12.10.2023
To avoid misunderstandings, it must be recognized that there is currently appropriate legislation regulating buildings in joint ownership, which, however, is not without significant shortcomings.
Quite often, difficulties arise in collecting general expenses from owners who are late in payment. To obtain recovery, it is necessary to file a claim in court through a civil suit, which is a time-consuming and expensive procedure for any Management Committee (MC).
Fines
Thanks to a recently introduced bill currently being debated in the House of Representatives, the CC could impose a fine on an owner who owes general expenses.
The new Office will have the ability to impose fines on the owner. The department has the right to sue the defaulter by initiating civil or criminal proceedings.
In order for defaulters to present a defense in a civil suit, they will first have to pay the utility debt to either the clerk of the court or the CC, and then have an attorney prepare a defense.
Management companies will be able to exercise the right to restrict the rights of the defaulter, excluding the possibility of limiting access to the defaulter’s property.
This provision of the bill requires further clarification. Namely, what exactly will the management company be allowed to do to put pressure on the defaulter to pay? Under the new bill, the Land Registry will require a certificate of payment of common costs before authorizing the transfer of a property.
Sinking fund
Another problem is that neither the current legislation nor the draft law requires the creation of a sinking fund.
Currently, only a small percentage of buildings have an established sinking fund, used to raise money that will be used for major building repairs such as roof insulation, elevator replacement, entrance improvements, and maintenance (large crack repairs, painting, etc.) on the outer shell of the building.
It is much simpler and smarter to already have a significant amount of money in the building fund at the time of major renovations, rather than requiring owners to raise a significant amount of money in a relatively short period of time when the need arises. New legislation should require the creation of a sinking fund.
The main problem
But what seems to be the biggest problem? Perhaps the biggest shortcoming of the new bill is the lack of transparency requirements through the regular and reliable provision of information to owners from the management company.
The current legislation makes a general reference to a quarterly flow of information, while the Bill makes provision for information to be provided biennially or annually at the AGM. This situation is far from satisfactory.
Transparency in finances is necessary to ensure that there is no doubt about the management committee’s ability to manage the building’s financial resources and to avoid much misunderstanding and friction between owners.
The bill amended the allocation of common expenses so that only 40% of covered porches and 20% of open porches would be counted toward the gross floor area of an apartment.
It is understood that owners of jointly owned buildings continue to have the right to make their own Rules by derogation from the Model Provisions. This means that owners with a 75% majority can change the provisions of the Model Clauses.
The new bill improves the procedures, rights and responsibilities of the owners and management companies involved in the event that an apartment creates problems either in relation to another apartment or in common areas.
Record keeping
The Bill places the supervision of jointly owned buildings on the district authorities of municipalities, rather than on the Land Registry, which is currently the established procedure.
The involvement of the Land Registry in the problems of jointly owned buildings has so far been virtually non-existent. It would be nice if the new Agency within the municipalities could cope with its mission, and problems such as the absence of an Administrative Committee, delay in payment of utilities by owners and timely repairs were resolved in a short time.
It should be emphasized that the bill requires administrative committees to obtain a certificate of building fitness from consultants (a kind of technical inspection for buildings), which is also a requirement of other legislation regulating public safety issues.
Buildings that are jointly owned must be registered in the Agency’s records and the Agency must be informed annually of the establishment of the Management Committee by paying the appropriate annual fee (20 euros).
Thus, the new bill offers some solutions to the main problem of non-collection of utility bills. The second major problem – the lack of transparency in providing correct and timely information – is not addressed in the new bill and must be corrected by the House of Representatives during the debate on the bill.
As the obligations and responsibilities of MC members increase, owners will have little interest in participating in Administrative Committees. The proposal is that all owners should be appointed members of the management company by law, but for practical reasons a small group of owners should act as the management committee’s executive committee.
