement mainly determines who pays the amount as between the buyer and seller.
Has the VvE borrowed money? Ask for the loan agreement, current debt, interest rate, remaining term, repayments and the purpose of the loan. Also check what share is allocated to the apartment. In addition, request the statement from the VvE board that is attached to the deed upon transfer; it includes debts, contributions and the size of the reserve fund. A VvE loan can increase your monthly costs and may be relevant to your mortgage application.
Review the insurance and organisation
Request current policy schedules and check which insurance policies are required by the applicable regulations. For the building insurance, review the insured amount, cover, exclusions and excesses. Also ask about recent damage and disputes with the insurer. The existence of a policy alone does not mean that every risk is adequately covered.
A well-organised VvE holds meetings, approves annual accounts and budgets, collects contributions, implements decisions and arranges maintenance. A small, self-managed VvE can handle this perfectly well. Conversely, a large VvE with a property manager can still fall behind.
Red flags to look out for
- There is no current MJOP and no clear maintenance strategy.
- Major maintenance is repeatedly postponed.
- The reserve fund appears high, but planned work will cost more.
- The contribution has barely increased for years while costs are rising.
- There are substantial payment arrears or legal disputes.
- Approved additional contributions or loans have not been clearly allocated.
- The deed of division, annual accounts or recent meeting minutes are missing.
- The building and the documents reveal different maintenance problems.
A single red flag does not necessarily mean you should walk away from the home. But you need to understand the risk, be able to afford it and, if necessary, address it in your purchase conditions. Ask a civil-law notary to assess any unclear legal provisions, and discuss a VvE with limited activity with your mortgage adviser in good time.
