Building liability and the homeowners' association: here's how it works!

As a homeowner, you know that you can be liable for damage caused by a defect in your home. Consider, for example, a loose roof tile that causes damage to your neighbor's car during a storm. In such a case, you are liable as the owner. This is called building liability and is regulated by law in Article 6:174(1) of the Dutch Civil Code. It says:

“The owner of a building that does not meet the requirements that may be imposed on it in the given circumstances (...) is (...) liable (...)”

So:

• if there is a building,
• and if that building defective is,
• and as a result danger arises and that danger materializes;
• then the owner of the building liable for that damage.

The term "structure" refers to buildings or other works that are permanently attached to the ground. A structure is defective if it does not meet the requirements that may be imposed on it. An apartment complex is a structure. Does this mean that the homeowners' association of that complex is liable if the building has defects and causes damage as a result? Or is it a little more complicated than that?

The homeowners' association is not the owner, so it is not liable?

The problem, however, is that the HOA does not own the building. The HOA only manages the common areas and matters and is responsible for maintenance. Therefore, the HOA is not in fact the party that can be held liable under Article 6:174 of the Dutch Civil Code.

In the judgment of the Amsterdam Court of Appeal of May 17, 2022 (ECLI:NL:GHAMS:2022:1460) dealt with precisely this question. In this case, there was a dispute between the owner of an apartment and the homeowners' association. The owner claimed that her apartment had been affected by water damage caused by leaks in a sewer pipe. The sewer pipe is part of the common area of the building, for which the HOA is responsible. It therefore belongs to the building. The HOA would therefore be liable under Article 6:174 of the Dutch Civil Code. The Court ruled otherwise: it is not the HOA, but the joint apartment owners who are the owners of the building within the meaning of Article 6:174 of the Dutch Civil Code. The HOA is merely the legal entity that unites these owners and is responsible for management and maintenance (Article 5:126 of the Civil Code). That does not make her the owner and therefore she is not liable on the basis of building liability.

Court confirms: Homeowners' association is not the owner. The apartment owners are.

That line has been continued since then. Both the Court of Appeal in The Hague (September 5, 2023, ECLI:NL:GHDHA:2023:1760) as the Amsterdam Court of Appeal (November 9, 2024, ECLI:NL:GHAMS:2024:3204) confirmed that damage caused by defects in the building, such as communal pipes, is not borne by the owners' association. The joint apartment owners are liable for this. After all, they are the owners and possessors of these parts. not at the owners' association. In a somewhat older ruling by the Amsterdam District Court (November 20, 2013, ECLI:NL:RBAMS:2013:9042) this was aptly formulated:

“4.4 With regard to the claim made by [the claimant] under Article 6:174 of the Dutch Civil Code, the owners” association has rightly argued that it is not the association but the joint apartment owners who are to be regarded as the owners of the building.”

Legally sound, but difficult to implement in practice?

This sounds logical in theory, but in practice these judgments do have a number of consequences. It is still somewhat manageable for a homeowners' association with two or three owners. However, for large apartment complexes (with 100 or more units), this becomes a lot more difficult. In fact, it would mean that every owner would have to be subpoenaed, if the common property has caused damage. This rule is not always practical.

Incorrect application in practice

In practice, this does not always work out well. There are various rulings in which judges (in my opinion, wrongly) leave room for the owners' association to be held directly liable. For example, in a ruling dated April 8, 2020, the Amsterdam District Court (ECLI:NL:RBAMS:2020:2314) ruled that the owners' association was the owner of the items located on the roof of the building. Therefore, it would also be liable under Article 6:174 of the Dutch Civil Code. In a recent case before the District Court of Rotterdam (March 27, 2024, ECLI:NL:RBROT:2024:2692), it is apparently considered that the owners' association is liable for the building. Although this is not stated explicitly, the judge's ruling essentially means that the owners' association was liable for the damage, since it was caused to a considerable extent by defects in the construction of the apartment complex.

In my opinion, these statements are incorrect. The homeowners' association is not the owner. It merely manages the community.

Literature: Homeowners' association is not an owner but merely an administrator

Not only the three judgments mentioned above, but also the literature is fairly clear on this point. For example, the Asser series (Asser/Bartels & Van Velten 5 2017/521) provides the following explanation:

“As noted above (...), the owners” association exists alongside the special community of apartment owners; it does not replace it, nor does it coincide with it. The judgment of the District Court of Maastricht (presiding judge) that the owners' association was the owner of the building and therefore liable under Article 6:174 of the Dutch Civil Code (...) was therefore incorrect.”

In short, the HOA manages the building. The ownership lies jointly with the apartment owners.

Homeowners' association is (internally) liable for poor maintenance

Incidentally, the HOA may also be liable internally (i.e., to its own members) on the basis of the provisions of the deed of division. This states that the HOA is obliged to ensure the management and maintenance of the common areas. If the HOA fails to do so and damage occurs as a result, the HOA may therefore be liable. This liability does, however, require that there be acts or omissions. This is therefore not the strict liability referred to in Section 6:174 of the Dutch Civil Code. See the judgments of the Gelderland District Court of March 1, 2017 (ECLI:NL:RBGEL:2017:2021) and August 15, 2018 (ECLI:NL:RBGEL:2018:3727). In this context, see also the article by my colleague, Mr. De Vries, on the liability of the homeowners' association for leaks in the basement.

Homeowners' association sometimes also externally liable for poor maintenance

If the poorly performed maintenance is such that it can be considered a wrongful act, the HOA may also be liable externally (i.e., to third parties). In the case that was heard before the Rotterdam District Court and in which a ruling was handed down on February 16, 2023 (ECLI:NL:RBROT:2023:986), a dental practice has been experiencing leaks from the residential tower above it since 2019.

Investigations revealed that the damage was caused by defective lead replacements between the facade/window frames of the residential tower and the flat roof of the practice. The lead substitutes are part of the common areas of the building and fall under the responsibility of the owners' association. Therefore, the court ruled that this is the responsibility of the common owners of the apartments (and not the owners' association). However, the dental practice had repeatedly notified the HOA and demanded compensation and requested repair by the HOA. As a result, the HOA acted unlawfully (ex. Article 6:162 of the Civil Code), as she failed to fulfill her maintenance obligation.

So: who should you sue if the building owned by the homeowners' association causes damage?

I already mentioned the Asser series earlier. It contains the following striking text:

“The homeowners” association can be considered the most challenging aspect of apartment ownership, as the flexible rules of association law are applied alongside the rigid rules of property law (real rights), which can sometimes lead to conflicts. The homeowners' association exists alongside the community.”

The fact that it is a difficult subject is evident from the difficulty of applying the doctrine of building liability. If you have damage caused by a building that has been divided into apartment rights, it is advisable (unless there is clear evidence of fault due to poor maintenance) to sue the apartment owners individually. In the aforementioned judgment of the Amsterdam Court of Appeal (ECLI:NL:GHAMS:2022:1460) this is also stated in so many words. Although the owners' association is jointly and severally liable for the debts of the owners, their liability must first be established.

“3.6 The court's ruling that the owners” association cannot be held liable in proceedings in which the joint apartment owners are not participating on the basis of its joint and several liability under Article 5:113(4) in conjunction with Article 5:113(2) of the Dutch Civil Code before the liability of the joint apartment owners has been established in proceedings brought against them is equally correct.”

Specialized lawyer for homeowners' association liability

Lexys' attorneys specialize in both liability law and homeowners' association law. They can assist you with issues involving the liability of the homeowners' association. Contact contact to see how they do this for you.