Building Expenses Explained
Building Expenses Explained
All you need to know about a common property management practice in Greece
What is the legal status of a residential building in Greece?
In Greece, almost every residential building functions as a legal entity. Most residential buildings have their own Tax Identification Numbers and bank account, in order for financial issues of the building to be served in the best way possible. Here are the most important things you need to know regarding the legal status of a building:
Each residential building has its own. It’s a notarized contract drafted after the completion of the construction and it is signed by the owners of the apartments. It regulates the administration rules and every aspect of the day-to-day affairs of the building. The charter/statute can be modified only by the general assembly of the owners.
The general assembly is held by the apartment owners. Each apartment has a share of votes in the general assembly depending on its surface area.
The votes of each owner are calculated in a “thousandth proportional basis”. This means, the votes are divided to one thousand (1000) and each apartment/owner gets a number of votes (see Examples below for more detail.
There are two categories of building expenses:
a. Maintenance expenses
They are divided to one thousand. Each apartment - depending on its surface area and the floor level - gets a "per thousand” participation to the maintenance cost.
b. Heating expenses.
They are divided to one thousand. Each apartment - depending of its surface area and the floor level - gets a "per thousand” participation to the heating cost. The tenant is obliged to pay for heating cost. If the apartment is empty, the owner is obliged to pay the flat fees for the heating, such as boiler regular service, etc.
Note that an apartment can have unequal participation in these two categories. E.g. an apartment might have 120/1000 participation for maintenance costs, but 140/1000 participation for heating costs, depending on features such as insulation, etc.
The general assembly is responsible for electing a building administrator for a specified period of time chosen among the owners.
The general assembly can also designate a company in order to run the day-to-day issues of the building such as:
Smaller buildings usually calculate their own expenses manually
The charter of regulations provides that the building has its own reserve fund. Every owner is obliged to contribute proportionally to the fund. The amount of each owner contribution is related to the number of votes they have in the general assembly. If an owner sells their apartment, they will take back their contribution and the new owner (buyer) is obliged to contribute the same amount of money. The reserve fund can be used in various ways in order to cover a wide range of expenses such as maintenance, repairs, improvements for the greater benefit of the building residents. The reserve funds can be used only after a majority has reached consensus at the general assembly.
What are “Shared Building Expenses”?
As an entity, every residential building has its own expenses which are shared by the owners and/or the tenants.
Usually, the building expenses types are:
This expense is related to the common used spaces and facilities, e.g. hall lighting, water for the cleaning of stairs, watering the garden etc. It is issued every 1, 2 or 3 months. The building manager company takes care to apportion the cost among the apartments.
This type of expense is applied in buildings which have a shared boiler for the heating (central heating). The calculation of the cost is explained above.
This expense is relative to the common used facilities of the building (e.g. the regular service of the elevator). According to the Greek Urban Planning regulations, all buildings with an elevator must employ a technician to certify safe operating conditions on a monthly basis.
These include works related to the façade, corridors or building surroundings. Since the maintenance has to do with the building, the owner is obliged to pay the cost, even if the apartment is vacant or occupied.
Who is responsible for paying?
It depends. If the property is vacant, the owner is responsible to cover the 100% of the building expenses for his apartment. If it is leased, a great part of the expenses are covered by the current tenant. The owner is obliged to pay for whatever expenses are incurred for maintenance, repairs and improvements of the building (see the table below for more info).
Who pays the expenses?
Expense Name
Category
Leased Property
Vacant Property
1
Water bill
Utilities
Paid by Tenant
Paid by Owner
2
Electricity Bill
Utilities
Paid by Tenant
Paid by Owner
3
Heating Consumption
Heating
Paid by Tenant
Paid by Owner
4
Elevator
Maintenance
Paid by Tenant
Paid by Owner
5
Building Cleaning
Maintenance
Paid by Tenant
Paid by Owner
6
Garden care
Maintenance
Paid by Tenant
Paid by Owner
7
Deposit
Building economics
Paid by Owner
Paid by Owner
There are no rows in this table
7
Count
What is the frequency of the payments?
Most buildings issue the building expenses notice on a monthly base, but there are few buildings which issue notices every 2 months. In rare cases it could this can be done every 3 or 4 months.
What if the tenant neglects to pay his part of the building expenses?
The prompt payment of the building expenses is vital for the smooth operation of the building. In case the tenant cannot (or will not) pay their part in the building expenses, regardless of the reason of this failure, the apartment owner will be accountable and must pay off the expenses.
This is a good reason to assign management of your leased property to us. Apollo Home makes frequent inspections of the property and has close co-operation with the building administrators, in order to make certain that the tenants are paying their dues promptly.
Frequently Asked Questions
The Building Administration decided to proceed with repairs and renovations in the building, but I don’t agree, can I avoid paying?
If 51% of the General Assembly has decided for changes in the building, all the owners must comply with these decision, otherwise they may face legal consequences.
What happens if I cannot participate in the meeting of general assembly?
You can authorize a person of your trust, or a Property Management company to represent you to the General Assembly. Every Charter of Regulation has a provision for the representation of the owner by a third party. This can be done, either by signing a formal authorization or by sending an email to the current Building Administrator.
EXAMPLES
The Charter of Regulations, describes the “per thousand” participation of each property. The decision is based on the the surface area and the floor level of the apartment. An apartment of 70 Sq.M in the sixth floor has more expenses for the elevator that a same size in the 1st floor.
The Apartment C1 has 153/1000 participation to the building expenses. So, if there was an expense of 100€ for the supply of new plants for the garden, apartment C1 needs to pay 15,3€.
See examples below for more info
Cost Analysis For Vacant Property
Expense Description
Total Cost
Participation Votes
Owner Cost
1
New plants for the garden
€100.00
153/1000
€15.30
2
Elevator maintenance
€60.00
153/1000
€9.18
3
Purchase of Heating Oil
€500.00
124/1000
€62.00
4
Electricity bill (16/1-15/3)
€92.00
153/1000
€14.07
5
Install new entrance door
€400.00
divided by number of apartments/ 10
€40.00
There are no rows in this table
5
Count
€140.55
Sum
Cost Analysis For Leased Property
Expense Description
Total Cost
Participation Votes
Tenant Cost
Owner Cost
1
New plants for the garden
€100.00
153/1000
€15.30
2
Elevator maintenance
€60.00
153/1000
€9.18
3
Purchase of Heating Oil
€500.00
124/1000
€62.00
4
Electricity bill (16/1-15/3)
€92.00
153/1000
€14.07
5
Install new entrance door
€400.00
divided by number of apartments/ 10
€0.00
€40.00
There are no rows in this table
5
Count
€100.55
Sum
€40.00
Sum
This article comes from common situations we have encountered in over 100 properties during the last 5+ years. We have frequently advised tenants and assisted owners on all the above points, ensuring that our properties make good homes for tenants, provide a healthy return for investors and appreciate in value for sellers.
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