What is better: HOA or housing cooperative - the difference between organizations

What kind of associations are these in the housing and communal services sector?

ZhSK is a housing construction cooperative. It is created directly for the construction of a house, and in the future its repair and reconstruction will be under the responsibility of the cooperative.

The minimum number of people who must be in a cooperative is 5 (Housing Code, Article 112).

The main body of the board is the chairman (LC RF Article 115).

Homeowners' association (House Code of the Russian Federation, Article 135) is a homeowners' association. Such a partnership was created so that it would be possible to independently manage the common property and promptly provide the necessary services. All homeowners in a given building can join the partnership. But not less than 50%. An HOA must have its own Charter. And according to the law of the Housing Code, namely Art. 45—, The charter must be approved by 100% of the owners.

Read all about what an HOA is in an apartment building, what the essence of the activity is and what the forms of its existence are.

What is the difference between them?

After changes were made to the housing code in 2015, there were no more changes. Accordingly, those data are still relevant today.

HOA	Housing cooperative
Partnership of real estate owners (99-FZ dated 05/05/2014, Housing Code of the Russian Federation).	Consumer cooperative (Civil Code of the Russian Federation, Housing Code of the Russian Federation).
A non-profit organization that has the right to exist only if more than 50% of the owners vote “For” (Article 117 of the Housing Code).	An NPO will be formed if there are at least 5 people ready to join the cooperative.
Created after the construction of an apartment building or village.	Formed before construction is completed. In the initial stages.
The main goal will be participation and management of an already built house and joint property. Solving necessary business issues.	The main goal is the construction work itself. And after the commissioning of the facility, it can exist to participate in the operation of common premises and territories.
All income belongs to the organization.	The proceeds can be divided among the founders of the cooperative, that is, all participants.
It can unite several houses and the leader will be one common cooperative.	Has the right to exist only in one specific house, whose construction they controlled.
Any decision is made by the general meeting.	Whatever the majority votes for, so it will be.
The law establishes the possibility of conducting absentee voting.	Absentee voting may take place if it is specified in the Charter.
The owner of a home in a specific building can become a member of the cooperative.	Any person who has reached the age of 16 can join (Article 111 Part 1 of the RF Housing Code)
There is no limitation on the duration of work, but the duration of existence may be determined by the Charter.	The duration of existence is not limited.

IMPORTANT: All decisions are made at the meeting. Absolutely every owner has the opportunity to express his opinion on this or that matter.

Similarities and differences between housing cooperatives and homeowners' associations

Reasons for comparison	Housing and construction cooperative	Homeowners Association
Purposes of creating the association	Created for the construction of a specific house and its subsequent maintenance, including in terms of common property	Can be created only to service the common property of an apartment building or a group of such buildings
Number of participating members	A housing cooperative is recognized as complying with the requirements of current legislation if the number of its members is at least five, and it must include all owners of premises in an apartment building	To recognize the existence of an HOA as legitimate, it is required that it consists of at least fifty percent of the owners of premises in an apartment building. At the same time, an HOA can merge several apartment buildings, subject to the consent of all its participants
Regulatory regulation	Regulatory regulation of the activities of both HOAs and housing cooperatives is carried out only in accordance with the Housing Code of the Russian Federation and regulations adopted in its implementation at various levels of subordination (from federal to municipal)
Carrying out commercial activities and distributing its results	Since the housing cooperative is a commercial legal entity, any result of financial activity that allows obtaining a certain amount of profit must be divided among all members of the cooperative in accordance with their shares of participation in the authorized capital of the legal entity	Although an HOA is recognized as a legal entity that has the right to conduct commercial activities (for example, renting out existing common property), however, profit due to the legal features of its functioning cannot be divided among the members of the HOA. All profits received are directed towards solving existing expenses or accumulated in special accounts of the organization for the purpose of further allocation to resolve emerging needs.
Contributions to the capital of a legal entity and obtaining property rights	In the case of full or partial payment of the share contribution provided for by the statutory documents of the housing cooperative, it is possible to obtain property rights, for example, ownership rights to residential or non-residential premises located in an apartment building. Contributions can be paid both during the construction of the house and after its completion. Full right of ownership and disposal, that is, classical ownership, arises only after share contributions have been paid in full for a specific property	Contributions are regular and are made in accordance with the payment schedule defined by the statutory documents. At the same time, the implementation of such contributions, even in full, does not entail property rights, since these contributions are directed towards the formation of a fund that ensures the functioning of the HOA itself and the contractors it hires
Transformation of housing cooperatives into HOAs and back	A housing cooperative into a HOA can be transformed based on a decision of the general meeting of owners of premises in an apartment building, and the procedure must be fully implemented with notification of all government bodies	Impossible, since the HOA cannot engage in the construction of apartment buildings. This is due to the purposes of creating such a legal entity. A housing cooperative can only be created with the participation of members of the HOA if a decision is made to build another apartment building that meets the requirements for a cooperative
Procedure for creating a legal entity	The procedures are similar, since all stages go through from the announcement of the constituent meeting, at which the decision to create a legal entity is made, to the registration of the formed legal entity with the state authorities. The list of documents used also does not differ, since in order to register both legal entities, you will need to provide statutory documents, as well as documents for the leaders of the association being created
Board members and chairman	The members of the board and the chairman are selected from among the owners of premises in the apartment building. Information about the chairman as the head of the organization is entered into the Unified State Register of Legal Entities. The position of the chairman most often has the character of an actual acting one, since he is assigned a large number of rights and responsibilities recorded in the Charter of the organization	Board members are selected from among the owners of premises in an apartment building. The chairman is also selected from among the board, however, the position is nominal in nature, since the main rights and responsibilities fall entirely on the shoulders of a specially hired manager. However, data on the chairman as the head of the legal entity being created is entered into the Unified State Register of Legal Entities
Responsibility for financial obligations in case of their violation	Creditors have the right to apply to the members of the housing cooperative for repayment of existing debts, since the authorized capital consists of the share contributions of the members of the cooperative. However, foreclosure can only be applied to that part of the share that has not been paid	Even if there are large debts, they can be collected by creditors and resource supply organizations only from the legal entity itself. It is strictly prohibited to impose penalties on members of the partnership

What is the difference between accounting in one and another organization?

Homeowners' associations and housing cooperatives are non-profit organizations.

Considering that there is still cash flow there, accounting is mandatory in both cases.

Items that must be taken into account:

Funds coming from homeowners and other business activities.
Costs of maintaining the house and surrounding area. Also expenses that will be required in the near future.
Materials and production inventories.
Reporting on fixed assets at the enterprise.
Reports on the results of work done in houses or on the territory.

Attention! For the stable operation of partnerships and cooperatives, full interaction between owners and housing service providers is necessary.

The peculiarity of the account of the non-profit housing cooperative is that the initial savings for working capital are nothing more than the entrance fees of each member of the cooperative. These funds are non-refundable, even if you leave the cooperative. In addition to membership and share fees, cooperatives can resort to borrowing the required amount of funds from banks.

Unit deposits are used for capital investments. This must be provided for in the charter. If the owner decides to leave the cooperative, the targeted contributions will be returned to him. Accounting of funds is not carried out generally, but specifically for each of the owners. Membership fees are non-refundable. The funds are spent on administrative and economic needs. At the time of creation of the cooperative and when registering the charter, everything must be properly documented by an accountant.

When reconciling the balance sheet, excess expenses are reflected in current assets, and if expenses are less than the money collected, they are reflected in short-term liabilities. If there is a shortage of funds in one account and an excess expense in another, the accountant must reflect it in the debit and credit balance.

Housing cooperatives do not engage in entrepreneurial activities and are therefore exempt from paying income and highway taxes. Also, the cooperative does not have to pay property taxes. And according to the clauses of the Tax Code, membership fees and share contributions are not subject to deduction of income taxes. All entry fees until the house is handed over must be reflected in the appropriate records by the accountant.

If the cooperative’s activities are also entrepreneurial, the expenditure and income of targeted funds must be conducted separately. Estimates for targeted needs and for utilities must take into account future payments. Payments for electricity, gas, and telephone are not taken into account by housing cooperatives; members of the cooperative bear the costs themselves. The housing cooperative plans only to pay for hot and cold water supply, heating, garbage collection, etc.

In HOA accounting, things are a little different. One of the main tasks is the generation of financial statements that reflect reliable information about the activities of the HOA. The accountant must provide an estimate of income and expenses for the next year. Reports must be approved at the general meeting. Taking into account the amendments to the law, now, under Article 20 of the Housing Code, residents have the right to submit an application so that the activities are checked whether everything in the Charter is legal (who is responsible for the illegal actions of the HOA, the types of fines and penalties for violation of powers, are described in detail here) .

HOAs must report to tax authorities and extra-budgetary funds. Regardless of the fact that the HOA is a non-profit organization, reporting and calculations are required. Only homeowner contributions are tax-deductible; all other financial transactions are taxable.

Some HOAs found a good solution by choosing the simplified tax system. The system provides some advantages when accounting for receipts. In addition, regional benefits are also provided.

HOAs, housing cooperatives and other forms of housing management and their features

Many people didn’t know, but it turns out that cooperatives still exist today.

In the housing sector there are such organizational forms that, it would seem, should sink into oblivion.

Housing and savings cooperative, Housing and construction, Homeowners' Association.

The legislation of the Russian Federation has been worked out in the housing issue to the smallest detail, but what to do, sometimes, is not always clear.

How not to get confused and choose the right direction? Let's try to figure it out in this article.

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Types of housing cooperatives

All of the above forms of government can refer to non-profit organizations. Non-profit organizations do not aim to make a profit . As a rule, they are organized to achieve different goals:

In this case, we are talking about competent management of real estate. However, such associations of residents as homeowners' associations, housing cooperatives and others can receive income from the rental of non-residential premises that they own. For these tasks, there are three types of cooperatives:

A housing savings cooperative (HSC) is a consumer cooperative created as a voluntary association of citizens on the basis of membership in order to meet the needs of shareholders in residential premises by combining members with share contributions. (according to Federal Law 215 as amended on July 3, 2016 “On Housing Savings Cooperatives”).
Homeowners' Association (HOA) is a type of real estate owner's association, which is an association of owners of premises in an apartment building for joint management of common property in an apartment building or several buildings. (according to the Tax Code of the Russian Federation).
A housing construction cooperative (HBC) is a voluntary association of citizens and, in cases established by this Code and other federal laws, legal entities on the basis of membership in order to meet the housing needs of citizens, as well as manage an apartment building. (according to the Housing Code of the Russian Federation).

Is the management company identical to the housing cooperative?

Is the management company the same organization as the housing cooperative or not? From the point of view of house management, the last two organizational forms are identical. If we compare the second and third forms of housing and communal services with a management company, the difference is that the management company employs professionals who, according to the contract, are fully responsible for the management of the house , housing and utility resources, and the board members of the HOA or housing cooperative may be incompetent in these matters.

How does work work in a housing construction cooperative?

Housing construction cooperative in accordance with Art. 110 of the RF Housing Code differs from other forms of management in that it is formed at the stage of construction or reconstruction of a residential building. Housing cooperative and acts as a developer. That is, shareholders are future home owners.

Differences between housing cooperative organizations and housing cooperatives and homeowners' associations

Differences between housing cooperatives according to the housing code and the organization of the HOA:

An HOA is organized by owners to manage existing housing.
Housing cooperative is at least 5 people. HOA – at least 51% percentage of all owners.
The HOA consists only of the owners of residential premises.
Shareholders of housing cooperatives are liable for part of the unpaid share.
In a housing cooperative, unlike a homeowners' association, income from business activities (renting out premises) is distributed among the members of the cooperative.
Any owner can receive information from the activities of the HOA.

Advantages of organizational forms

So, after all, what organizational form to choose? So:

The HOA is deprived of the following advantages of housing cooperatives and housing cooperatives and can only be chosen to manage existing housing. The main advantage of an HOA compared to a management company is the transparency of the costs of maintaining and repairing a home, and for utilities.
A housing cooperative is selected only in the case of new construction or reconstruction of an apartment building (in the case of reconstruction, you can also select a housing cooperative). Advantages:
In a housing cooperative, unlike a homeowners' association, income from business activities (renting out premises) is distributed among the members of the cooperative.

In conclusion, I would like to note that cooperatives have now taken on a new form and are an excellent means for the construction , acquisition and management of housing. This is the best form for people with a managerial approach to their own real estate.

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Can one transform into the other?

There is also the option that the housing cooperative can be formally dissolved and merged as an HOA (House Code of the Russian Federation, Article 122). The cooperative at a general meeting of all its members can make this decision (Article 145 of the Housing Code).

The procedure for creating an HOA will not be anything special or simpler.

You will need to do the same thing as during the normal formation of a partnership. The only thing is that the application for state registration will be in a slightly different form, and it will also require drawing up a transfer deed.

It is worth taking into account that Article 136 of the housing legislation of the Russian Federation clearly states that there can only be one HOA in one house (about an HOA for one house, about how many apartments and entrances in an apartment building can be part of this type of partnership, and about other nuances, read separately).

But the owners can change the management option if such a decision is made at a general meeting (in accordance with Article 161, paragraph 3 of the Housing Code).

REFERENCE: According to Housing Code 140, an HOA can transform into a housing cooperative.

Do they have jobs and how are they paid?

As for wages, housing cooperatives and homeowners associations have this, of course. You can receive wages in a partnership or cooperative. It will be accrued from the moment the employment contract is signed. On its basis, the employee, in accordance with internal regulations, is obliged to perform the work required by his position. The amounts of payment will be established by the members of the partnership or cooperative at the general meeting. This article describes which personnel are required on the staff of an HOA, and which positions employees can be recruited for at will, as well as the job descriptions of employees.

According to Article 65 of the Housing Code, the rights and obligations of everyone who is part of the partnership can be changed.

What do we end up with? Each owner will have to independently decide what, in his opinion, will be better - a homeowners' association or a housing construction cooperative. You shouldn’t make a hasty decision; the right thing to do first is to add up all the pros and cons of both.

But no matter what choice is made, the main aspect will still be caring owners. If the owners are directly involved in the life of the house, the house will prosper and everyone will be happy!