ORDER IS BROUGHT TO THE COMMUNALLY OWNED CHAOSWITH THE REGULATION OF 220,000 RESIDENTIAL UNITS - WHAT CHANGES WITH THE NEW BILL - Filenews 25/10 by Vassos Vassiliou
The chaos that prevails in the communal buildings is such that, among other things, there is no exact number, nor is it known how many live in them and, more or less, are affected by the prevailing anarchy.
The above will be ascertained when the relevant bill ("The Management of Communal Buildings and Related Issues Law of 2023") is approved, which entered the final stretch of its examination before the Parliamentary Committee on the Interior.
Although the picture is not clear, the EOAs submitted numbers to the Parliament that reflect the magnitude of the problem. Specifically, based on the data, there are 20,919 communally owned buildings throughout Cyprus, which consist of 219,635 residential units. Among them there are registered (with a certificate of final approval) and non-registered as follows:
-The registered communal buildings amount to 14,208 throughout Cyprus and concern 159,659 residential units.
-The unregistered communal buildings amount to 6,711 (nationwide) and concern 59,976 units.
If it is considered that an average of two people live in each unit, then about 440,000 live in communally owned buildings, i.e. about half the population of Cyprus.
It is noted that a building that includes more than five units is considered a communal building. Most of them are apartment buildings, while there are also organized residential complexes, many of which were sold or rented to tourists.
But why is it considered necessary to amend the relevant legislation? Obviously because the existing law does not work, as a result of which many residents of communal buildings suffer from the fact that some residents do not pay common expenses, others do not contribute to the repairs, others proceed with additions and conversions, others occupy common areas, others make the escape staircases useless by placing bulky furniture/objects and so on.
However, even if the above factors did not exist, two examples that were mentioned before the Parliamentary Committee on Interior (where the relevant bill is being discussed) are enough to understand that order must be imposed.
>The first case referred to concerns a pregnant woman who carries her first child in her arms, up to the third floor, because some people do not pay the utilities, as a result of which even the elevator does not work.
> The second case concerns a 75-year-old woman with respiratory problems who goes up the floors panting to the floors with shopping, also because the elevator does not work. And of course these cases are not the only ones.
However, in addition to these, among the reasons for amending the legislation (so that management committees can operate that will deal with all issues that arise in communally owned buildings), there are also safety issues that are created because many buildings are not maintained, resulting in the collapse of balconies, etc.
With the new legislation, the owners of the apartments will be obliged to deposit, in addition to the common expenses, an amount that will be agreed for the purpose of creating a reserve for the purpose of maintaining the communal building. The difference in the new legislation is that those who do not cooperate will be sanctioned. One of them, if and when approved, provides for a ban on the sale of the apartment/house if the utilities are not paid beforehand. This provision comes up against the reaction of banks and real estate management companies, on the grounds that there will be problems in transfers, in the economy, etc.
On the other hand, the position is expressed that if there are no commitments, even at the stage of selling the properties, some will simply continue not to pay. It is noted that in addition to the cases where someone is indeed unable to pay the utilities or contribute to the fund which concerns the maintenance of the building, there are also those who rent their apartments and the only thing they are interested in is to collect the rent without spending any amount.
In addition to well-intentioned owners and tenants, there are others who expect order to be imposed and these are mainly buyers of units in residential complexes or apartments. According to information that was put before us, there are complexes in which management committees were set up without normal procedures, collecting from each owner up to €1,500 per year and even without offering services corresponding to the money collected. Already, both Cypriot and foreign buyers are expressing complaints.
What does the new legislation regulate?
The proposed bill appoints a Service for the Registration of Communal Buildings and the Supervision of the Operation of Management Committees with a parallel definition of its responsibilities.
The Common Buildings Registration Service, among other things, will be responsible for:
>> Registration of communal buildings, as well as the compulsory registration of management committees in the Service, which maintains a register of communal buildings and management committees.
>> Adoption of Model Internal Regulations for the regulation of the management of communal buildings, as well as the determination of the rights and obligations of the owners, which will be applicable in the event of non-issuance of regulations under the proposed law for the regulation of any issues.
>> Compulsory insurance of jointly owned buildings and supervision for the compulsory insurance of units and communal buildings.
>> Registration of the common-owned buildings and the relevant management committee in a register to be kept by the Service and regulation of their management.
>> Determination of the rights and obligations of the owners of the units for the regulation of various issues.
Powers of the Management Committees
The owners or tenants will have to deal with the management committee of the communally owned building which will have the opportunity to:
-To impose penalties on owners for non-payment of common expenses related to access or passage through common areas, for the repair of which the owner or owners of the units did not contribute.
- To control, operate, manage and manage the common property and the jointly owned building and to carry out any action necessary for the enforcement of the Standard or Internal Standard Regulations.
- To maintain in good and functional condition and to maintain the common property and such other parts of the jointly owned building.
-To provide facilities and services for common areas only to owners who do not owe common expenses, provided that it does not deprive them of absolute access to their unit.
- To establish and maintain a fund and an account in a credit institution from the contributions of the common expenses of the owners of the units pursuant to article 20 and from other amounts that are decided from time to time during the general or extraordinary general meeting, which in its opinion are sufficient and which it can use:
-For the management costs and for the control, operation, management and management of the common property and for the payment of insurance premiums;
-For repairs, renovation, energy upgrade and maintenance of the communally owned building.
- To convene a general meeting of the owners at least once a year or within twenty-six months.
- To comply with any settlement agreement, notice, order or other decision of any competent administrative body, authority, mediation or Court or person regarding the common property.
The EOAs will be in charge
Based on the promoted legislation, the Provincial Self-Government Organizations undertake the Service of Registration and Supervision, Operation of Management Committees of Communal Buildings.
Based on the bill, the EOAs assume the responsibility for the establishment and operation of the Management Committees of all commonly owned buildings. Specifically, among others, they will have the following responsibilities:
>> Registration of Management Committees and keeping a register.
>> Supervision of the operation of the Management Committees.
>> Resolving personal disputes between co-owners.
>> Imposition of an administrative fine on Management Committees and/or owners.
The original proposal for a Law provided for the establishment of a Registration Council which would handle the issues of management of communally owned buildings, which was not accepted by the Ministry of Interior and it was decided that the competence should be transferred to the local authorities. The municipalities reacted strongly to the assumption of this responsibility and consultations with the Union of Municipalities followed.
ETEK President: Solution to 4 critical issues for effective operation
The president of ETEK, Konstantinos Konstantis, believes that in order for any regulation to work effectively, the following four critical issues must be regulated:
-The existence of a management committee in every communally owned building,
-The timely payment of common expenses by the vast majority of owners,
-The effective implementation of the obligation to create and utilize a reserve fund for repairs and maintenance of the building and
-The rapid and low-cost out-of-court settlement of small financial disputes between management committees and owners.
According to the president of ETEK, it is of particular importance to establish smart and, as far as possible, automatic disincentives for inaction in the establishment of a management committee and for the late payment of common expenses. The consequences must be known in advance and activated without the need for a decision by the competent Service each time. Accordingly, the management of small financial disputes should first be directed to a short and accessible out-of-court procedure and not directly to a court procedure.
ETEK, citing the fact that we are already in the era of digitization and artificial intelligence applications, believes that legislation should function, as far as possible, on its own, limiting the need for administrative intervention.
The president of the Chamber also believes that instead of operating five new provincial structures (in the EOAs) it would be more productive to seriously consider the operation of a pan-Cypriot Service within the administrative structure of the Ministry of Interior and a single Register of Shared Buildings and Management Committees.
However, if, for institutional or other reasons, the relevant responsibilities are conferred on the NSAIDs, the President of the ETEK considers that provision should be made at least for:
• a single pan-Cypriot digital platform,
• a common register and a unique registration number for each jointly owned building,
• common procedures, model forms and guides,
• centralized technical support and a common database.
He is also in favour of the creation of a single Register of Communal Buildings and Management Committees and not district registers. Regardless of the administrative model that is ultimately chosen, the information must be recorded and managed in a single digital infrastructure.
It also considers that the competent Service should primarily have a staff, organizational and supervisory role and not be called upon to approve management committees and be involved in issues related to the operation of a jointly owned building and private disputes.
According to the president of ETEK, its basic responsibilities could be defined as follows:
The Service:
(a) maintains and manages the Register of Communal Buildings and Management Committees,
(b) manages the single digital platform;
(c) issues model forms, guides, circulars and standard procedures;
(d) carry out automated completeness checks and sample or risk-based compliance checks;
(e) sends automated notifications of outstanding obligations, and
(f) exercise general supervision and intervene in the specific cases expressly specified in the law.
ETEK also recommends that it be provided that:
• the contribution is collected at the same time and in the same way as the common expenses,
• the amounts are deposited directly into a separate account of an authorised credit institution,
• the general meeting may increase the contribution, set a target reserve amount or decide on an extraordinary contribution for a specific purpose,
• the money is used exclusively for repair, renovation, maintenance and security issues,
• non-payment of the contribution to the reserve has the same consequences as non-payment of common expenses,
• The Management Committee submits to the owners an annual statement of the reserve at least thirty days before the General Meeting. The annual statement must show the initial and final balance, receipts, expenditure and planned work for the following year.
The goal is to end absolute anarchy
The chairman of the parliamentary committee on the Interior, Aristos Damianou, indicated that the aim of the bill is to regulate the issue of communal buildings, in order to end the absolute anarchy that prevails, which causes constant friction between owners and leaves thousands of buildings unmaintained, with all that this entails.
He also noted that one of the main innovations of the bill lies in the fact that it gives the management committees the power to make expenses, reasonably necessary, for the maintenance and proper operation of the common areas of the communal building, which the owner neglects to pay. He also said that this power upgrades the role of the management committees and those who ignored them until now, if they continue the same tactics, are very likely to be called to account before the Court.
In addition to the Parliament, an important role in the whole process was played by the Ministry of the Interior, which also submitted the relevant bill. The Minister of the Interior, Konstantinos Ioannou, had indicated that there is no substantial management or even supervision, as a result of which the daily lives of thousands of citizens are affected. He had also referred to friction between tenants, non-payment of utilities, inability to effectively implement existing legislation and reluctance to maintain buildings inevitably lead to inadequate maintenance of buildings and, by extension, to the creation of dangerous and inappropriate living conditions, with direct effects on the safety of residents and public health.
All of the above as well as other gaps are regulated by the promoted legislation and the point is not to alter its provisions to the point of overturning its philosophy.
