Logo Advokátní kancelář roku 2023

Settlement of contributions to the repair fund when selling or buying a flat

In this article, we will discuss why it is good for both parties to a condo purchase agreement, i.e. the one who buys the condo unit and the one who sells it, to balance the dues paid to the unit owners’ association (UOA) for the management of the building.

6 minutes of reading

Chapters of the article

The buyer is now in the “shoes” of the seller in terms of rights and obligations towards the SVJ when transferring a residential unit. Ignoring this problem brings considerable risks to both parties of the purchase contract.

What are the contributions to the management of the building?

House management contributions can be essentially twofold:

1.payments for the day-to-day running of the house (house insurance, hallway lighting, lifts, refuse collection, etc.),

2.payments to the ‘repair fund ‘ (funds earmarked for repairs and renovation of the house).

In particular, contributions to the so-called repair fund can be a significant amount for those HOA’s that save for major repairs. The average amount of the contribution to the repair fund is about CZK 15-20, but the situation changes significantly with the technical condition of the building and the plan for further investments. It can therefore range from around ten crowns per m2 of floor space per house to 60 crowns per m2 for old houses that require more extensive investment. The specific amount of the contribution for the management of the house and the land is decided by the unit owners’ association at a membership meeting. It can also decide on a change.

As a rule, each unit owner contributes to the management of the house and land in an amount corresponding to his/her share of the common parts of the house. However, the statutes may determine the principle of contribution differently.

Contributions may have both a positive balance (e.g. the seller has “saved” one hundred thousand for the repair fund) and a negative balance (the seller owes the HOA for the payment of these contributions).

The fund is then used to pay anything that does not appear in the annual bill. This may include:

  • operation, maintenance, repairs, alterations and other changes to the common parts of the house,
  • revisions of technical networks, common technical installations of the house, fire-fighting equipment, lightning rods, energy distribution systems including heat, hot water, drinking water, etc.,
  • maintenance of the land and maintenance of access roads to the land.

Align the allowances in the purchase contract

It is extremely important for both the seller and the buyer to come to an agreement regarding the settlement of the house management allowances. It is best to do this directly in the purchase agreement. The HOA itself will not be of much help in this, because according to the new Civil Code it is not obliged to settle the contributions in any way when selling the flat.

Apositive balance of contributions – the seller has “saved up” in the repair fund – may result in a higher purchase price for the apartment. If the seller has saved e.g. 200,000 in the repair fund, he may want to pay this amount from the buyer and increase e.g. the purchase price for the apartment. However, it is again important that the seller settles this amount directly with the buyer, because the HOA is not obliged to reimburse the seller for what he has already paid into the repair fund. Knowing the positive balance is important for the seller.

Thenegative balance of contributions – the seller’s debts to the HOA (typically the seller owes for contributions to the repair fund) – is again important to settle in the purchase agreement, as they will pass to the buyer with the transfer of the unit. However, the seller himself is also at risk, because the seller is liable for his debts to the HOA! If the buyer does not pay the SVJ the debts on the contributions left by the seller, the SVJ can recover these debts directly from the seller. Knowledge of the negative balance is therefore important for both parties, but should be of particular interest to the buyer.

Real Estate Purchase or Sale

We provide a complete package of legal services related to real estate sales and purchases, including reservation contracts and escrow services. We will also help you with all tax and land registry issues. Our work is fast and accurate, ensuring a worry-free transaction. You’re also welcome to pay after services are provided.

Tip: Every homeowner has certainly encountered a contribution to the repair fund. How to determine how much the individual owners should contribute, what all can be paid from the fund and how to understand it from the accounting point of view? We will look at all this in a separate article.

What to do if the seller owes SVJ contributions?

We present a simple and practical procedure on how to make sure that debts on SVJ contributions are not swept under the carpet and do not surprise anyone unpleasantly later on.

1. find out if the seller owes SVJ contributions

Ask the seller to get a certificate from the HOA stating how much the seller owes in dues, or a certificate stating that the seller owes nothing. The HOA must issue such a certificate to the seller. If you fail to do this and do not get the certificate from the HOA, it is your responsibility and any debts owed by the seller will be passed on to you!

2. adjust the purchase price for the apartment

If you have found out that the seller owes the HOA dues, start negotiating to reduce the purchase price as you will have to pay this debt for the seller, which will affect the total amount you pay for the apartment.

What should I do if I owe the HOA dues?

It is very important for the seller to have it specifically addressed in the purchase contract that the debt on the buyer’s dues is paid through a reduction in the purchase price, which will preclude the buyer from healing on the seller for the same reason in the future. Also, such a provision will give the buyer the ability to recover the amount of that debt from the buyer in the future if the HOA takes advantage of the language of the statute and pursues the debt against the seller as guarantor.

What should I do if I have saved in the repair fund?

If the seller has saved a substantial amount in the repair fund, this is nothing more than funds for the future appreciation of the apartment, which the seller can sell to the buyer together with the apartment. Therefore, try to increase the purchase price of the apartment by this amount.

Download the free e-book 5 tips on how to buy or sell property risk-free and go through the process of selling or buying a house, flat and land smoothly.

Tip: The Civil Code primarily protects the weaker party to the contract. In the case of a lease agreement, it considers the tenant as such, and thus restricts the landlord in many respects. Some provisions of the Civil Code can be derogated from contractually, but some cannot be “circumvented”. So what are the rights and obligations in rental housing? What is advantageous for the landlord and what is advantageous for the tenant and what should not be missing in the lease agreement? This is the focus of a separate article.

Are you solving a similar problem?

Dostupný advokát team of online lawyers will solve it for you.

Real Estate Purchase or Sale

We provide a complete package of legal services related to real estate sales and purchases, including reservation contracts and escrow services. We will also help you with all tax and land registry issues. Our work is fast and accurate, ensuring a worry-free transaction. You’re also welcome to pay after services are provided.

Preset Prices
All services pre-priced for no surprises.
We Do Everything Online
Save time, money and the hassle of travel.
We Work Fast
90 % of issues get solved by the following day.
Experienced Team
We have specialists for every field of law.

Has this content helped you? Give it a rating

No rating yet. Be first to rate and help others.

Author of the article

JUDr. Ondřej Preuss, Ph.D.

Ondřej is the attorney who came up with the idea of providing legal services online. He's been earning his living through legal services for more than 10 years. He especially likes to help clients who may have given up hope in solving their legal issues at work, for example with real estate transfers or copyright licenses.

  • Law, Ph.D, Pf UK in Prague
  • Law, L’université Nancy-II, Nancy
  • Law, Master’s degree (Mgr.), Pf UK in Prague
  • International Territorial Studies (Bc.), FSV UK in Prague

Reviews of the Dostupný advokát service

Recenze služby

PhDr. Helena Hoffmanová, Prague

before 3 years

I lease and sublease properties professionally and have been working with Dostupný advokát regularly long term. I especially appreciate their reliability. I also admire the flexibility and professionalism of their online legal service. But what I value most is that they are always on top of the latest news. With Dostupný advokát I can feel (zobrazit více) confident because I know that my business is always covered.

Recenze služby

Lukáš Řezníček, Prague 6 – Bubeneč

before 3 years

I am giving both the website and service provided my very highest rating. Dostupný advokát found a hidden risk in my contract for the transfer of an apartment, which would have cost me tons of money.

Recenze služby

Jitka Salačová, Praha 6 – Řepy

before 3 years

In 2016 our Homeowner Association faced an unexpected event which led to the need for legal help. We reviewed many professional legal services, and chose Dostupný advokát because they remain available for contact practically anytime, without charging extra for being outside work hours. In addition, Mr. Preuss is available to speak with by phone, email (zobrazit více) and Skype, and he never fails to be respectable and discrete. We can confidently confirm the excellent quality of his service, loyalty and availability online.

View All Testimonials

You could also be interested in

About us in public media
Logo Česká advokátní komora Logo Advokátní kancelář roku 2023
Follow the news
Facebook Dostupný advokát Twitter / X Dostupný advokát