Collection of utility debt for large condominiums: legal aspects

Debt collection is the legal process of recovering a debt through a pre-trial settlement or court decision. It includes enforcement proceedings and recourse to the debtor’s property.

With the beginning of the full-scale invasion, many Ukrainian owners of real estate, including residential property, were forced to leave the country. As a result, residential complexes and apartment buildings managed by condominium associations (associations of co-owners of apartment buildings) or management companies faced the problem of accumulating debts for utility services. The law firm “DE-JURE” helps to solve this problem: we successfully ensure the collection of problematic debts of individuals and legal entities for housing and communal services in court.

For which utility payments can debt be collected?

Debt for all housing and communal services provided through an apartment building association or management company can be collected by court order. Debt collection for housing and communal services can be achieved in two ways:

1. Filing an application for a court order to collect debt for housing and communal services. Currently, this procedure is widely followed by large and small apartment building associations and management companies, as it is the fastest and most effective, and there is also the possibility of re-submission. The disadvantage is that legal assistance and lawyer services are not reimbursed within the framework of injunctive proceedings. The court order is issued within two to four weeks, depending on the workload of the court.
2. Filing an application for debt collection within the framework of claim proceedings. This method is used when the debtor-co-owner of the real estate object, against which a court order for debt collection has been filed, does not agree with any circumstances of the case, can justify this and appeals the court order for debt collection. In this case, the judge refuses to issue the order, and the condominium association (management company) is forced to go to court as part of the lawsuit. It lasts much longer (again, depending on the workload of the court), but allows you to return the funds for legal assistance.

The law company “DE-JURE” helps to return the debt for housing and communal services regardless of the number of debtors, and if possible, compensate for the services of a lawyer for debt collection.

Legal principles for collecting debts for utility payments in an apartment building

The legal principles for collecting debts for utility payments in an apartment building or a management company are set out in the Housing Code of Ukraine and the Civil Code of Ukraine. Within the framework of injunctive and claim proceedings, the applicant representing the apartment building must prove the following circumstances:

• the ownership of the real estate object in the apartment building to the debtor;
• the amount of the debt – the actual calculation as of the date of filing the application for issuing a court order or statement of claim;
  a contract for the use of housing and communal services, which directly binds the obligations of the property owner to the apartment building or management company.

A lawyer or a lawyer helps to correctly draw up all documents in accordance with the procedural requirements for the court.

The role of the condominium association charter in the debt collection process

The condominium association charter can also play a role in cases of debt collection for housing and communal payments. It is a document that confirms that the condominium association was created with a single purpose: to ensure that the needs of the owners of the apartment building are met.

What is the role of a lawyer in collecting a debt from a utility company?

Both a lawyer and a lawyer play an important role in collecting a debt by obtaining a court order. The tasks of a lawyer (lawyer) in collecting a debt for a utility company are as follows:

• direct analysis of the information provided by the condominium association or the management company, its verification with relevant documents;
• preparation of an application for issuing a court order or drawing up a statement of claim, within the framework of which the filing with the court will take place;
• substantiation of the factual circumstances with evidence in the case, assistance in calculating the actual debt;
• search for legal grounds for holding the debtor accountable by collecting the debt from him.

In the case of a claim, a lawyer or a representative of the collector can represent the client’s interests in court.

How to draw up a claim for debt collection

Templates of claims for the issuance of a court decision to collect debt for housing and communal services are freely available on the Internet (for example, on the web portal “Judiciary of Ukraine”), and they can be found and filled out, including with the help of AI tools. However, given the need for the application to comply with the requirements of procedural law, we recommend that you seek legal advice regarding debts. Also, when applying to court, you must pay a court fee.

The process of filing and considering a claim for the collection of utility debts

In order to achieve payment of the debt by court decision, it is necessary to prepare the necessary documents confirming the fact that the debtor actually owns the object for which the debt arose, the calculation of the amount of debt at the time of filing the application to the court and the debtor’s agreement with the condominium association for the provision of housing and communal services. A statement of claim is drawn up and submitted to the court in accordance with the territorial jurisdiction. If all documents are drawn up in accordance with the requirements and the court fee is paid, the court opens proceedings in the case and the consideration of the case continues properly.

When are penalties and fines possible for debtors for utilities?

With the beginning of the full-scale invasion, the possibility of collecting penalties for non-payment of debts for housing and communal services was canceled for some time (for obvious reasons). But since January 2024, penalties and fines have returned to judicial practice. Currently, they are 3% per annum, and it is even possible to take into account inflation.

In what cases can the court refuse to collect a debt for utilities?

The court may refuse to issue a decision to collect a debt for utilities if the condominium association or management company fails to provide the necessary evidence or commits procedural violations. In particular, the court case will end in the defeat of the condominium association in the following cases:

• failure to prove the fact that the debtor is a co-owner of the house managed by the condominium association or management company as of the date of the application to the court;
• failure to prove the actual debt on the basis of proper and admissible evidence (calculations for the entire period of the debt);
• failure to prove the applicant’s right to apply to the court as a representative of the condominium association or management company, failure to pay the court fee and other procedural violations.

In such cases, a second application or the initiation of claim proceedings is possible.

For what amount of debt for utility payments can you go to court?

There is no limit to the amount of debt for utility payments for which you can go to court, but it is worth considering the expediency. Yes, the minimum court fee when filing an application for a court order is 308 UAH, and if the debt is 300-400 UAH, it makes sense to wait. But if even such an amount is critical for the functioning of the condominium association or management company, they can go to court.

Can a debt be collected from a legal entity that rents premises in a condominium?

Debt collection from a legal entity that rents premises in a condominium is carried out in the same way as from individuals. A representative of the condominium or management company files an application for a court order to collect the debt from the legal entity and attaches the necessary evidence, including a lease agreement and debt calculations.

What to do if the debtor evades the execution of the court decision?

If the debtor evades payment after the court decision on debt collection, the applicant has the right to present a court order to state or private bailiffs for forced debt collection. The bailiff seizes bank accounts, and if these accounts are insufficient, then collects the debt from pensions, salaries and other income.