It is one thing buying real estate and adopting a correct sales contract and another having such clauses in the sales contract for the correct administration of the common expenses after delivery.

The law regarding the common expenses, as is at the moment, stipulates that the Administrative Committee can sue anyone who is not paying. In order however for the Committee to take the legal action, it must cover first itself the unpaid expenses of the defaulting party!! So not only the defaulting party is not paying, but all the others who are, are called upon to pay the deficit, plus legal expenses, plus a lot of court hassle and perhaps after 2-3 years the Committee might get its money back!! Surely, with such a system, it is very not surprising that the operation of commonly owned buildings becomes most difficult, since it discourages the payers and encourages the non payers, who exploit this legal nonsense.

Another matter to consider, is who is responsible to pay the common expenses, the occupying tenant or the landlord? This must be made clear in the sales contract/common expenses agreement, that it will be the landlord (buyer) otherwise who is going to chase the tenant who might be there today and gone tomorrow?

The other issue is how are the expenses collected. The practice is the covered square meterage of the unit, excluding open verandahs, gardens in private use etc. There are a lot of arguments for and against this basis, but it is the simplest method. Another approach is based on the value of each unit. This may be a more fair basis, but then one is open to disputes regarding the relative values, if values change in future etc etc.

Another factor to consider is that for an administrative committee in order to be in a position to take legal action against a defaulting party, it must be so registered with the Lands Office. However for such a committee to be so registered, the project must have separate titles (so what is happening inbetween??) the endless arguments on the voting procedure, the need to keep an accounts department etc etc – and for those unfortunate people who will administer the fund without or with a small fee, one wonders what will it happen if one single resident does not pay 1 cent from the electricity bill? The electricity will be cut-off, so more often than not, the administrators are funding the common fund out of their pockets in hope of future collection!!

For this reason and based on our experience, the best way is to have the developer appointed at the time of signing the sales agreement as the sale administrator of the common fund for a period of at least 10 years. If and it should, this general agreement forms part of the sales contract, the non-payers stand to have their contract cancelled and repossessed by the developer being a breach of the sales contract. In this way he has the legal power to do it, he is not so much affected by the ill-feeling of the non paying residents and he handles all the hustle. This needs not only a good sales contract, but also an accommodating developer, who cares not only to sell, but to the upkeep of the project after delivery.

Having said that, there is also the confused situation between buyers claims against the developer (or against each other) using the non payment of common fund as a tool to pressure the developer/others. What a mistake indeed, since what they are doing is damaging their property as well as the others. The two subjects, on the developer regarding the building and the expenses regarding living etc, are completely different and each party has a recource. But non payment of the common fund may end up with the closing down of a project e.g. non maintenance of the common sewage plant/sewage rates, which can cause “health hazard”, as a result of which the local health authorities might issue a closing order on health grounds.

This very serious and heartbreaking situation for the descent payers, which on certain occasions can escalate into “laughable” claims. Our most recent experience was of one woman not paying her common fund, because the neighbors (adjoining flat), were making “improper” noises “at night” causing her distress!! – What can we say dear readers.

www.aloizou.com.cy

www.aloizou.ro

www.aloizou.ru

ala-HQ@aloizou.com.cy