communal fees - penalty fee

Questions about living in properties with shared/common facilities
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h3ats33k3r
Posts: 17
Joined: 25 Aug 2022 14:35
Location: Pissouri | Limassol

communal fees - penalty fee

Post by h3ats33k3r »

Good day to you all,

in our development the annual fees are due until the end of the financial year, so from the date of the AGM where the budget is agreed (late May) to end of the financial year on 31.03. each year people have about 10 month time to pay their fees. I know, we are very generous. :)

Anyways, very few of the owners still manage not to pay for several reasons, even though a couple of reminders have been sent out to them.

Can we set up a penalty for that?
Are there any legal requirements to be considered in order to do so?
And what would be the appropriate value for that penalty?

My plan was to charge a penalty of 10% on the amount due if due date is exceeded. Any suggestions?

Best GW
Nigel Howarth
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Re: communal fees - penalty fee

Post by Nigel Howarth »

Hi GW

I suggest you download a copy of the law (in English).

It does not provide for any fines to be imposed on those who fail to pay communal fees unless they agree to it.

Article 34 on page 19 states "A decision imposing on any owner obligations or payments of any kind or extent which are not provided by the Law or these Regulations or which alters his rights, is not applicable in relation to this owner, unless he consents to it."

Article 38R. - (5)(c) on page 9 states "No Regulation and no amendment, revision, replacement or revocation of any Regulation may have the effect of - imposing upon any owner of a unit an obligation or payment the nature or degree of which is not specified by or by virtue of this Part or the Regulations except if this occurs following the consent of the owner of the unit; "

A revised law is currently under discussion, which will (hopefully) help Management Committees get the communal fees. When it was published for comment, I sent the following:

Article 22 (1) - Actions for non-payment of amounts imposed by the owners.

Suggestion: Additional methods of collecting debts quickly are needed, such as:

(α) Preventing the sale, renting, mortgaging and otherwise disposing of properties whose owners have not paid their communal fees.

(β) Lodging a lien against a contract of sale in cases where no title deed has been issued in the name of the debtor.

(γ) Instigate a small court claims procedure where debts will be repaid in 2 or 3 weeks.

(δ) Restricting withdrawals/transfers from the debtor's bank account(s) until the debt has been paid.

(ε) Seizing movable property owned by the debtor and selling it to repay the debt.

Justification: In my 20+ years of experience, non-payment of communal fees is the greatest problem. If one owner doesn't pay, the owners who continue to pay have to pay the debt. These owners often refuse to pay the debtor's debt and, as a consequence, often refuse to pay their communal fees – “Why should I pay when someone else is not paying?”. This causes a chain reaction until no-one pays and the management committee resigns.

Court cases can take 3 or 4 years to be heard and even if successful it can take another 2 or 3 years and if still no payment, further court action is required. A court may also the debtor to repay the debt in low value instalments, and it could take many years to recover the debt (assuming the debtor abides by the court ruling.)

Those who do pay communal fees must be protected from paying the debts of non-payers.

Regards
Nigel Howarth
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h3ats33k3r
Posts: 17
Joined: 25 Aug 2022 14:35
Location: Pissouri | Limassol

Re: communal fees - penalty fee

Post by h3ats33k3r »

Thank you Nigel for sharing your experience, highly appreciated.

I thought about budgeting communal fee debt defaults for next years budget, because technically and commercially you would have to take these foreseeable defaults into account. But I guess it's probably better to stay below the radar of all the other owners with these kind of problems to avoid the downward spiral you have mentioned.

I have already heard from the upcoming improvements to the law, do you have any information if and when this will be happening? I guess there would be a posting in this forum, right?

Cheers,

GW
Nigel Howarth
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Re: communal fees - penalty fee

Post by Nigel Howarth »

I haven't any information on when the law will be come into force.

I read on a Greek channel that it should be voted on by the end of this year. But much depends on any amendments MPs wish to make.

When it does reach the light of day, I'll publish details in my Cyprus Property News.

Cheers,
Nigel Howarth
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Pantheman
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Re: communal fees - penalty fee

Post by Pantheman »

https://www.stockwatch.com.cy/el/articl ... m=facebook

Sorry it's in Greek but easily translatable.

No transfer of property with outstanding communal fees!! Hip Hip Hooray.
For all your property needs, we offer Trust, Integrity, Honesty.
FSB Properties Ltd
Registered and Licensed Real Estate Company. Reg. No. 1145, Lic. No. 572/E
Member of ETEK Registration No. A201999
https://www.fsbproperties.com
Nigel Howarth
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Re: communal fees - penalty fee

Post by Nigel Howarth »

Thanks Pan

I've read the stockwatch article "An end to the transfers of those who owe utility bills".

That doesn't help Management Committees get the monies owed until the property is sold! They need the money today not in 20 years time!

The original proposal included many more provisions.

The new law is about as much use as a third eyebrow. Anyone buying a property must get the lawyer to check that communal payments are up to date.

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Nigel Howarth
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JohnTB
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Re: communal fees - penalty fee

Post by JohnTB »

Hi Nigel

I was just looking through some old postings and came across this one re.communal fees which brought a question to my mind that I would like to run pass you.
I have a townhouse on a development of nine townhouses of which one has been repossessed by the Bank of Cyprus and apparently is now in line for auction on the banks website. The remaining eight complex property owners have paid the communal fees due by this ninth property for around nine years now and we split the fees between the existing eight owners to ensure payment of communal insurances for buildings, communal pool, communal area maintenance and painting etc.
We keep good records and accounts of what we spend and have improved the communal areas significantly over the years which included the tiled pool regrouted along with new pipework, skimmers etc. which comes to quite a sum.
There was a mention in this old email string re.any outstanding monies for communal fees were to be paid as part of a property sale, is this now a reality and therefore could we submit the account for our ninth property to get some money back for all the years we've paid for building insurance premiums and communal property maintenance etc?
The account is currently around the seven thousand Euro mark which would be marvellous if we could get even some of it returned.

Look forward to your reply, cheers Nigel

Regards
Joh TB
Nigel Howarth
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Re: communal fees - penalty fee

Post by Nigel Howarth »

Hi JohnTB

The Bank of Cyprus is responsible for paying the communal fees from the date it repossessed the property.

The new law has yet to be approved by Parliament, but the BoC should cough up nevertheless.

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JohnTB
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Re: communal fees - penalty fee

Post by JohnTB »

Nigel

Thanks for your reply.

Just to update you we have now confirmed that the BofC have made a conscious decision NOT to repossess the house currently, not sure why? So currently the house is still in the original buyers names. They have however confirmed they have possession of the property and have allocated someone in their organisation to handle the property as a bank asset.
They have also acknowledged the claim and we are currently awaiting the 'allocated person' from the BofC to contact us to discuss how to move forward with this.
Thanks for your advice to date and we'll keep you posted for information as we try to recover the fees, it may be useful to others whether we are successful or not.

Regards
John TB
Nigel Howarth
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Re: communal fees - penalty fee

Post by Nigel Howarth »

Thanks for the update John TB

I expect BoC have decided not to repossess the property as they would have to account for it differently in their books (to their detriment.)

I'll be very interested to hear how the situation progresses.

Regards,
Nigel Howarth
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JohnTB
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Re: communal fees - penalty fee

Post by JohnTB »

Nigel

Just to update you on our situation.

The BoC has now cancelled the original contract of sale to the original buyer with the land registry so technically the property title has never been separated from the developer who remains the current 'registered owner'.
However the developer has also informed us that he has sold the property to a new buyer and that the new buyer is now responsible for the outstanding debt, the developer will not tell us who the new buyer is before the transfer is complete, we don't know when this is scheduled for.
We don't believe the developer has informed the new buyer of the €7.5K debt, however can the house still be sold when there are outstanding monies owed. including unpaid communal fees?

We contacted a local solicitor who stated the following:-

"The law states that the owner of the property is due to pay the fees. This includes not only the 'registered owner', but also the person entitled to be
registered ie.'entitled owners'.
We assume the previous owners lodged the contract in the Land Registry and so were entitled to be registered owners
Also, the law says that if a property is sold both the old and the new are liable for the fees. This is our opinion that both the previous and the new
owners are liable to pay the outstanding common expenses".

With the property never being transferred from the developer then surely during all this time they would be considered as owners of the property and therefore liable to pay for communal fees to ensure the building is covered for any issues etc.
The solicitor has advised as above that "the law says that if a property is sold both the old and the new are liable for the fees", then surely the developer is liable for at least some of these costs??

The solicitor also stated "the developer in their opinion is not liable" which I just don't understand WHY NOT, as they are the current 'registered owner', which as the law states is liable to pay???
Reading both statements from above, the solicitor seems to be contradicting themselves with regards to the liability of the 'registered owner' of the property?

The solicitor recommends us to sue the new owner for the outstanding monies however we don't believe the developer is being open and honest with the new buyer as regards to this debt as they won't even pass on the new buyers details until after the title has been transferred which seems rather clandestine!

If we follow the solicitors advice and sue the new buyer can you imagine our first meeting 'Hello and welcome to the complex, oh by the way leave your €7.5K on the table when you leave will you please!!!!!!!
WOW what a welcome, we'd be lucky to see anything at all from the poor unfortunate new buyer after that....

The developer is basically selling the property with outstanding debt that they are aware of, THIS CAN'T BE RIGHT!!!!!

Your thoughts on our current predicament would be greatly appreciated as usual, thanks NIgel

Kind Regards
John TB
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