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Apartment associations, stand up for your rights! By Rivo Kaldvee, associate at MAQS Law Firm

There has been a lot of talk in the media recently about buildings where the heat has been turned off in the middle of the cold season due to unpaid invoices. This behaviour leads to suffering also for the apartment owners who have paid their bills on time.

Many managers of apartment associations (Est: korteriühistud, in short KÜ, the association that manages an apartment building and where all owners of apartments have to be members) have complained lately that their debts to the utility service providers (water, heating, sewage, electricity etc) are just growing and it becomes more and more difficult to get the apartment owners to pay their bills to the associations.

The current financial situation gives us reason to believe that these types of problems will continue to grow also in the future and more and more buildings are to face the cold reality.

There has been a suggestion to protect consumers by legislation prohibiting turning off the heat during the cold season. The associations should according to the suggestion always secure a minimum indoor temperature for all households. But this suggestion does not serve the interest of the apartment associations that needs to deal with the unpaid bills, nor does it serve the interest of the utility service companies that cannot just continue to deliver heat, water and electricity unless they get paid. So again, the reality may leave some houses cold.

To solve the problem, the apartment associations have to start to deal with their unpaid bills in a more professional way. The current legislation gives the associations enough possibilities to stand up against its less well-behaved members. The law (Est: Korteriühistuseadus) prescribes that the association's decisions regarding the management and covering of the costs are mandatory for all members. Hereby, all members are obliged to pay their bills to the association on time.

If a member does not pay on time, the association have a right under law to claim 0.07% interest per day. As this equals to a yearly interest of 25% it is actually quite expensive to owe money to an apartment association. At the same time, this additional pay is fair as the association is forced to put in extra efforts to get its money. If a member does not pay at all, it is reasonable to turn to court, either directly or through a professional. Don't forget to make some research to be sure the member has enough assets to pay. If nothing else, there is the apartment.

The fastest and cheapest way to claim up to 100.000 EEK from a debtor is to use the system for Maksukäsu kiirmenetlus (approx. Expedited payment order). The cost for this simplified procedure is 3% of the claim, or a minimum fee set to 750 EEK. This is much lower fees than for initiating a court procedure. The application for an Expedited payment order is done through the web-page www.e-toimik.ee. It can be made in Estonian only. In case everything works smoothly, you will have a payment order within three months from your application. The payment order can be handed over to a bailiff in case the member still does not pay.

Having stated the above about the Expedited payment order system, I would also like to add that apartment associations should not be afraid of court procedures even though these are more costly and time consuming. It is important to keep in mind that the part that loses a court case also has to compensate the winning part for the costs of the procedure. In the case of unpaid bills to an apartment association in the amount of 10.000 – 50.000 EEK the association can claim up to 25.000 EEK in compensation for legal assistance.

As a conclusion, it is possible for apartment associations to stand up for its well-behaved members against the debtors and thereby avoid the risk to freeze.

Contact information MAQS Estonia:

Rivo Kaldvee
Tel: (+372) 66 76 447
rivo.kaldvee[at]ee.maqs.com