The same building from the outside, a different world inside: a housing cooperative block and a condominium are two different legal forms – with a different ownership structure, different decision-making and partly different insurance questions. If you live in a cooperative building or manage one, it is worth seeing those differences through insurance eyes too – this article helps with that, with the necessary caution: in the details, the cooperative's own articles of association govern here even more than usual.
- In a condominium the flats are private property and the shared parts are the co-owners' common property; in a cooperative the ownership structure can be different – the cooperative itself may own the whole building or parts of it.
- The basic insurance logic is similar (building plus liability), but who the policyholder is, what has to be covered and how the decision is taken all depend on the form.
- The same golden rule applies to both: the founding documents – articles of association, deed of foundation, organisational and operational rules (SZMSZ) – set the framework.
The difference in ownership structure
In a condominium every flat has its own title: the flat is private property and the shared parts are the co-owners' undivided common property – the line is drawn by the deed of foundation (details). In a housing cooperative the formula varies more: the flats may be owned by the members while other parts of the building belong to the cooperative as a legal entity – the actual arrangement is set out in the cooperative's articles of association and in the title records. The insurance consequence: in a cooperative, the question “who is the policyholder and for what” has even less of a standard answer.
Decision-making and management
A condominium is the world of the general meeting and the property manager (common representative); the cooperative operates through its general meeting (or, where the statutes so provide, an assembly of delegates), its board and its chair, with the statutes governing the remit for the insurance decision. Insurance decisions in a cooperative are therefore often faster and more routine – within the board's remit – but in exchange, informing the members takes conscious effort: here too, residents feel secure when they know what covers the building they live in. The tools are the same: a resident information note and a block in the annual report.
The common denominator of the insurance tasks
Whatever the form, the same three things apply: property insurance for the building with an adequate sum insured (natural perils plus the building's everyday risks), liability cover with a realistic limit, and dovetailing the residents' own policies – in a cooperative flat it is equally true that the contents and the interior are the resident's business (who covers what). The quote process is identical as well: a data list, getting competing quotes, a decision-preparation table – only the decision-maker differs.
When the two forms meet
A special case is a change of form – converting from a cooperative into a condominium – which rearranges both the ownership and the insurance structure: the cover then has to be “re-cut” to fit the new form (on becoming a condominium: a separate article). And a closing caveat: this article is general information – the details are governed by the separate Act on housing cooperatives (Act CXV of 2004) and the given cooperative's statutes – for a specific question, involving a lawyer is warranted.
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