New bill for buildings with common ownership | Cyprus Mail

Will this be the solution to the problems of apartment buildings?

To prevent misunderstanding, we must recognize that there is currently appropriate legislation governing multifamily buildings, but it is not without significant shortcomings.

The first problem is that quite often there are difficulties in recovering common charges from delinquent owners. Recovery requires filing a lawsuit through the courts, through a civil case, which is a long and costly process for the Administrative Committee (AC) to begin.

Fines With a recently introduced bill that will be debated in the House of Representatives soon, the AC can impose a fine on an owner who owes common charges. Municipal authorities (authorities) interested in the matter will be authorized to impose an administrative fine on the owner. The authority will be able to take action against the defaulter by filing a civil or criminal case. In order for defaulters to present a defense in a civil case, they will have to first pay their utility debts, either to the court clerk or AC, and then call an attorney to prepare a defense. AC will have the ability to restrict a defaulter's rights by prohibiting access to their property. This provision of the bill requires further explanation. Specifically, what exactly will AC be entitled to do to put pressure on a non-payer to pay?

According to the new draft law, the cadastral service will require a certificate of payment of common charges before authorizing the transfer of ownership.

Capital Repair Fund

Another problem is that neither the existing legislation nor the draft bill provides for the mandatory establishment of a capital repair fund. Currently, only a small percentage of buildings have an established capital improvement fund designed to raise money to be used for major repairs such as roof insulation, elevator replacement, entrance improvements, and maintenance (such as repairing large cracks, painting, and so on).

It is much easier and more prudent to have a significant amount of money in the building fund at the time of a major repair, rather than requiring owners to commit a substantial amount of money in a relatively short period of time when the need arises. We believe that the new legislation should oblige the creation of a capital repair fund.

The main problem

But what seems to be the biggest problem? Perhaps the most serious flaw in the new bill is the lack of a requirement for transparency through regular and reliable provision of information to owners by AC.

Transparency in finances is necessary to avoid raising doubts about AC's ability to squander the building's financial resources and to avoid most misunderstandings and friction between owners. In the age of information, we expect AC to post this information electronically and around the clock. If continuous information is not possible, there should be an update at least once a month, which should include (a) payments and charges for the month, (b) financial obligations of the building and debts of the owners, and (c) bids received for repairs and details of work provided to service providers and so on.

The bill modifies the allocation of common expenses so that only 40 percent of covered porches and 20 percent of uncovered porches are counted in the calculation of the total floor area of an apartment. It is clear that owners in jointly owned buildings will retain the right to set their own rules that deviate from the standard rules accompanying the legislation. This means that owners with a 75 percent majority can change the provisions of the standard rules.

The new bill improves the procedures, rights and responsibilities of involved owners and AC when an apartment causes problems either in relation to another apartment or in common areas.

Maintaining records

The bill entrusts the supervision of jointly owned buildings to the district authority of municipalities instead of the cadastral service, which is currently the established procedure. The involvement of the cadastral service in the problems of jointly owned buildings has so far been almost negligible. We hope that the new agency in the municipalities will be able to fulfill its mission so that problems such as lack of AC, delayed utility payments by owners and timely repairs will find their solution as soon as possible.

It should be emphasized that the bill requires AC to secure a certificate of building compliance from consultants (like a building inspection), which is also a requirement of other citizen safety legislation.

Jointly owned buildings must be registered with the agency and inform it annually to establish a management committee by paying an annual fee (€20).

In conclusion, the new bill offers some solutions to the main problem of non-collection of common charges. The second major issue of transparency is not addressed in the new bill and is something the House should fix when debating the bill. Our final concern is that as AC members' obligations and responsibilities increase, owners will have little or no interest in participating in AC. Our proposal is that all owners should be appointed as members of the AC by law, but for practical reasons a small group of owners should act as the executive committee of the AC.

George Mouskides is a director of real estateagency FOX Smart and chairman of the Cyprus Property Owners Association (ΚΣΙΑ).