Com­mon ex­penses: the curse of the prop­erty mar­ket

Financial Mirror (Cyprus) - - FRONT PAGE -

By de­scrib­ing com­mon ex­penses as a ‘curse’, I am sim­ply em­pha­sis­ing the se­ri­ous­ness of the prob­lem re­lated to un­paid com­mon ex­penses. There is an ob­scure law gov­ern­ing th­ese pay­ments and it is doubt­ful if it can ever be ap­plied prop­erly.

The ques­tion raised is whether it is nec­es­sary or not for the man­age­ment com­mit­tee of a project or build­ing to reg­is­tered at the Land Reg­istry. The law says this is a must, the Land Reg­istry says it is not nec­es­sary and that only a gen­eral as­sem­bly with 50%+ of votes ap­plies. The ad­min­is­tra­tor should not be paid, the law says. Who, then, will un­der­take this ar­du­ous task that re­quires ex­tra time and causes un­nec­es­sary fric­tion among co­hab­i­tants in a build­ing?

The law says that for those who do not pay the charges, their debts should be paid by the rest of the (con­sis­tent) res­i­dents who should then un­der­take legal pro­ceed­ings to re­cover the amount. That means the con­sis­tent res­i­dent is bur­dened with the un­paid com­mon ex­penses, as well as legal and court fees, the has­sle of ap­pear­ing in Court and by the very end, the debtor prob­a­bly dis­ap­pears (if the unit is sold to a third party, or has a ten­ant who does not pay) or even the Court awards par­tial pay­ment by in­stal­ments of 10-20 eu­ros a month. When a sim­ple court case costs around 2,000 eu­ros, it is clear when and if this debt will ever be re­ceived.

It is in­con­ceiv­able that a buyer of a unit at a cost of at least EUR 200,000-300,000 would not be in­ter­ested to pay com­mon ex­penses which could amount to EUR 500 a year, and thus main­tain the value of the in­vest­ment, use ser­vices such as clean­ing and el­e­va­tor main­te­nance, and of course main­tain a level of safety. The prob­lem gets much big­ger in the case of hol­i­day homes where there is a lack of un­der­stand­ing among the res­i­dents with the pres­ence of for­eign, lo­cal or sea­sonal buy­ers or ten­ants, the out­come of which we see ev­ery day with empty swim­ming pools, wild grass and weeds grow­ing all over the place and pro­ject­ing a sense of aban­don­ment.

There are also those who protest at ev­ery­thing who refuse to pay for shar­ing such com­mon ser­vices sim­ply be­cause they have a bone to pick with the de­vel­oper, and of­ten re­sort to the ex­cuse of “if the other ten­ant does not pay, why should I?” or “I’m not happy with the clean­li­ness and thus will not pay,” and other silly pre­texts where th­ese ten­ants mainly pun­ish the con­sis­tent res­i­dents and even them­selves, thus de­grad­ing the value of their own prop­erty and cer­tainly of oth­ers.

Nev­er­the­less and de­spite our con­stant ef­forts to di­ver­sify the law on com­mon ex­penses, the is­sue has been stuck at the House of Rep­re­sen­ta­tives and awaits dis­cus­sion for the last 15 years! The mat­ter is sim­ple – the Min­is­ter of In­te­rior should in­sist on the pro­vi­sion that there must be reg­is­tered man­age­ment com­mit­tee, the out­stand­ing fees must the re­spon­si­bil­ity of the shared own­er­ship of the unit and upon any fu­ture trans­fer, mort­gage, sale, etc. of that, all dues must be set­tled. It is not the man­age­ment com­mit­tee that should chase the debtor ten­ant, but the other way around, that the in­con­sis­tent res­i­dent should chase the Ad­min­is­tra­tive Com­mit­tee if he be­lieves he has been wronged.

In re­spect of the ten­ancy agree­ments, there re­mains the other se­ri­ous prob­lem of main­te­nance of the roof. This is a com­mon area, un­less a cer­tain unit has ex­clu­sive right of use of that roof, which is com­mon in hol­i­day homes and du­plexes. In the case of shared roofs, sup­pli­ers and oth­ers of­ten place var­i­ous equip­ment such, as the air con­di­tion­ers, satel­lite dishes, ad­di­tional wa­ter tanks, so­lar pan­els, etc.) which th­ese sup­pli­ers and their tech­ni­cians will not hes­i­tate to drill or dam­age the roof-top in­su­la­tion and this raises the other ques­tion of who is re­spon­si­ble for the wa­ter leakages, etc., since it is not clear which of the say, ten ten­ants hired the sup­pli­ers who caused dam­age to the roof.

Un­for­tu­nately this be­hav­iour of non-pay­ment

of main­te­nance charges ex­ists among all fi­nan­cial and pro­fes­sional cir­cles. Let’s take, for ex­am­ple, the man­age­ment of an apart­ment build­ing with an av­er­age value of EUR 500,000 and the oth­er­wise well-todo ten­ants owe back pay in com­mon ex­penses, as a re­sult of which there is no proper main­te­nance and the whole project starts to crum­ble.

Then we have an­other build­ing where 12 res­i­dents are con­sis­tent and de­spite the 24-year age of the build­ing, it re­mains in ex­cel­lent con­di­tion, both be­cause of con­sis­tent main­te­nance and due to con­tin­u­ous up­grad­ing, thereby rais­ing the value of the units.

The sit­u­a­tion of non-pay­ment of com­mon ex­penses is tragic and is a mat­ter of poor men­tal­ity, some­thing that un­for­tu­nately a lot of for­eign buy­ers are also fol­low­ing. In one such case where our of­fice un­der­took the col­lec­tion of com­mon ex­penses, we took legal re­course case for the de­mo­li­tion of il­le­gal constructions by one owner, the oth­ers ten­ants paid EUR 2,500 in lawyers’ fees and other ex­penses. So, now we will have to chase the ac­cused ten­ant for the col­lec­tion of the 2,500.

Is this any way neigh­bourly man­ners?

The “so­cial fab­ric” (we learned this new cliché from our very wise MPs) was “res­cued” by our deputies who sup­pos­edly worked so hard, day and night, to save the shop hours farce. Where, then, is that same “so­cial fab­ric” when a 69 year old lady with a heart prob­lem, can not climb the stairs for three floors, while her neigh­bour has to carry her bags of shop­ping be­cause the el­e­va­tor is not work­ing caused by the non-pay­ment of com­mon ex­penses and the lack of proper main­te­nance) of the lift.

Un­for­tu­nately, this is who we are. Ev­ery­one try­ing to make ends meet, while both the gov­ern­ments of the day and our House of Rep­re­sen­ta­tives failed to do any­thing be­cause they are too busy reg­u­lat­ing shop hours or the “ur­gent mat­ters” of wa­ter sports.

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