Recovery of unpaid service charges: the procedures available to the property manager
Non-payment of service charges is one of the most common difficulties faced by co-ownerships. The deterioration of the co-ownership’s accounts can quickly have very significant repercussions: weakened cash flow, maintenance and works left undone, and a reduction in the value of units in the event of a sale...
The recovery of unpaid service charges is the responsibility of the property manager, who has a range of legal options enabling them to act swiftly without prior authorisation from the general meeting.
How can unpaid co-ownership charges be recovered?
In the event of unpaid charges or provisions, the property manager may take the following actions:
- Friendly reminders sent by the property manager to the defaulting co-owner
- A formal notice from a lawyer, detailing the nature and exact amount of the sums claimed
- Initiation of legal proceedings appropriate to the situation
- Obtaining an enforcement order to proceed with enforcement
- Implementation of enforcement measures
What legal proceedings should be taken against a co-owner in arrears?
Depending on the nature of the debt and the co-owner’s conduct, several recovery options are available:
- The expedited proceedings on the merits (Article 19-2 of the Act of 10 July 1965): this is a procedure specific to co-ownership law. It enables the property manager to obtain a judgment on the merits — rather than a mere provisional order — before the President of the Judicial Court, with provisional enforcement by operation of law. However, the formal requirements are strict, particularly regarding the content of the formal notice and the prior approval of the accounts at a general meeting.
- The order for payment (Article 60 of the Decree of 17 March 1967): a simplified and inexpensive procedure, suitable for uncontested co-ownership charges where the amount is precisely determined. Its effectiveness is, however, compromised in the event of opposition by the co-owner.
- The summons for payment on the merits: the common law procedure to be preferred where the claim is complex, where counterclaims by the co-owner are anticipated, or where damages for wrongful resistance are sought.
- Objection to the sale price (Article 20 of the Act of 10 July 1965): upon the sale of a co-ownership unit, the property manager may block the funds held by the notary to secure payment of arrears, within 15 days of receiving the notice of transfer.
What recovery costs may the property manager charge to the defaulting co-owner?
Article 10-1 of the Act of 10 July 1965 allows the costs necessary for recovery to be charged solely to the defaulting co-owner: costs of formal notice, subsequent reminders, and fees and charges for the judicial officer’s deeds. Case law interprets this concept strictly and excludes reminder fees incurred prior to the formal notice or the property manager’s routine management fees.
Claims for the recovery of co-ownership charges are subject to a five-year limitation period, pursuant to Article 42 of the Act of 10 July 1965 and Article 2224 of the Civil Code. The property manager must therefore act without delay to prevent the claim from becoming time-barred.
Why contact a lawyer for the recovery of co-ownership charges?
Successful recovery of charges depends on thorough preparation: drafting formal notices in accordance with case law requirements, verifying the approval of accounts, compiling a file of evidence, and selecting the most appropriate procedure. A procedural error — such as an imprecise formal notice or unapproved accounts — may be sufficient to cause the claim to fail.
Our firm provides specific support to property managers at every stage of the recovery process:
- Ensuring formal notices are compliant by adhering to the formal requirements set out in the most recent case law
- Selecting the appropriate procedure for each case of non-payment (expedited procedure, order for payment, summons to appear)
- Conducting proceedings before the civil court until an enforceable judgment is obtained
- Implementing the enforcement measures necessary for the effective recovery of the outstanding charges
For further information, see the firm’s latest articles on the recovery of co-ownership charges:
- Comprehensive guide to the recovery of unpaid co-ownership charges
- Fast-track proceedings under Article 19-2: A guide for property managers
- Payment orders and co-ownership charges: a practical guide for property managers
- Recovery of co-ownership charges: the property manager does not need prior authorisation
Are you a property manager looking to ensure the recovery of your unpaid charges or provisions? Our firm can assist you, from the formal notice stage through to the enforcement of the judgment.
Frequently Asked Questions
What is an unpaid service charge or maintenance charge?
A service charge is deemed unpaid when a co-owner fails to pay, by the due date, the quarterly contributions from the provisional budget, the calls for funds for works approved at a general meeting, or contributions to the works fund. Approval of the accounts by the general meeting renders the co-ownership’s claim certain, liquid and due.
How can the property manager recover unpaid service charges?
The property manager has several options for debt recovery, ranging from informal reminders to legal proceedings. The expedited proceedings on the merits (Article 19-2 of the Act of 10 July 1965), the order for payment and the summons to appear on the merits enable an enforceable title to be obtained. In the event of the sale of a unit, the property manager may also lodge an objection to the sale price with the notary.
Does the property manager need authorisation from the general meeting to take action to recover debts?
No. The property manager may, on their own initiative, bring proceedings to recover service charges without prior authorisation from the general meeting. They are simply required to report on this at the next meeting. This rule applies to all recovery proceedings, whether they involve fast-track proceedings, a payment order or proceedings on the merits.
What recovery costs can be charged to the defaulting co-owner?
Article 10-1 of the Act of 10 July 1965 allows the costs necessary for recovery to be charged to the co-owner in arrears: costs of formal notice, subsequent reminder fees, and fees and charges for the judicial officer’s services. Case law, however, excludes reminder fees incurred prior to the formal notice and the property manager’s routine management fees.
What is the limitation period for taking legal action to recover service charges?
Claims for recovery are subject to a limitation period of five years, pursuant to Article 42 of the Act of 10 July 1965 and Article 2224 of the Civil Code. This period begins to run from the date on which the co-ownership became aware, or ought to have become aware, of the facts justifying the claim.