Attorney Aleksandr Tsemin explains if community of apartment owners has any right to claim from a new owner of property a debt that belongs to a previous owner
Attorney from law office LEADELL Pilv Aleksandr Tsemin has written an article in web publication of Postimees magazine, the topic of which: “Is new owner of an apartment obliged to pay old debts?”.
There are only a few apartment buildings where amongst the residents prevails total consensus, as well as compulsory taxes are paid timely and to full extent. Regardless of payment discipline, community of apartment owners has to fulfil its obligations concerning both members of community and the service providers. Unpaid debts are executed by community members, thus the community has to claim all the household expenses from obligors. But how one should behave, if obligor transfers a property after court sentenced obligor to pay the debt for the benefit of community? If it is possible to get this debt from a new apartment’s owner on the basis of a judgement connected to the previous owner?
The first-time assessment of the Supreme Court
The Supreme Court has recently published an assessment of the possibility for community of apartment owners to claim the debt from a new owner by execution process on the basis of judgement that had been used to collect the debt from previous owner. In this decision The supreme Court detected that the new owner is not a legal successor of the previous one, rather he is a solidary responsible – that means that the new owner’s responsibility occurs just in a raw with the responsibility of previous one_ but not instead of it. Consequently, it is not possible to apply earlier judgement as enforcement order for debt claiming from a person, who acquired the apartment ownership later. In other words, the community of apartment owners has to file the same claim with court again. Unfortunately, there is still no clear answer in the court practice, if the debt expired, when it had been formed, for instance, 4 years before an apartment was transferred. Thus, the absence of legal regulations in this case makes it complicated for legal defence of the community of apartment owners.
From the standpoint of expiry issue, it is significantly important to define the basis for arising acquirer’s solidary responsibility. Following the regulations of the Supreme Court, it is possible to assume, that this relationship is covered by the Article 65 of Law of Obligations Act. In this case the situation for community of apartment owners is extremely unfavourable. In the light of this article, the unnamed facts, that impact the responsibility of solidary obligors, particularly the expiry date objection, are applied to this solidary obligor to whom they concern, if other is not stated by law. Therefore, if the claim against one of the obligors is satisfied as well as expiry is stopped (court decision can be fulfilled within 10 years), it doesn’t impact anyhow the new owner. The claims against the new owner can be expired before he acquired a new flat, which means community will never get the debt back.
New owner as a surety
In contrast, a fundamentally different situation occurs, if to consider Apartment Ownership Act that came into force in 2014, on the basis of which the new owner bears responsibility acting as a surety for unpaid bills of a previous owner. If to consider new owner as a surety, then his acquirer’s obligation arises separately from secured principal obligation. A surety can submit objections, that are based on obligee and obligor relationship or on suretyship. In other words, in case community of apartment owners was diligent and filed a claim against previous owner, the expiry of claims stops with regards to principal obligor (the court decision can be fulfilled within 10 years). A surety can therefore submit objections that only arise from suretyship. As the new owner gets into position of surety only at the stage of acquisition process, community has the right to file the same claim with court against new owner of the property within 3 years.
One has to be active oneself
The above mentioned solutions are only a part of existing alternatives. Hopefully the Supreme Court will provide its assessment to above described legal problems sooner or later, however, it is reasonable for the community of apartment owners to apply the following diligence measures:
- Community has to be active and do not let the debt grow. It is highly recommended to have recourse to court straight after debt appears;
- Community has to fulfil the judgement immediately, that sentenced to collect debt from obligor, and charge it the connected with it apartment, if necessary;
- The community must claim the debt payment from the new owner immediately after property is transferred.
Financial resources of community are modified of all of the paid amounts by all owners. In case some of the owners don’t pay the bills, then those bills are paid by other owners. It is obvious that this situation hurt the sense of justice of community members. As a result of increased financial burden, the smaller communities can stay without some important renovating works that impact a lot the quality of living of all the members. Bearing this in mind, the community of apartment owners should be active while defencing own rights and do not postpone the collection of debt.