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Untangling the common expenses quandary

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The publication of the proposed new law on common charges is most welcome, not so much for the proposal’s content but more for the interest, the Law Commissioner shows.

It is a start to the existing unacceptable and unworkable state of the prevailing law, although the two previous proposals failed without much debate in Parliament.

I am, therefore, pleased with the Commissioner’s interest and especially her invitation to interested parties to submit their comments and proposals to her. This in itself is a positive element in the whole effort.

Here are my thoughts on the issue.

  • The competent authority will be the one that issues the relevant building permit. Therefore, the municipalities and/or the District Office. Neither have the appropriate knowledge or capacity to manage such matters, in addition to the increased financial resources they will need to deal with the thousands of applications. At the same time, concerning the local councillors, mayors, and municipalities (especially the small ones), people “connected with the authority” will find it difficult to overcome the private interests now present in numerous other sectors.
  • A new Authority is needed to look into common property issues, with offices in all towns where the interested parties can refer to.
  • The proposal refers to disputes to apply to the local courts. But as things stand today, with the unacceptable delays in the judicial system, how will it cope since a simple case, even for €500, will take 2-4 years to be heard, be it some new procedure along the lines of bad debtors in rented properties, which has also been subject to unacceptable delays. Mediation is a good suggestion for staffing this service. I add that mediators be technicians from the Technical Chamber and involve lawyers and others in the tenancy-employment dispute models. The state has not yet adopted the Small Claims Court system, despite such in the UK (Magistrates) and other countries (see the USA with special/small courts with summary proceedings, no right of appeal and final judgment).
  • As for unused development rights, it needs further discussion and explanation.
  • Reference is made to units which do not have titles that should hold all necessary certificates (e.g., subdivision permit, a final certificate of approval etc.). If not, where will these units be classified?
  • I wonder which owner will be interested in taking over management of the common expenses when they will be liable to be sued for whatever reason the owners believe they did wrong. Of course, there should be a civil liability, but on the other hand, bearing in mind management is done in most cases (mainly elderly/retired), who will be attracted?
  • Is it difficult for us to adopt that the management committee will take on the responsibility of funding, which of course, the financier will ask for personal guarantees and/or mortgages? Who will take on such a liability?
  • In addition to the need to issue a certificate of common charges paid for unit transfer and mortgaging, a condition should be included that “no transfer of property will be permitted if the owner owes common charges, similarly nor for rent”.
  • Concerning insuring a jointly owned building, there is the issue of uninsured building costs, and I have reservations about the sale of remaining unutilised development rights that need to be discussed.
  • The debtor (owner) must pay the utilities as stated in the audited accounts, whether or not they agree, but to have the ability to be corrected by the court (just the opposite of what is currently the case).
  • Include in the common law the alterations to appearance performed without the permission of the administrative committee and the possibility of a unilateral court order for reinstatement.
  • On the issue of cutting off access to non-payers, although the need is understood, I wonder how it will be implemented – e.g., no access to an elevator (will the elevator door need to be locked and good-payers only to have keys?)

These are some initial points that I believe the Commissioner should look into and arrange a consultation with interested parties before the proposed legislation goes ahead.

I look forward to the involvement of developers, estate agents, Landlords and the Property Owners Association to improve it.

 

By Antonis Loizou – Real Estate Appraiser, Property Seller & Development Project Manager