Raiding of condominiums: how it happens and how to protect yourself

Today, raiding is increasingly affecting associations of co-owners of apartment buildings (ACAB). Raiders often act according to typical schemes. If you know exactly what they are, you can suspect the seizure of the ACAB already at the initial stages of the scenario. The best way to protect an ACAB from raiding is to eliminate gaps in management: unclear provisions of the charter, chaotic document flow, shared passwords, lack of audit of contracts, etc. During an attempt to illegally seize an ACAB, it is important to act quickly and legally competently. Legal support in such cases allows you to quickly stop illegal actions and minimize risks for co-owners.

The most common scenarios of raiding condominiums

Raiders often act according to typical patterns. If you know which ones, you can suspect the seizure of a condominium already at the initial stages of the scenario. Let’s consider the most common of them.

• Registration blitz

The registration blitz variant is considered “classic”. Fake minutes of the general meeting with the allegedly elected new chairman or board of the condominium association are submitted to the state register. If the registrar does not notice any violations, an entry about the change of the head appears in the Unified State Register. Then the bank, counterparties and service providers already see another official. Then everything happens quickly: the new “management” gains access to accounts and documents, and based on the Unified State Register data, seizes power by force, and the real board of the condominium association loses control.

• Phantom meetings

A phantom meeting is not as straightforward a takeover of an apartment building as the first option. However, it is essentially very similar. An announcement is made about a planned meeting of co-owners: instead of personally notifying each co-owner, information is temporarily posted in the elevator or lobby of the building. At the next stage, a non-transparent vote count is carried out, powers of attorney with an indefinite list of powers are fraudulently signed, and questionnaires for voting are formed with signatures from persons who are not co-owners (tenants, relatives, neighbors, etc.). Then there is an appeal to the registrar and a forcible takeover as in the first scenario.

• Contractual ambush

This option is the imposition of “one’s” management company/contractor on the basis of fictitious decisions. This happens when the board or chairman of the board abuses their authority to quickly direct funds to the “flow” they need. The condominium association supposedly exists, but the actual payments are received by the management company, which makes such a condominium association only a formal arrangement, and the real management is carried out by the involved company.

Sometimes such a situation arises not as a result of intentional actions by the management of the condominium association, but due to the lack of necessary knowledge or simply a negligent attitude of the responsible persons of the condominium association to the involvement of a manager. A management agreement is signed with terms that are unfavorable for the condominium association, a power of attorney is provided without limitation of powers, etc. In this case, terminating the agreement becomes a very complicated procedure, and it is better to contact a lawyer.

• Forced pressure

An aggressive variant of raiding an condominium association is the physical seizure of a seal, documents, premises or equipment. The basis may be fake meeting decisions or court acts that have not yet entered into force. Forced pressure is often used as the final stage after a “registration attack”.

If you notice suspicious actions regarding a condominium association, seek legal advice.

Protection against raiding: what can a condominium association do to avoid falling into the trap

The best way to protect an condominium from raider takeover is to eliminate gaps in management: unclear provisions of the charter, chaotic document flow, shared passwords, lack of audit of contracts, etc. A properly constructed structure of documents and procedures significantly reduces the risks of any manipulation.

Meetings, charter and document flow – a legal shield from raiders

A properly drawn up condominium charter is a legal “shield”. The following data must be clearly stated in the document:

• procedure and methods of notifying co-owners about the meeting (mail, e-mail, personal delivery);
• the format of the agenda and the circle of persons who can initiate the meeting;
• voting rules (in person, in absentia, mixed), quorum, vote counting procedure;
• algorithm for creating a vote counting commission and publishing the results;
• creation of standardized templates – notifications, registration journals, bulletins, questionnaires;
• requirements for the minutes indicating all the necessary details for the Unified Register of Shareholders: date, quorum, wording of decisions, signatures, attachments, link to the video recording (if necessary).

It is recommended to record the meetings on video and save the originals of the ballots and minutes. All this deprives unscrupulous persons of the opportunity to interpret the procedure “at their own discretion.”

Protection of financial instruments

In case of suspicious behavior of managers who have access to the CEP (accountant, deputy chairman, etc.), it is worth introducing dual signature and SMS-informing. Also, enable notifications about changes in the Unified State Register in order to promptly respond to any attempts at interference. The condominium association should clearly define who controls mail and applications, who is responsible for “blocking” the bank in a telephone format and informing counterparties, as well as who prepares a complaint to the Ministry of Justice in case of violations.

Be sure to make sure that the data of the condominium association manager and the address in the register are up-to-date – the discrepancy between this information often becomes the first “loophole” for raiders. Formulate the decisions of the meeting as clearly as possible, without ambiguity, with a reference to the charter and relevant annexes.

Contracts with the manager and contractors

Before concluding contracts with management companies, it is worth conducting even a minimal “tender”: check their reputation, the presence of legal disputes, real owners and material resources. The contract should provide for the following provisions:

• a clear list of services, the scope of work and liability for non-performance;
• the procedure for changing tariffs. The price should be fixed and change only according to a transparent indexation formula or a decision of the meeting of co-owners. Unilateral change in value should be unacceptable under any circumstances;
• a separate account of the condominium association for making payments and mandatory monthly reporting on its use;
• a ban on subcontracting without the written consent of the condominium association. The manager is fully responsible for the actions of the subcontracting organization;
• an established form of liability for violations – fines, compensation for losses, etc.;
• carrying out work outside the contract. All additional work requiring financing can be performed only after a decision of the general meeting of co-owners;
• access to confidential data. The manager may be the administrator of accounting registers and access keys, but acts only as a trustee. On the day of termination of the contract, he is obliged to return all access, keys and documentation. The actual owner of all data is the condominium association;
• termination of the contract with the manager. At the initiative of the condominium association, the contract may be terminated with a transition period of up to two months, during which the manager continues to provide services. After the expiration of this period, the company is obliged to return all documents, keys and seals;
• form of power of attorney. The power of attorney must be targeted, with a clearly defined list of rights, validity period and limits of authority. In the event of its withdrawal, all counterparties and the bank must be notified.

Remember: a dispute can be easily won if the documents are drawn up competently, transparently and are easily verified in form and content.

Technical security and access control

Qualified electronic signatures (QES) should be stored on secure media and transferred only to authorized officials. It is recommended to regularly change passwords to banking systems, tax services and document management platforms. Archives, seals and accounting documents should be stored in safes or premises with limited access and security. The optimal solution would be to connect video surveillance and alarms.

A set of such technical and organizational actions significantly reduces the risk of raider intervention. Preventive measures are the best way to prevent raiders and maintain control over the condominium.

How a lawyer can help protect an condominium from raiding

During an attempt to illegally seize a condominium, it is important to act quickly and legally competently. Legal support in such cases allows you to quickly stop illegal actions and minimize risks for co-owners. A lawyer provides the following services:

• coordination of actions during an actual raid – from collecting evidence to submitting urgent applications to the relevant authorities;
• involving law enforcement officers to stop illegal actions and protect the condominium board;
• preparation and support of complaints about actions or inaction of state registrars or authorities that contribute to raiding;
• challenging illegal state registration or fake changes in registers;
• protection in court if the activities of a condominium are actually blocked or seized;
• support in the execution of court decisions, in particular regarding the restoration of legal management and the return of assets;
• representation of the interests of co-owners during the investigation of criminal cases opened against raiders.

In addition to responding to already committed offenses, lawyers help prevent raiding at the prevention stage. To do this, the following can be carried out:

• a legal audit of the condominium association – to identify weaknesses in documentation, management and registration processes;
• development of measures to protect documentation and internal information, including access to seals, protocols and commercial (or financial) secrets;
• verification of counterparties and business partners to avoid the risk of cooperation with unscrupulous companies or intermediaries.

Involving a lawyer is a real tool for restoring control and law and order in the condominium association.