The Cyprus Banks Association (CBA) has put forward a series of recommendations regarding the management of jointly-owned buildings, as part of the ongoing discussion of the relevant bill before the House Interior Committee.
The CBA has suggested enabling the registration of a memorandum of encumbrance (MEMO) without requiring a court ruling, as well as the introduction of clear rules on the imposition of interest on property owners who fail to pay common expenses for extended periods. At the same time, the association has requested a transitional period for the full implementation of the legislation.
A more efficient legal framework
In a position paper submitted to the Committee, the CBA underlined the need for a comprehensive and effective legal framework to govern the management of jointly-owned buildings. The aim is to tackle long-standing challenges in the collection of unpaid communal fees, which are currently hampered by lengthy court procedures.
One example proposed is that once the competent authority (EOA) determines the amount owed, a memorandum of encumbrance could be registered directly against the property, without the delay of judicial proceedings.
Interest on arrears not of fines
The CBA also recommends that management committees (MCs) be allowed to impose interest on overdue communal expenses prior to litigation. This, it argues, would be a fairer and more effective tool than fines to ensure timely payments.
Currently, the draft bill does not regulate interest rates, and in some cases, owners have faced charges as high as 12%. The association proposes a maximum interest rate of 2%, aligned with the Law on the Liberalisation of Interest Rates, while abolishing the right to impose fines.
If fines remain permitted, the CBA insists that both interest and fines should be capped and clearly defined in the law to avoid disputes between owners and management committees.
Ensuring existence of management committees
Another key proposal concerns the guarantee of a functioning management committee in every shared building. Since such committees are vital for maintenance, repairs, and even property transfers, the CBA suggests granting EOAs the power to appoint external committees if owners show no interest in managing the property.
This safeguard would also prevent complications in cases where a management committee is required to issue a clearance certificate for unpaid communal expenses, which is essential for property sales and loan restructuring.
Need for transitional period
Finally, the CBA stresses the importance of a transitional provision to allow sufficient time for the proper establishment and registration of management committees across all jointly-owned buildings before the law takes effect.
The parliamentary debate on the bill continues, alongside consideration of a separate proposal on dangerous buildings. Representatives from multiple ministries, the Land Registry, municipalities, professional associations, and the banking sector have been invited to contribute to the discussions.
To read an English translation of the recommendations proposed by the Cyprus Banks Association – click here.
