Real Estate

Bankruptcy estate legal responsibility for mutual real property company’s upkeep charges

These days, the Eastern Finland Court of Appeal dominated on a bankruptcy property’s legal responsibility for a mutual actual property organization’s maintenance expenses.


Bankruptcy estate legal responsibility for mutual real property company's upkeep charges 1

The stocks inside the mutual real estate organization owned by using the debtor conferred a proper possession of workplace premises that the debtor had utilized in its business. The debtor’s enterprise turned into no longer continued through the financial ruin estate, but the property took measures to recognize the shares. The property contested its responsibility to pay the agency any upkeep costs that the organization’s shareholders have been obliged to pay and that have been charged to cover the organization’s prices.

The courtroom ruled that any renovation costs incurred after the financial ruin had been started could not be held as liabilities of the bankruptcy property. However, as a substitute as receivables from the debtor in financial disaster (i.e., the real shareholder). It applied the concepts installed in a Supreme Court precedent concerning the liabilities of a financial ruin property in a case concerning a limited legal responsibility golfing corporation’s protection fees (2015:103).

According to the Bankruptcy Act, financial disaster estates are accountable for money owed:

primarily based on a contract or dedication entered into using the estate or arising from the financial ruin court cases; and
for which the property is in charge beneath the Bankruptcy Act or another act.

The responsibility to pay upkeep prices to a mutual real estate company is based totally on the identity of the stocks inside the organization. The standards for the shareholder’s responsibility for the charge are supplied inside the corporation’s articles of association.


The Eastern Finland Court of Appeal first said that putting forward a debtor bankrupt does not switch the identity to the debtor’s belongings to the financial ruin estate. Therefore, a financial disaster property’s liability for upkeep prices can’t be based totally on a debtor’s identity to stocks. The court also said that, inside the present case, the corporation had not claimed that the financial disaster estate had, in particular, entered into a settlement constituting legal responsibility for the upkeep fees.

Referring to a Bankruptcy Act authorities concept, the court said that debts bobbing up from financial ruin proceedings are prices based totally on:

felony processes;
bankruptcy directors’ charges; and
different fees regarding an estate’s control.

Costs relating to an estate’s control may encompass those bobbing up from drawing up a debtor’s account. The court docket considered that preservation prices aren’t fees that may be considered as debts arising from bankruptcy court cases.

Referring to Supreme Court precedent (2015:103), the court stated that the debtor’s belongings belonged to the financial ruin property by using the regulation. Bankruptcy directors ought to take control over a debtor’s assets and liquidate them. Such manipulation and control over the debtor’s belongings do not represent a financial disaster estate’s commitment to the debtor’s obligations. As the bankruptcy property had no longer actively used rights conferred utilizing the shares in a way that couldn’t be considered property administration according to its obligations supplied for in the law, it could not be held liable for the protection expenses claimed with the aid of the agency.


This selection similarly defines the scope of financial ruin estates’ liabilities and is a logical continuation of Supreme Court precedent in this location. As payments of financial ruin estates’ administrative prices are privileged compared with claims in opposition to a debtor, the definition of ‘administrative charges’ needs to be interpreted carefully.

The bankruptcy of a shareholder in a mutual actual estate organization may increase the other shareholders’ liabilities as in exercise; the solvent shareholders should compensate for the lack of coins go with the flow to the mutual actual estate agency due to the financial ruin. However, the results at the solvent shareholders are not very last if the bankruptcy property realizes the stocks. The new shareholder might be liable for the debtor’s failure to pay the renovation prices.

Margie Willis

When I decided to start blogging about real estate, I knew this would be a long journey. I was right. As you can see, I've grown my blog over the years and now have many followers. The reason why I started blogging is that I wanted to share my passion for designing and decorating my own home. I want to help people with home improvement ideas, trends, and inspiration.

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