A flat owner in arrears. What can a housing community do?

What forms of pressure may a housing community not use?

The obligation to contribute to the costs of maintaining the common property arises directly from the Polish Act on Ownership of Premises. A unit owner is required to participate in the costs of managing the common property, and advance payments toward those costs should, as a rule, be paid in advance by the 10th day of each month. However, not all unit owners pay the amounts due on time.

Case law shows that, in such circumstances, housing communities sometimes attempt to use various forms of practical or financial pressure against unit owners. These include:

• disconnecting the hot water supply,
• disconnecting central heating,
• charging the debtor the housing community’s own “debt recovery costs”,
• imposing financial penalties by way of a housing community resolution,
• deactivating a gate remote control or restricting access to parking facilities.

Can a housing community disconnect hot water because of arrears?
One of the practices considered in case law is the disconnection of the hot water supply to a unit. In the judgment of the Court of Appeal in Kraków, 1st Civil Division, of 16 June 2020, case no. I ACa 84/20, the unit owners adopted a resolution under which the housing community could disconnect the hot water supply to premises whose owner was in arrears to an extent justifying the commencement of court proceedings.

The disconnection was to take place as soon as a claim for payment was filed. On the basis of the resolution, the hot water supply to the indebted unit was in fact disconnected. The housing community argued, among other things, that the owner still had access to cold water and could heat it independently.

The housing community resolution was challenged. The courts of both instances held that the resolution was grossly contrary to the law. They indicated that a housing community cannot independently interfere with the ownership rights attached to premises or restrict the owner’s ability to use them without an express statutory basis.

Nor may a housing community assume the powers of a court or bailiff and create its own forms of security for outstanding claims. It was irrelevant that the resolution concerned only hot water rather than cold water.

The court also noted that the mere fact that the housing community had entered into an agreement with the heat supplier and allocated the resulting costs among the unit owners did not mean that the housing community had itself become a seller of hot water or could rely on the rights granted to an energy or water supply undertaking.

Can a Housing Community Disconnect Heating in an Indebted Unit?

As with the disconnection of water, a housing community is not entitled to disconnect central heating in a unit because of arrears.

In a case concluded by the judgment of the Regional Court in Bydgoszcz of 8 October 2014, case no. II Ca 184/14, the housing community adopted a resolution providing for the disconnection of central heating in an indebted unit.

The court found that such an action was unlawful and impermissible under the Polish Act on Ownership of Premises. In its reasoning, the court expressly extended this assessment not only to heating, but also to the potential disconnection of water, gas and electricity.

According to the court, the housing community has other lawful remedies available to it. In particular, it may file a claim for payment, refer the case to a bailiff or bring an action for the compulsory sale of the premises.

Can a Housing Community Charge a Debtor Debt Recovery Costs?

In the judgment of the Court of Appeal in Warsaw, 1st Civil Division, of 23 May 2014, case no. I ACa 1757/13, the housing community adopted a resolution under which the debtor was required to cover directly:

• the costs of sending payment demands,
• debt recovery costs,
• the costs of potential court proceedings.

Under the resolution, payments made by the owner were to be allocated first to those costs and interest, and only subsequently to overdue and current service charges.

The court held that this arrangement was unlawful. A housing community cannot arbitrarily determine debt recovery costs, add them to the unit owner’s account and then allocate payments first to amounts that may be disputed or may not be due at all.

The court decides on the reimbursement of litigation costs in the judgment or order concluding the proceedings. Consequently, a housing community is not entitled to create its own system of financial sanctions imposed on debtors.

Can a Housing Community Impose Financial Penalties?

There are also a number of judgments showing that housing communities attempt to impose “penalties” or “financial charges” for breaches of house rules.

In one case, a resolution provided for a penalty of PLN 100 for each subsequent breach of quiet hours following an earlier warning. The matter was considered in the judgment of the Regional Court in Poznań, 18th Civil Division, of 22 December 2015, case no. XVIII C 900/15.

The court set aside the resolution, indicating that a housing community cannot adopt resolutions with an unlimited regulatory scope. Granting security personnel authoritative powers to impose financial penalties at their discretion could, in practice, lead to arbitrary decisions infringing the rights of individual unit owners.

In the court’s assessment, a housing community does not possess such extensive powers.

Although the judgment did not directly concern overdue service charges, it illustrates a broader tendency for housing communities to attempt to create their own catalogues of prohibited conduct, penalties and enforcement methods.

A housing community resolution is not equivalent to legislation or an agreement entered into individually with a unit owner. A housing community has no statutory authority to introduce measures of this kind.

More information on the matters that may be regulated by housing community rules is available in our publication Housing Community Rules in Poland: What They Can and Cannot Cover.

Can a Housing Community Deactivate a Gate Remote Control Because of Arrears?

In one case, a housing community adopted a resolution providing that, if a user was two months in arrears with fees connected with access through a gate, the user’s remote control would be deactivated.

The resolution also provided for the deactivation of the remote control if the user failed to repay earlier amounts that had been covered by the housing community. The matter was considered in the judgment of the Court of Appeal in Poznań, 1st Civil Division, of 28 July 2016, case no. I ACa 152/16.

It should be emphasised, however, that the court did not examine the lawfulness of deactivating the remote control on the merits. The claimant had challenged the resolution before it was formally adopted.

The judgment therefore shows only that housing communities attempt to use this type of “repressive” mechanism against unit owners.

Nevertheless, if such a resolution were examined on the merits, there could be substantial grounds for setting it aside to the extent that it provided for deactivation of the remote control solely because of arrears.

Where the gate provides access to the common property and the remote control is an ordinary means enabling the unit owner to use that property in accordance with its intended purpose, removing that access in order to compel payment could be found contrary to the Polish Act on Ownership of Premises and the Polish Civil Code.

As a rule, a housing community should not make the use of common property conditional upon the prior repayment of arrears. Deactivating a remote control solely as a means of exerting pressure on a debtor could be regarded as an impermissible form of self-help, similar to disconnecting heating or water.

Can a Majority Resolution Legalise an Unlawful Action by a Housing Community?

No. Obtaining the required majority of votes does not grant a housing community powers that are not conferred on it by the Polish Act on Ownership of Premises.

Resolutions adopted by unit owners may, as a rule, concern matters connected with the management of the common property. They cannot arbitrarily interfere with the ownership rights attached to individual units, restrict the owners’ ability to use their premises or replace a court judgment or enforcement measures taken by a bailiff.

A housing community cannot therefore independently determine additional consequences of non-payment, even if the management board obtains the owners’ approval for such measures by way of a resolution.

A housing community resolution is not a source of unlimited authority over its members and cannot create new sanctions that have no statutory basis.

What Can an Owner Do if a Housing Community Infringes Their Rights?

In such circumstances, the unit owner should consider bringing a claim to set aside the housing community resolution.

The grounds for challenging a resolution and the applicable statutory time limit are discussed in more detail in our publication Challenging a Housing Community Resolution: When and How Can It Be Set Aside?.

What Can a Housing Community Do to Recover Overdue Service Charges Effectively?

Where a unit owner has failed to pay service charges for an extended period, the recommended sequence of actions is as follows:

1. establish the identity of the current owner of the premises and their address for service,
2. prepare a detailed statement of arrears,
3. send a formal demand for payment,
4. file a claim for payment, together with an application for interim security where justified,
5. commence enforcement proceedings after obtaining an enforceable title.

It is a serious mistake for a housing community to tolerate mounting arrears for many years and then attempt to replace proper court proceedings with an unlawful form of pressure.

Detailed information on the structure of a claim, the necessary documents and the method of proving the amount of arrears is available in our publication Suing for Unpaid Service Charges in a Polish Housing Community.

Can a Housing Community Demand the Compulsory Sale of a Unit?

The most far-reaching remedy available to a housing community is an action seeking an order for the sale of the premises by auction.

Under Article 16 of the Polish Act on Ownership of Premises, a housing community may bring such an action where the unit owner:

1. has been in long-term arrears with the payment of amounts due,
2. grossly or persistently breaches the applicable house rules,
3. through inappropriate conduct, makes the use of other premises or the common property burdensome.

A compulsory sale does not take place solely on the basis of a housing community resolution. The resolution authorises the management board to bring the claim, while the court decides whether the sale is justified.

Only a final judgment may form the basis for the subsequent procedure leading to the sale of the premises.

It should be borne in mind that an action under Article 16 of the Polish Act on Ownership of Premises is an exceptional remedy. The housing community should demonstrate not only the existence of arrears, but also their duration, scale, effect on the operation of the housing community and the ineffectiveness of less onerous measures.

It cannot therefore be assumed that arrears lasting only several months or involving a relatively small amount will automatically justify depriving the owner of their ownership rights.

The conditions for applying this measure are discussed in detail in our publication Compulsory Sale of Premises in a Housing Community: When Is It Permissible?.

Summary

The measures available to a housing community against a unit owner in arrears are limited because the housing community has no enforcement powers.

It cannot disconnect utilities, obstruct the use of the premises or independently secure its claim. A resolution adopted by a majority of unit owners does not provide a sufficient legal basis for such actions.

Nevertheless, a housing community has effective legal instruments at its disposal. It may send a formal demand for payment, enter into a settlement agreement, file a claim, obtain interim security, conduct enforcement proceedings and, in extreme cases, seek the compulsory sale of the premises.

It is essential to take lawful action promptly and consistently rather than impose sanctions that may expose the housing community to an unsuccessful court case, an obligation to restore utility supplies, litigation costs and, in certain circumstances, liability for damages.