Questions & Answers to "Hot" Management Problems
After 1980, Cyprus has been transformed from privately owned individual developments into residents, offices, large-scale apartment buildings, residential and shopping/office compounds, as well into shopping centers. This development requires the existence of maintenance fees, which, in general, are not expensive, but the inadequate maintenance and upgrade, especially of older projects, causes problems in both appearance, operation and security of buildings, maintaining the value of a project/building etc. The problem is focused on the weakness of both the General Agreements for the Building fees and the Building Fees Law, 6(I)1993, but even more important is the prevailing mindset, especially by locals (foreign buyers have started as well) who are not paying up. This wrong attitude is due to the fact that the buyer/owner of a unit can claim all types of supporting documents, some of which are listed below, along with their answers:
1.“The apartment is rented and the responsible for payment is the tenant.”
Wrong, the responsible person is the buyer/owner.
2.“The seller/developer did not do what he promised and I will not pay until his obligations are met.”
Wrong, because building fees and maintenance have nothing to do with the developper/seller. This certainly makes this buyer punish himself, as well as other co-owners, thereby reducing the value of his investment.
3.“Why pay for an elevator since my flat is on the ground floor and I don't use it?”
Wrong, in a building everyone pays their share for everything, Law does not exclude units on the ground floor.
4.“I do live in the apartment only 3 months a year, so why pay for others?”
Wrong, regardless of use, empty or not, the charge should be paid.
5.“The owner (in case of no title deed) charges me a local property tax, which I consider an excess”.
Right, this tax is based on the Land Registry estimate of 1.1.80, which is determined by the issue of the possession. However, what happens between the delivery date and the issuance of the title deed? The best is for the seller to indicate to the dealer the 1.1.80 value and charge accordingly, perhaps considering the opinion of a registered assessor.
6. “Am I obliged to pay for central heating if I am not home during the operating hours?”
No, operating hours are decided by the majority of buyers and so regardless of use, each owner pays his share.
7.“Why pay for Management?”
Wrong, Management has to be paid because this is such a difficult job to do (especially collections) and also because he has to keep the accounts in order. Any volunteer is, of course, welcome.
8.“A does not pay and the Management Committee does nothing, why should I be the fool who pays?”
Wrong, the highest priority is to keep the project running well, as well as for the benefit of your own property.
9.“While charges are €/sq m, the Management charges me + €/sq m for future maintenance. This is something I can't understand.”
Wrong, a maintenance fee includes renewing and future planning, e.g. the elevator that needs to be changed after 15-20 years.
10.“There is no agreement in the Sales agreement for maintenance fees, so can anyone pay whatever they want?”
Wrong, if there is not such an agreement, the Law of Immovable Property 6 (I) 1993 can be applied.
11.“I can’t understand how fees are charged. That is, one that has a large veranda and one that hasn’t are charged the same amount when the unit has the same occupied area?”
The charge should be based on the square meters of each unit and include covered occupied area, covered and uncovered verandas.
12.“I can't figure out why I have to pay for Insurance for the building, when I have my own Insure. I'm not going to pay twice.”
Wrong, if e.g. there is an a building of 4 apartments that is insured entirely, then there is no problem. But if one owner out of 4 has either not insured or has under-insured his unit, then no unit (of the remaining 3) can be re-erected. The best is the whole building to be insured as a single unit. This is of course provided for by the relevant legislation 6(I)1993. Where units are independent (e.g. residences), it is doable, but shared areas, e.g. shared swimming pool, private roads, retaining walls, biological wastewater treatment etc., need to be insured separately from the running.
13.“I know that in order for a house of my level to get re-built the replacement/insurance cost would be around €1,200/sq m. Management charges €1500/sq m. Am I being scammed?”
Wrong, since replacement costs should include demolition of the existing unit, new licenses and architecture plans, VAT and new costs after 1-1½ years. So, the extra 25% is the minimum additional cost and should be recalculated at least every two years.
14. “Should all of us who pay properly and regularly to pay the non-payments of others, along with the legal/administrative costs, and then if we are lucky to collect them via court? This is unacceptable!”
Wrong, but the point is right. The providence of the Law of Immovable Property states that management must first cover the costs and then take legal action against the non-payers. But the legal process is time consuming and costly.
15.“Once in England I bought a luxurious apartment, whose owner needed to be approved by management. It seemed strange to me then, but it may have to be applied in Cyprus too, because impractical buyers reduce our investment!”
Very advanced, but let's solve the basic problem of non-payment and attitude first and then move on to a more advanced level.
16.“We have a huge problem, not even the street lights turn on. We have no title deeds and no registered management, so how do we deal with such a problem?”
The best method in the pre-issuance stage of a title deed is for the seller/developer to take over management until the title deeds issuance, provided the Sales Agreement contains a statement for non-payment of charges (even if the buyer complains) to be considered a fault of the Sales Agreement, with the developer's right to require it back etc. This is a good method that is being implemented and is kind of intimidation to the unconscious ones. But if there is a title deed things become more difficult, because the only way to collect debts is a lawsuit.
17. “The pipes of the above apartment have been punctured and water is dripping into my apartment. Who pays for the repair?”
According to the acceptable tactic, responsible is the one who has a problem in his unit, regardless of whether the other is culpable. This is the only solution, otherwise it is much more difficult to find the culprit, eg. a toilet where A threw various stuff inside and blocked B’s sewerage - B pays, unfortunately. This issue should also be addressed by the rules of the apartment building.
18.“I have a storage and a private parking lot, and the manager insists that these areas should be calculated along with the covered areas of the unit for common expenses purposes. Is he right?”
Usually these stuff do not count in occupied areas, although we do believe the problem is found when someone does not have a storage room and has an unoccupied parking lot instead of an occupied one.
19.“I will not pay the maintenance fees because I am not allowed to have my dog in my apartment, does that make sense?”
Wrong, if this is a decision of the General Meeting then you cannot have the dog, but if there is no such a decision then you have the right to keep your dog inside, provided that it does not cause nuisance to others (for which there is a nuisance legislation, etc.).
20.“I bought the apartment 7 days ago and on the 8th day I received a note from the management including a charge of €500 for refurbishing the elevator. Shouldn't this charge be sent to the former owner?”
No, when you bought the apartment you should have asked about such a possibility. In any case, since the apartment is of some age, we expect you to have bought it at a lower price.
21.“We have no management and we have had no problems. But recently we have had an unacceptable incident by a tenant and I wonder whether I should take legal action against him or not, but on the other hand how will we face each other peacefully when we meet from time to time? Is there a solution;”
This is the management’s responsibility. In this case you are not “caught” and maintain a peaceful neighborhood.