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Surplus communal funds 
Post: #1   PostPosted: Fri Dec 28, 2018 6:10 pm Reply with quote
J B
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Location: Shropshire/Staffordshire/Cheshire (UK) and Tala (Paphos) sometimes!

 
Our complex has ten identical houses - we all pay €500 and up to now everyone has paid in full since we took control of the management ourselves.
There is around €8K in the account

However, one owner has just sent this message and I would appreciate anyone's comments ...

Hi J

Just to say that I have paid €250 into the Residents Association Account. This is my share of the €2,500 for this year’s jointly owned property expenditure.

Having spoken with George Coucounis, the lawyer who wrote the attached article ‘Legal Status of a Management Committee’ he advised me to raise the issue concerning surplus funds. He said that according to the law, a management committee is not allowed to keep large amounts of money in the fund and the amount that we have needs to be reduced considerably. The surplus is to be used to pay the common expenses of the jointly owned areas. Imposing further fees, whilst there is a surplus, is not in line with the provisions of the law.

https://cyprus-mail.com/2017/07/30/legal-status-management-committee/

Regards

J

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Post: #2   PostPosted: Sat Dec 29, 2018 6:40 am Reply with quote
UD
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Its always good to have surplus funds, I would call them a contingency as the complex ages they can be used for any major breakdown of the pool etc
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Post: #3   PostPosted: Sat Dec 29, 2018 8:45 am Reply with quote
J B
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UD wrote:
Its always good to have surplus funds, I would call them a contingency as the complex ages they can be used for any major breakdown of the pool etc


Thanks - we all know this, but sadly the owner in question seems to have just dropped this one on us!

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Post: #4   PostPosted: Sat Dec 29, 2018 1:11 pm Reply with quote
cansweet
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Might be no harm to send out a circular to each household asking them for 3 ways the complex can be improved, then suggest the most popular problem be taken care of first, then No 2, 3, etc. Shouldn't take too long to decrease the surplus finds.
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Post: #5   PostPosted: Sat Dec 29, 2018 2:34 pm Reply with quote
J B
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cansweet wrote:
Might be no harm to send out a circular to each household asking them for 3 ways the complex can be improved, then suggest the most popular problem be taken care of first, then No 2, 3, etc. Shouldn't take too long to decrease the surplus finds.


I *hope* the last bit was tongue in cheek!

We don't want to decrease the communal fund.

Smile

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Post: #6   PostPosted: Sat Dec 29, 2018 4:45 pm Reply with quote
nhowarth
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Hi J B

The money collected by the Management Committee for insurance, maintenance, repair, etc. needs to be spent in the year following the AGM when th ebudget was agreed.

If you want to set up a 'sinking fund' you can do this by passing a motion at any general meeting of owners and placing the money in a separate bank account.

Regards,

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Post: #7   PostPosted: Sat Dec 29, 2018 7:50 pm Reply with quote
J B
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Location: Shropshire/Staffordshire/Cheshire (UK) and Tala (Paphos) sometimes!

 
nhowarth wrote:
Hi J B

The money collected by the Management Committee for insurance, maintenance, repair, etc. needs to be spent in the year following the AGM when the budget was agreed.

If you want to set up a 'sinking fund' you can do this by passing a motion at any general meeting of owners and placing the money in a separate bank account.

Regards,


Many thanks Nigel - much appreciated.

We have voted to build a sinking fund, but were unaware of opening a separate account - will investigate that when I'm next in CY

So, everyone else has already paid €500 and she has decided to only pay 250
How do we address that issue???

Confused

Regarding passing a motion at 'any general meeting' - does this have to be a meeting for everyone, or can we just have a committee meeting on Monday and carry the motion?

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Post: #8   PostPosted: Sun Dec 30, 2018 7:51 am Reply with quote
nhowarth
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Hi J B

When you say "We have voted to build a sinking fund" was that done at a meeting of owners or the a meeting of the Management Committee?

The answer to that will answer your question about passing a motion at a General Meeting.

The vote needs to be taken at a general meeting of owners.

Assuming the vote was taken at a general meeting of owners, you can take legal action against the person who has only paid €250 - and include legal expenses and court costs in the claim. (But you might have your lawyer write her a 'stiff' letter as that may do the trick.)

Regards,

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Post: #9   PostPosted: Sun Dec 30, 2018 8:16 am Reply with quote
J B
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Location: Shropshire/Staffordshire/Cheshire (UK) and Tala (Paphos) sometimes!

 
Thanks again Nigel - much appreciated.

From 2018 AGM minutes:-
Although we have a reasonably healthy fund in our bank, it was agreed that we should keep the fees at €500 per year to help this to continue to build up.

From 2017:-
It was agreed that the annual fees should be reserved for maintenance of the communal areas and management of the complex (pool cleaning and cleaning of pool area and communal areas) and not for luxury items. To put this in context it was agreed that the current fund of circa €8,000 is not a large fund given the age of complex and the likelihood of repairs being needed to the pool and surrounding areas in future. In future years, if the fund increases in value we may either reduce the fee or discuss luxury items again.

2016:-
The latest financial figures were presented and discussed. It was agreed that things were looking very healthy but that we should continue to pay €500 annual fees so that we can continue to keep the complex looking good.

BUT - we have never put the surplus funds into a separate account

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Post: #10   PostPosted: Sun Dec 30, 2018 3:57 pm Reply with quote
nhowarth
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Hi J B

I think I should start at the beginning. I see that all the units are contributing the same amount - €500.

So one of the following must be true:

1. Title Deeds for the units have not been issued.
2. All units are the same size.
3. A motion that all units should pay the same amount was passed by a majority of units, the standard Regulations in the Jointly Owned Building Law were amended and filed at the Land Registry office.

The sinking fund

Initially there should have been a motion put on the agenda for a General Meeting of Owners to set up a sinking fund. This needed to be approved by a majority vote of those present and proxies (or by a majority percentage of the ownership if conducted by secret ballot) - and the meeting must have been quorate.

Then the amount to be collected for the sinking fund needed to be agreed and a motion to that effect voted (as above).

Then the method of calculating each unit's contribution to the sinking fund needed to be agreed and a motion passed to this effect.

All these should be included in the agenda for the meeting and shown in the minutes.

A sinking fund is completely separate from the communal fees, which will be another motion placed on the agenda for discussion.

I'm the secretary of a NGO here in Cyprus and recently we changed our Constitution. The minutes of the meeting had to be approved by the Interior Ministry and as the secretary I had to ensure they were complete and accurate.

The first thing I had to do was ensure the meeting was quorate - and record the figures in the minutes. I included a statement along the following lines following the chair's welcome:

"There were 193 members in good standing of whom 42 were present at the AGM plus a further 57 who had offered their apologies ‐ total of 99 or 51%. The meeting was therefore quorate."

As for the motions, I recorded voting on these as follows in the minutes (all motions were on the agenda):

Motion: That the retiring Hon. Treasurer's report and audited accounts be accepted.
Proposed: (name of the proposer)
Seconded: (name of seconder)
Carried: Show of hands & online votes (one abstention, no votes against).

(Two members volunteered as tellers but they were not needed).

I'm not sure if your minutes would hold up in court.

Regards,

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Post: #11   PostPosted: Sun Dec 30, 2018 5:24 pm Reply with quote
J B
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Location: Shropshire/Staffordshire/Cheshire (UK) and Tala (Paphos) sometimes!

 
Nigel

All the houses are identical

We bought from ICE Developers (now bankrupt) in 2007 and the complex was completed around 2009
HCS took on the management of the complex - pool cleaning etc

In 2013 we took on the the management ourselves and I was elected chairman
We found a 'general agreement for all owners' from somewhere and tailored it to suit our needs - this was NOT registered with the LR

This agreement was circulated to all members and nine out of the ten sent back a signed declaration that they were in agreement.
(We have the signed document from the lady who is now in disagreement)
(I can email this to you if you like)
In this agreement it says (amongst other things):-
g. The Managing Committee shall have the right to impose an additional charge with the sole purpose of creating a reserve of capital to cover long term expenses for the common areas i.e. replacement of installations such as the male and female toilets/changing rooms and generally to cover high cost for unforeseen eventualities. The distribution of the common costs shall be carried out by the manager in accordance with the terms of this agreement. No Owner shall have any right to delay payment of any dues because of the existence of this fund. In the case of any Owner delaying payment of any of his obligations as herein provided, the amount due shall bear interest at 10% per annum from the expiration of 6 Months, from the date of demand for payment and the management may withdraw provision of common services and or take other measures including recourse to legal action to recover such debt.

Is the lady in question within her rights to only pay 250 when everyone has already paid 500?

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Post: #12   PostPosted: Mon Dec 31, 2018 6:36 am Reply with quote
nhowarth
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Hi J B

If the woman in question has consented to the imposition of an additional charge then she is required to pay - and you seek legal assistance if she continues to refuse.

As for your Regulations, I'm not sure if these come into force before they've been lodged at the Land Registry and approved. Also it's not clear whether you can include a 'sinking fund' in the regulations. Looking at the law 38R (5) it states:

(5) No Regulation and no amendment, revision, replacement or revocation of any Regulation may have the effect of –
    (a) prohibiting or limiting the transfer of the units by succession or any transfer, lease, mortgage or other transaction in relation thereto or extinguishing or amending any easement or right constituted by or by virtue of this Law or any other Law or which is the result thereof;

    (b) terminating, altering or abolishing the rights of any owner of a unit;

    (c) imposing upon any owner of a unit an obligation or payment the nature or degree of which is not specified by or by virtue of this Part or the Regulations except if this occurs following the consent of the owner of the unit;

    (d) defining a specific part of the jointly-owned property as limited joint ownership and allocating it Exclusively to a specific unit, except if this is done in accordance with section 38F.
You'll need to take legal advice on this matter as payment into a sinking fund is not included in the law.

Regards,

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Post: #13   PostPosted: Mon Dec 31, 2018 8:44 am Reply with quote
J B
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That's great Nigel.

Many thanks, as always, for your excellent help.

Smile

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Post: #14   PostPosted: Mon Dec 31, 2018 11:39 am Reply with quote
bubblechris
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Personally I cannot see why you are being so belligerent.

You have excellent occupiers all paying so you can afford to ease off for a year or two or until there is a need to get quotes for works needed.

Wish them all a happy new year and tell them you're dropping the charge as per the one occupiers request/demand. Any that are worried can put the money aside themselves.
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Post: #15   PostPosted: Mon Dec 31, 2018 11:49 am Reply with quote
J B
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Location: Shropshire/Staffordshire/Cheshire (UK) and Tala (Paphos) sometimes!

 
Personally I cannot see why you are being so belligerent.
You have excellent occupiers all paying so you can afford to ease off for a year or two or until there is a need to get quotes for works needed.


But, as the chairman, surely I have to remain impartial and go with the majority ... even if I disagree!!! Wink Wink Wink

Wish them all a happy new year and tell them you're dropping the charge as per the one occupiers request/demand. Any that are worried can put the money aside themselves.
The charge is for 2018 - everyone else has already paid 500, so on 28/12, she decides to only pay 250 Rolling Eyes

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Post: #16   PostPosted: Mon Dec 31, 2018 5:50 pm Reply with quote
nhowarth
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bubblechris wrote:
Personally I cannot see why you are being so belligerent.


The problem is that one person not paying the agreed amount can have a domino effect and others will follow suit. Eventually the whole thing collapses in a financial mess.

Regards,

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Post: #17   PostPosted: Mon Dec 31, 2018 6:23 pm Reply with quote
bubblechris
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nhowarth wrote:
bubblechris wrote:
Personally I cannot see why you are being so belligerent.


The problem is that one person not paying the agreed amount can have a domino effect and others will follow suit. Eventually the whole thing collapses in a financial mess.

Regards,


Seriously? You have 10 houses so no lifts, no communal areas stairs lobbies etc and they are paying £500 a month to maintain a pool and changing rooms/toilets and not much else? SO why do they need more than £2500 to maintain such a small area. When one of the ten is talking sense surely you should listen to what they have to say?

Imo a sinking fund is for replacing expensive items or carrying out large jobs like decorating, roof repairs etc. I'm presuming the houses are maintained by the individual owners. Sounds like 'nirvana' to me compared to other estates in Cyprus.
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Post: #18   PostPosted: Mon Dec 31, 2018 7:09 pm Reply with quote
mouse
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bubblechris wrote:
nhowarth wrote:
bubblechris wrote:
Personally I cannot see why you are being so belligerent.


The problem is that one person not paying the agreed amount can have a domino effect and others will follow suit. Eventually the whole thing collapses in a financial mess.

Regards,


Seriously? You have 10 houses so no lifts, no communal areas stairs lobbies etc and they are paying £500 a month to maintain a pool and changing rooms/toilets and not much else? SO why do they need more than £2500 to maintain such a small area. When one of the ten is talking sense surely you should listen to what they have to say?

Imo a sinking fund is for replacing expensive items or carrying out large jobs like decorating, roof repairs etc. I'm presuming the houses are maintained by the individual owners. Sounds like 'nirvana' to me compared to other estates in Cyprus.


Chris.

It's 500 euros a year not a month. Rolling Eyes and the whole complex 2500 euros a year to maintain.

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Post: #19   PostPosted: Tue Jan 01, 2019 7:53 am Reply with quote
J B
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bubblechris wrote:


Seriously? You have 10 houses so no lifts, no communal areas stairs lobbies etc and they are paying £500 a month to maintain a pool and changing rooms/toilets and not much else? SO why do they need more than £2500 to maintain such a small area. When one of the ten is talking sense surely you should listen to what they have to say?


I think you are missing the point - the majority have agreed to pay 500 per year for the last 4/5 years
The one lady has decided on 28/12 to only pay half of her due fees for 2018 when everyone else has already paid. She hasn't *ever* commented that she thinks 500 is too much

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Post: #20   PostPosted: Tue Jan 01, 2019 3:56 pm Reply with quote
CyprusForMe
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One could argue that she had been paying the required amount all this time, giving tactic, if not explicit, approval of the fees. Now suddenly she decides not to pay the full amount. The proper way to do this is she has exception to the amount of fees is not not to pay, but to bring the matter up at an AGM or special meeting and allow all members to vote on the matter.

I would inform her as such. Ask her to pay the balance due in one month, informing her that if she doesn't pay by then, then she will incur a late payment fee and interest charged.

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