HW Legal
What happens if a homeowners' association fails to provide a unit owner with a utility bill? What if a landlord fails to provide a tenant with a utility bill? And what are the consequences of a late or incorrect utility bill?
Which “utilities” are we talking about?
These utilities (or "services") typically include:
- heat supply and centralised hot water supply;
- water supply and wastewater disposal;
- operation of lifts;
- lighting of common areas;
- cleaning of common areas;
- sewage removal and cesspit cleaning;
- provision of radio and television signal reception;
- chimney operation and cleaning; and
- municipal waste collection.
Collectively, these are advance payments for services connected with the use and enjoyment of an apartment, which one party arranges for another.
The person using the apartment is the service recipient.
The party arranging or procuring these services is the service provider.
If the apartment is occupied by the unit owner, the service provider is the homeowners' association (SVJ).
If the apartment is occupied by a tenant, the service provider is the landlord or unit owner.
Naturally, the services themselves are usually supplied through third parties, such as utility providers, lift maintenance companies, or cleaning contractors.
Unit owners and tenants are required to pay advance payments for these services.
The amount of the advance payments is agreed by the parties or determined by the homeowners' association.
If the price of a particular service changes during the year, the service provider may unilaterally adjust the amount of the advance payment. The revised amount may be demanded no earlier than the first day of the month following delivery of written notice informing the recipient of the new amount.
Utility bill
The service provider (whether the homeowners' association in relation to a unit owner, or a landlord in relation to a tenant) must provide the utility consumer with a bill of the actual costs incurred and the advance payments paid for each service.
The bill must include:
- the actual cost of each service, broken down by service category and containing all necessary details; and
- the total amount of monthly advance payments received.
The bill must be sufficiently clear and detailed to allow verification of any overpayment or underpayment and of the method used for allocating costs.
Services paid through a fixed lump-sum charge are not settled. This commonly applies to internet services, but it may also apply to all services collectively if the parties agree on a lump-sum arrangement.
The utility bill must be prepared and delivered within four months after the end of the accounting period. The accounting period may not exceed twelve months and is determined by the service provider. In practice, it is usually a calendar year.
What if the number of occupants changes?
In such circumstances, the service recipient has a statutory duty to notify the service provider.
The change in the number of persons living in the apartment must be reported in writing and without undue delay, typically within a matter of days.
The number of occupants is often relevant to the allocation of service costs.
Objections to the utility bill
Can the recipient review the supporting documents?
Yes.
Under Section 8 of Act No. 67/2013 Coll., the service recipient may, within 30 days of receiving the utility bill, request in writing that the service provider:
- substantiate the costs of individual services;
- explain the allocation method used;
- explain how the advance payments were determined; and
- allow the recipient to make copies of the supporting documents.
The service provider must comply within 30 days of receiving the request.
The cost of making copies is borne by the requesting party.
What if the recipient discovers errors?
The recipient may submit objections to the utility bill.
The objections must be submitted within 30 days of receiving the utility bill or, where applicable, within 30 days of receiving the supporting documentation.
The objections are submitted to the service provider, who must deal with them within 30 days.
The provider must review the objections and either:
- accept them and correct the utility bill; or
- reject them and provide reasons.
If no objections are submitted within the statutory period, the recipient is deemed to have accepted both the content of the utility bill and the method by which it was prepared.
Statutory penalty for delay
The law imposes relatively strict consequences for failure to comply with these obligations.
If either party breaches a statutory obligation owed to the other party, a statutory penalty becomes payable.
Examples include:
- a service recipient failing to report a change in the number of occupants;
- a service provider failing to deliver the utility bill on time;
- a service provider refusing access to supporting documents; or
- a service provider failing to deal with objections within the statutory period.
How much is the penalty?
The statutory penalty amounts to CZK 50 for each commenced day of delay.
The parties may agree on a lower amount, and in the context of a homeowners' association a different amount may also be determined by the association.
Delays can therefore become surprisingly expensive.
Example from practice
A common situation arises where a landlord and tenant part ways on poor terms.
The tenant moves out and communication ceases.
The landlord then fails to provide a utility bill for the final year of the tenancy.
Regardless of whether the utility bill would ultimately show an overpayment owed to the tenant or an underpayment owed by the tenant, the landlord has breached a statutory obligation.
The tenant may therefore claim the statutory penalty.
After six months of delay, the penalty will already amount to CZK 9,000.
Similarly, a homeowners' association may claim the statutory penalty from a unit owner who fails to notify the association without undue delay of a change in the number of occupants.
Case law
Does a recipient's failure to notify the service provider of a change in the number of occupants relieve the provider of the obligation to prepare a utility bill?
No.
This issue was considered by the Czech Supreme Court (Case No. 26 Cdo 2088/2022).
The Court held that the obligation to provide a timely utility bill is not conditional upon the recipient having complied with their own statutory obligations, including the obligation to report changes in occupancy.
However, where the utility bill is incorrect because it relies on an inaccurate number of occupants and that inaccuracy is attributable to the recipient's failure to provide the required information, the service provider will not be liable for the statutory penalty under Section 13 of Act No. 67/2013 Coll. - The reason is that the error in the utility bill was caused by the recipient, not by the service provider.
If you have doubts regarding your rights or obligations as a landlord or tenant, we recommend that you seek legal advice from a qualified lawyer.