Be careful when granting powers to the president of the homeowners’ association!

When granting the powers, the resolution must state that they are granted to the extent necessary to bring whatever legal actions may be appropriate to claim for the damage affecting the communal areas and private elements of the building.

Let us go back to the moment when the homeowners’ association has to meet to bring a lawsuit because it has problems with damage caused by defective construction or finishes in the building, in its communal areas and/or private elements, and does not know whether to go after the developer. The owners must decide who to sue, whether an individual or a company. One person stands up at the meeting and says the architect should be sued, another says the developer, and others the building contractor. There is no agreement.

Professionals do not normally sue the contractor, as contractors often have no assets; the owners are not familiar with the insurance companies, still less with whether it is appropriate to sue them, or even whether they exist; nor are those at the meeting on top of the time limits for bringing a claim against each party; and they do not really distinguish between the building’s 10-year structural insurance and the architects’ insurance. The result: great confusion and bewilderment about taking the first step, which is granting the powers of attorney for litigation.

The matter can become even more complicated if the directors of the developer company, or their children or spouses, or the architect on the works, live in the building itself.

The problem arises of whether the resolution should state that the president is authorised to bring one particular legal action and not another, and against whom. There are also friends of the defendant company among the owners in the homeowners’ association, and besides being friends, they share interests with the developer that sold them their homes, for reasons of work, favours, payment in kind, offsetting of debts, and so on. Commitments, arguments and a certain amount of chaos.

Can objections be raised in the lawsuit that the authorisation granted by the owners’ meeting was not given, or did not extend to bringing that action, and against whom? Normally, no.

In view of this, several rules need to be set out:

1. The fact that a president is president “does not mean that they are entitled to take any action merely by virtue of holding the office of president, since they cannot replace the will of the homeowners’ association as expressed at ordinary or extraordinary meetings”. The homeowners’ association must meet and vote to grant them powers.
2. A prior resolution of the owners’ meeting expressly authorising the president of the homeowners’ association to bring legal actions in its defence is therefore necessary, unless the association’s rules expressly provide otherwise.
3. When granting the powers, the resolution must state that they are granted to the extent necessary to bring whatever legal actions may be appropriate to claim for the damage affecting the communal areas and private elements of the building. Exactly like that.
4. The owners’ meeting of the homeowners’ association should therefore not specify the range of persons against whom legal action could be brought. It should be understood that the meeting’s intention is to claim against all those who may be liable for that damage. Nor should it specify the particular actions the president of the homeowners’ association is authorised to bring, but simply state that the president is authorised to bring whatever actions are appropriate.

It must be worded as neutrally as that, because such broad wording even allows for the possibility of suing the developer’s directors, in the event that the developer has not fulfilled the obligations the law imposes regarding its liabilities and has no assets with which to pay.

It is not the first time we have come across relatives of the directors or owners of the developer company living in the homeowners’ association’s own building and trying from the outset to sabotage the granting of the powers, by specifying and restricting the power to a single purpose, limiting it to action against the architects or the quantity surveyors, so that later, if they themselves turn out to be liable or are sued, they can object that the power was only granted against the technical professionals and not against others, and for some actions but not others. Experience of subterfuge and tricks is also a teacher.