Enforcement of the cooperative right to a dwelling
Entrepreneurs running a business with a cooperative right to a flat should bear in mind that this right is subject to enforcement. The execution of the cooperative right to the premises depends on the type of this right: ownership or tenant. The differences between the two rights to the premises significantly affect the possible enforcement by bailiffs.
What is the difference between the two rights to the cooperative premises?
A cooperative ownership right to a dwelling is a limited property right, very close to the ownership right. The holder disposes of it similarly to the owner. It may, among others, rent a flat, sell it, encumber it with a mortgage without the consent of the housing cooperative. The issue of the housing cooperative law is completely different. In this case, the right holder using the premises may not encumber or sell it, nor is it an hereditary right.
How is the cooperative right to the premises being enforced?
The differences in the two types of rights also become apparent when their owners run into serious financial problems. More rights means - unfortunately - more trouble. The cooperative ownership right to the premises, in accordance with the provisions of the Act on Housing Associations, is subject to enforcement, to which the provisions on enforcement against real estate apply accordingly. The regulation contained in Art. 982 of the Code of Civil Procedure Pursuant to Art. 982 § 3 of the Code of Civil Procedure, if no one participated in the auction, the subject of which is a cooperative ownership right to a dwelling, a cooperative right to a commercial premises or the right to a single-family house in a housing cooperative, the mortgagee may take over this right for a price not lower than three fourths of the sum of the estimate; the takeover request must be made within one week of the auction.
However, the provision referred to above does not mean the second, but the first auction. For many years, there has been controversy over the application of this provision in practice. There have been cases where creditors were refused the right to take over the cooperative ownership right to the premises, if such an application was submitted after an unsuccessful second auction. The Supreme Court finally sided with the creditors, recognizing that the application could also be submitted after the second auction. The above Art. 982 of the Code of Civil Procedure providing for the possibility of taking over the cooperative ownership right to the premises after the first unsuccessful auction was recognized as an exception aimed at the possibility of a more effective enforcement sale of the cooperative ownership right to the premises, and such an application may also be submitted after an unsuccessful second auction.
How is enforcement carried out in the case of housing cooperative law?
It is completely different in the case of the tenant's right to a flat. Pursuant to Art. 9 sec. 3 of the Act on Housing Cooperatives, the tenant's housing cooperative right to a flat is inalienable, it does not pass to the heirs and is not subject to enforcement. The creditor is not able to satisfy the right to the premises established in favor of the debtor. The topic could be considered exhausted if not for the provisions of the Cooperative Law. Well - as you know - a necessary condition for the establishment of a housing cooperative right to the premises is making a housing contribution. Art. 27 § 3 sentence 1 of the Cooperative Law Act stipulates that if enforcement from a member's other property proves ineffective, and a special provision does not provide otherwise, the member's creditor may refer the execution to the member's contributions.
The indicated provision gives the opportunity to seize the contribution made by a member of the cooperative for whom the cooperative tenant right to the premises was established, however, this may only take place after the ineffectiveness of enforcement of other components and property rights of the debtor. The practical significance of enforcement from housing contributions is, however, insignificant, as the creditor may obtain satisfaction from the contribution only after the expiry of the right to the premises, which pursuant to Art. 11 sec. 1-14 of the Act on Housing Cooperatives occurs only as a result of termination of membership by a cooperative member, his death, removal or exclusion.