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Joint and several liability for debts to the Housing Cooperative

Who is responsible for the arrears in settling fees for the Housing Cooperative related to the operation of the premises? 

Should the debt be covered by the owner of the dwelling or the person actually residing in it?

In one of the cases conducted by JMK Advocate’s Office, the housing cooperative in Wrocław initiated legal proceedings against a person residing in a  premise, raising claims for unpaid fees  for the operation of premises. At the same time, the cooperative requests the fees to be paid  by the Client of JMK Advocate’s Office, who owns the premises.

The housing cooperative, having only the data of the person residing in the premises, filed with the District Court in Wrocław and obtained a payment order. Due to the defendant’s failure to raise an objection, the order became final and the housing cooperative was authorized to enforce the amounts covered by the payment order. The awarded amount was the equivalent of debt for fees for the operation of the premises managed by the ooperative. Enforcement proceedings are pending against the defendant.

Before filing a lawsuit against a resident of the premises by the cooperative, the user of the premises donated to his son the above mentioned apartment. In the donation agreement, a personal easement was established for the benefit of the current owner, consisting of the right to unpaid and lifelong use of all equipment and rooms of this apartment, as well as rooms, equipment and land intended for common use of the building’s residents. To this day, the donor realizes this right by living in an apartment, which fact the owner of the premises admitted in the correspondence to the cooperative.

Due to the ineffectiveness of enforcement against the donor (cooperative’s debtor based on the writ of execution), the management board of the housing cooperative intends to demand repayment of the entire debt from the owner of the premises. The aspects which, in the opinion of the cooperative, decided about the owner of the premises responsibility for the amounts stated in the final order for payment, are: 1) joint and several liability of the donor and the recipient – the owner of the premises resulting from the wording of art. 4 clause 6 of the Act of December 15, 2000 (Journal of Laws 2001 No. 4, item 27) on housing cooperatives (hereinafter referred to as the Act on housing cooperatives) and 2) the cooperative may seek from the donor – a person still using the premises, the amount resulting from the payment order, being the equivalent of overdue fees for the operation of the premises.

Joint and several liability of the owner of the premises and the person actually using the premises

Pursuant to the wording of art. 4 clause 4 of the Act on housing cooperativesowners of premises who are not members of cooperatives are obliged to participate in covering the costs associated with the operation and maintenance of their premises as well as the operation and maintenance of common properties. They are also required to participate in expenses related to the operation and maintenance of real estate property belonging to cooperatives, which are intended for shared use by persons residing in certain buildings or housing estate. They perform these obligations by paying fees in the same way as cooperative members (…).

The quoted provision is the basis – for owners of premises, who are not members of cooperatives – to participate in the costs of maintaining their premises and common parts of the property.

In turn, according to the provision of art. 4 clause 6 of the Act on housing cooperatives, for the fees referred to in para. 1-2 and 4, persons actually using the premises and adults permanently living in the premises, with the exception of dependent descendants of adult age are jointly and severally liablewith the members of the cooperative, owners of premises who are not members of the cooperative or persons who are not members of the cooperativebut  are entitled to cooperative ownership rights to premises..

The above regulation establishes joint and several liability of the owner of the premises, with the person actually using the premises.

The literature indicates that, entities obliged to provide cash  are jointly and severally liable foroutstanding service fees  with persons listed in art. 4 clause 6 of the Act on housing cooperatives (passive solidarity), with the provison that the liability of these persons is limited to the extent indicated in art. 4 clause 61 of the Act on housing cooperatives.Theessence of this solidarity lies in the fact that the cooperative may require payment of all or part of the overdue fees from all debtors together, from several of them or from each separately, and satisfying the cooperative by any of these persons releases the others (Article 366 § 1 of the Civil Code). Thus, each of the debtors is responsible for the entire debt (subject to Article 4 (61) of the Act on housing cooperatives) until the full satisfaction of the creditor (Article 366 § 2 of the Civil Code). The cooperative’s situation is clearly favourable, especially since the subject of the service is divisible. Instead of pro parteliability for overdue fees, each of the debtors listed in art. 4 clause 6 of the Act on housing cooperatives, is responsible for the entire debt. In this case, the cooperative decides from whom, in what size and how it wants to seek satisfaction. As long as one of the joint and several debtors is in such a financial situation that enforcement against him is effective, the cooperative can count on satisfying its claims in its entirety.

In view of the above, in the analysed facts one should indicate the joint and several liability of the owner of the premises and the person actually using the premises on the basis of personal easement established for them  by the donation agreement.

Recovery of debts by the cooperative – choice of the debtor

This means that the cooperative may claim payment from the owner as well as from the person actually using the premises on the basis of personal easement established for him.

The owner of the premises as well as the person actually using the premises remain jointly and severally liable to the Cooperative for arrears in fees for operating the premises.

However, due to the fact that the cooperative brought an action only against the user of the premises in order to be able to effectively enforce the arrears from the owner, the cooperative would have to bring an action against the owner as well. .

It should be noted that the cooperative, as a creditor, is entitled to choose the debtor independently from among persons jointly and severally liable and may file a lawsuit against them , demanding the entire benefit as if they were the only obligors. The creditor may also claim payments from all debtors jointly and severally liable or only from some of them, or file separate lawsuits against each or some of them. Moreover, the creditor may change the previous choice and additionally sue another debtor who was not previously indicated in the lawsuit, or bring a separate action against them.

Summary

  1. A person authorized to use a dwelling on the basis of personal easement established in the content of the donation agreement and actually residing in it, pursuant to the provision of art. 4 clause 6 of the Act on housing cooperatives, is jointly and severally liable with the owner of the premises towards the cooperative for arrears due to maintenance fees related to the use of the residential premises managed by the cooperative.
  2. The cooperative may claim the full amount of arrears both from each of the debtors separately as well as from both debtors jointly until they obtain the amount due from the debtors.
  3. The owner of the premises will be entitled to raise an objection of limitation as to fees for the operation of the premises, for months counted three years back from the date of possible filing of a lawsuit by the cooperative.

I encourage you to take advantage of the experience of the advocate Justyna Michalak-Królicka in the scope of pursuing claims by housing oooperatives as well as protection of rights related to the ownership of premises claimed from the cooperative.