Apartment owners’ associations will have the right to receive loans from credit institutions for the renovation of residential buildings. This is stipulated by the amendments to the Apartment Ownership Law, adopted by the Saeima on Thursday, 13 November, in the final reading.

In transactions with a credit institution, an apartment owners’ association will be treated as a legal person. As a result, the association will be able to open a payment account and enter into agreements with credit institutions for loans intended for building renovation.

In order for credit institutions to identify an apartment owners’ association as their client, every association—both existing ones and those formed in newly constructed buildings—will be assigned a name and an identifier. This will be carried out in the Construction Information System by the State Construction Control Bureau. The explanatory note to the draft law states that the State Land Service already transfers up-to-date National Real Estate Cadastre data to the State Construction Control Bureau, including information on the division of a residential building into apartment properties, and no additional action will be required from residents.

The amendments also stipulate that the lawful representative of an apartment owners’ association will be the building manager registered in the register of residential building managers maintained by the State Construction Control Bureau. This will ensure that third parties have access to publicly available and reliable information about the association—its name, identifier, and representative.

Given that apartment owners’ associations engage in various legal transactions, for example, related to the provision of utility services, the association is considered a party to such transactions and is therefore obliged to identify and disclose its beneficial owner. The amendments set out the procedure by which an apartment owners’ association provides such information to the Enterprise Register.

The amendments also establish that apartment owners’ associations will not be required to register with the State Revenue Service as economic operators and taxpayers if their annual income from economic activity does not exceed twice the state-set minimum monthly wage. This provision aims to simplify accounting procedures, as these associations generally have small-scale income from economic activity, for example, leasing wall space on a building for advertising. These funds may be directed to the development of the residential building, the authors of the amendments note.

The legal changes will enter into force on 5 January next year.

Saeima Press Service