Case: Participation of owners of non-residential premises in a residential building in sharing of costs for maintaining the joint property of the condominium

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20 August 2014 Real estate

 Case: Participation of owners of non-residential premises in a residential building in sharing of costs for maintaining the joint property of the condominium

Under resolution of the general meeting of the owners of premises in the residential building, the owners established a condominium, defined the composition of the joint property of owners of the condominium, and the size of their shares in the joint property through the signing of a relevant agreement. In this case, under the joint property one should understand a plot of land, as well as those parts of the residential building, which are not in separate private ownership, including porches and entrances, driveways, stairs, elevators, roofs, attics, intra-apartment joint engineering systems and equipment, and landscaping elements that are owned by the condominium members under the joint ownership without the provision of the share in-kind. To manage the condominium, a cooperative of owners of premises (hereinafter “COP”) was set up.

Under the contracts of sale, the Company purchased two non-residential premises in this residential building and registered ownership to these premises with the registering body. At first, the Company paid monthly bills which included the amount of mandatory fees and fees to the capital expenditures pool, as well as the costs for maintaining the joint property of the condominium. Then, the Company ceased to do that because the non-residential premises in its ownership were not exploited, they had neither finishing, nor metering devices of power and heat consumption. In addition, the Company believed that it was not obliged to participate in joint expenses relating to those parts of the joint property which were exclusively related to the use of residential premises, referring to Article 37 of the Law "On Housing Relations" of April 16,1997 (hereinafter the "Law").

The COP (hereinafter the "Plaintiff"), stating that the Company (hereinafter the "Defendant") shall maintain the non-residential premises in its ownership and participate in the cost of maintaining the joint property of the condominium, filed a lawsuit against the Company to collect the indebtedness that had accumulated by that time.

The court by its decision satisfied the Plaintiff’s claims in full. Later on, the appeals court left the court decision in force. Legality and validity of the Plaintiff’s claims follow from the below:

According to Article 189, Item 1 of the Civil Code of the Republic of Kazakhstan, the owner shall bear the obligation to maintain its property, unless otherwise is provided for by legislative acts or the contract, and such an owner is not entitled to shift its obligation to a third party.

By virtue of Article 215 of the Civil Code of the Republic of Kazakhstan, every member of joint ownership shall, pro rata to its ownership share, participate in payment of taxes, fees and other payments on the joint property, as well as costs for its maintenance and preservation.

Article 35 of the Law "On Housing Relations" sets that the owners of premises (apartments) shall participate in all costs for maintaining the joint property and the building, and are liable for the preservation and safe operation of the joint property and premises that are in individual (separate) ownership.

In accordance with Items 1 and 4 of Article 50 of the Law, the owners of premises (apartments) shall share joint expenditures for maintaining and use of the joint property pro rata their ownership shares. The owner shares the costs for maintaining of the residential building on a monthly basis.

According to Article 2, sub-item 40) of the Law, the costs for maintenance of residential house (residential building) are the amount of obligatory expenses of the owners of premises (apartments) paid on a monthly basis, which are set by general meeting of the owners in its resolution for the purpose of operation and maintenance of the joint property of the condominium, as well as the expenses for keeping the plot of land in order, the costs for acquisition, installation, operation and verification of the metering devices for the utilities consumed, the costs for the utilities consumed in order to maintain the joint property of the condominium, as well as the fees to the saving fund for future purposes for the overhaul repairs of the joint property of the condominium or some of its parts.

Thus, the regulations of the Civil Code of Kazakhstan and the Law do not associate the maintaining of property belonging to the owner, as well as the participation in maintenance and preservation of the share in the joint property with that fact whether the owner of this property exploits it or not. Since the time of registration by the Defendant of its ownership to the premises, it has been obliged to pay fees (payments) for the maintenance of its non-residential premises and the joint property of the condominium.

This obligation is also prescribed in the COP’s Charter, according to which the owners of premises cannot be released from the obligation to pay fees, even in cases where they do not use the property in joint ownership or the premises they own.

The Defendant’s argument that there are no metering devices reading the consumption of electric power and heat in its premises is inacceptable, because, according to the calculations of the Plaintiff, only electricity consumed in the common areas is included into the bill, and the Defendant, as it was already said, shall share these costs. The calculation is done on a monthly basis, based on the readings of the metering devices for electricity in the common areas, pro rata the owner’s share in the joint property. As for the heat, the heating system in the building is designed so that there is a single counter reading the heat consumption for the whole building. According to these readings the COP pays for the heat consumed to the central heating provider. Separate metering devices for every individual premise are not provided. Calculation of the share of consumption per each owner, including those who do not make use of the premises, is made by using the formula: the total consumption of heat energy is divided by the total area of the building, and multiplied by the sum of areas (total area of the apartment /premise + the area of the share in the property in joint ownership). With this, it does not matter whether the owner makes use of the premise it owns or not. Billing for the heat is obligatory, since the central heat feeding pipes are laid to every premise and in the heating period they are all connected to the central heating system.

Concerning the Defendant referring to Article 37 of the Law and its arguments that the Defendant is not obliged to share the costs related to those parts of the joint property, which are directly associated with the use of residential premises:

Indeed, Article 37 of the Law, which regulates the specific nature of the rights and obligations of owners of non-residential premises, contains provisions that the owner of a non-residential premise is not obliged to share joint costs related to those parts of the joint property which are directly associated with the use of residential premises; moreover, the costs related to those parts of the joint property which are directly associated with the use of non-residential premises, shall be borne by the owners of such premises.

Along with that, the given provision of law is not applicable to our case, and the court agreed to that. As mentioned above, all operating engineering systems and utilities in a building are undivided, i.e. they are intended for joint use and maintenance; this applies both to residential and non-residential premises. The residential house is designed so that the individual servicing of non-residential premises is technically impossible. The same concerns the residential premises. So, in bills produced to the Defendant it is impossible to separately indicate the costs related to the elements of the joint property, which are not related to the use of non-residential premises.

In our case, the provision of Article 35 of the Law applies, according to which the owners of the premises (apartments) shall share all expenses for maintenance of the joint property and the building, they bear responsibility for the preservation and safe operation of the joint property and premises that are in individual (separate) ownership. The costs for the maintenance of the joint property shall be established pro rata the share of the owner of the premise (apartment) in the joint property, unless otherwise provided for by the agreement of the owners.

In court, the Defendant, objecting to the payment of fees to the capital expenditure pool, with reference to Article 50, Item 1 of the Law, stated that the additional costs that are not related to the cost of maintenance of the residential building, cannot be charged on the owners of the premises (apartments) without their consent, and he did not give such consent.

Meanwhile, the creation of the capital expenditure pool on the terms of payment by the apartment owners of monthly fees in the amount set at the general meeting of the owners of the premises was approved exactly with the consent of the owners of the premises at a general meeting of members of the COP. In addition, these fees cannot be attributed to the additional costs, referred to in Article 50, Item 1 of the Law. The payment of fees for capital repairs is governed by other provision of the Law, and is not a right but duty of owners of premises.

Thus, according to Article 31, Item 8 of the Law, the managerial body of the condominium shall open a bank account for every condominium at a second-tier bank, to which fees (payments) of owners of premises (apartments) for the maintenance and current repairs of the joint property of the condominium will be credited. Owners of the premises (apartments) in order to accumulate funds for capital repairs of the joint property of the condominium shall transfer on a monthly basis to the savings account of the managerial body of the condominium the amount as determined at a meeting of the owners of premises (apartments), but not less than 0.02-fold monthly calculation index specified for the relevant financial year in the law on the national budget, per square meter of usable area of the residential (non-residential) premise.

Thus, taking into account that the obligation for the monthly mandatory fees and fees to the capital expenditure pool is prescribed by the Law and the COP’s Charter; the rates of these fees are approved by the general meeting of the COP; the size of expenditure for the maintenance of joint property is set as per the Law, pro rata the share of the owner of premise (apartment) in the joint property; the Plaintiff’s claims were justifiably satisfied by the court in full. As for the date of preparing this case, the Defendant expressed a desire to voluntarily, without a writ of execution, to pay the amount of indebtedness collected by the court.
 

Developed by Ospanova Gulnar, Partner