Checking the VvE documents before you buy

Why this works differently than with a single-family house

Buy a house with its own roof and you decide when that roof gets replaced and what it may cost. Buy an apartment and the Vereniging van Eigenaren (VvE, the owners' association) decides that, and you pay your share in proportion to your stake. That makes the association's paperwork just as important as the condition of the home itself. A €350.000 apartment in a VvE that is pushing €40.000 per apartment in deferred maintenance ahead of itself is really a €390.000 home.

Step 1: Request the right documents

Ask for these five, and do not accept a selection of "the most important pages":

1. Minutes of the general meeting, three years back. This is where you find what is going on and what has been decided. See what to look for in the minutes.
2. The most recent annual accounts and balance sheet. The financial X-ray, here is how to read it in ten minutes.
3. The budget for the current year. The only document that looks ahead to what you will be paying; see also how the monthly contribution is built up.
4. The long-term maintenance plan (MJOP): including the date it was drawn up. Here is how to judge whether the plan is worth anything.
5. The deed of division and the division regulations. These determine what is yours and what you are allowed to do, see your rights and obligations as an apartment owner.

Not getting them, or do they not exist? That is an answer in itself. A well-run VvE has this package ready, because it is requested at every sale.

Step 2: Find the two numbers that matter

You do not have to read everything. Start with these two:

• The balance of the reserve fund (annual accounts / balance sheet).
• The maintenance planned for the coming ten years (MJOP).

If the fund holds less than has to be spent in the coming years, there is a shortfall, and that shortfall has to come from somewhere: a higher monthly contribution, a one-off levy, or postponed maintenance that gets more expensive later. Here is how to spot an underfunded reserve and how to work out what it costs you.

Step 3: Convert it to your share

A shortfall of €400.000 sounds alarming and a shortfall of €40.000 sounds manageable, but neither means anything until you know how many owners you are splitting it with. The deed of division states your fractional share, 87/1000 for example. Multiply the shortfall by that and you have the amount that actually hits you. That is also the number you can negotiate with.

Step 4: Read the minutes for patterns, not for details

One report of a leak is bad luck. The same report in three consecutive meetings, with no decision, is deferred maintenance with a growing bill. Also watch for decisions that have already been taken: those apply to you too, even if they date from before your purchase.

The red flags at a glance

• There is no MJOP, or it is more than five years old.
• The VvE does not meet and does not adopt annual accounts (a "dormant VvE").
• The reserve fund is shrinking without any major maintenance having been done.
• Fellow owners are in arrears on their payments.
• There is an ongoing legal dispute with a contractor, the municipality or an owner.
• An urgent recommendation from an earlier report was never acted on.

And then?

A VvE with a shortfall is not a reason to walk away, but it is a reason to price it in. What you want to avoid is finding out after the transfer. If you cannot work it out yourself, this is exactly the moment to decide which tasks you take on and which you outsource.