In this twelfth episode of our communal property essentials series I’m going to cover the process you should follow when selecting a third party vendor such as a management company, a maintenance contractor and so on.

A vendor is any third party employed by the committee to provide a one off or continual service or product.  This may include a property manager, lawyer, accountant, large maintenance contractor and so on.

Unless dealing with a large-scale building or resort, the Management Committee’s selection of a vendor does not really any advanced formal tender process. 

However, there should be a process to ensure that the vendor is suitable, and the best value for money. This does not always mean the cheapest quote, as you usually get what you pay for.

General good practice is to request like-for-like quotes to be obtained from a minimum of three providers.

Each provider should be correctly compared like for like to ensure the process is fair and unaffected by bias.

Dealing with confidential information

Quotations and confidential/commercially sensitive information received from vendors should be kept confidential and never shared with another vendor.

Additionally, the benefit of one vendor’s work or assessment should never be provided to another vendor to assist in the production of their quote. All vendors should be expected to do their own investigation work and propose their own solution.

For example: If you had a leak with the pool and requested for a pool maintenance company to come and find the leak and provide a quotation.  They then come inspect your pool and through their skill and knowledge they find your pool is leaking from one of the light fittings, and propose a solution with a quote factoring in the time they have already spent.

Unless you specifically paid for a leak detection service as a standalone service, it is unethical to use the time, skill and expense by the first vendor to assist the other vendors in bidding for the job.

So you should not then go to two other companies and say how much to fix a leaking light fitting.  They will be cheaper because they did not need to find the leak. 

Set minimum requirements

Create a set of minimum requirements for your vendors are to ensure that the selection is balanced and fair to all and provides protections to the Management Committee in the event there are any issues or incidents with the vendor.  For example, you may set that you will only accept quotations for pool maintenance from a registered company who uses CPO qualified staff and hold full liability insurance.

Avoid off the books vendors.

You should not entertain a quotation from an unregistered, unqualified cash in hand trader.  The cash in hand trader will no doubt be cheaper, however, it offers little or no protection, is operating illegally and is unlikely to carry any insurance or expectation of a guarantee.  Hiring this type of trader could also be seen as negligent by the Management Committee and open up additional liability issues.

Keep records of the selection process.

One of the other important steps is to keep copies of quotations, requirements, decision making process to make sure that you can demonstrate that you operated fairly and in good faith.  Remember legally, you could be sued by a vendor if they feel that they were not treated on a equal basis or if you breached confidentiality with their quote, information or work product.

If you want to know more about the vendor selection process I include this along with how to perform a complete tender process in the Ultimate Committee Handbook.

In this eleventh episode of our communal property essentials series I’m going to cover how to organize larger scale maintenance projects for your apartment building or resort, how to finance these works and organize the bidding process.

All buildings require constant maintenance and most of the time this is just minor repairs but occasionally you are going to need to organise a larger scale project.  For example, your building may be getting to the stage where it requires a complete repaint, or your pool surface may be at the end of its expected life.

While small maintenance can be organised with minimal hassle, larger jobs require a little more attention as there are specific considerations when organising major maintenance works.

Selecting a Suitable Time

When major works are being done there can be a considerable amount of disruption to your buildings residents, however this disruption can be reduced by proper planning and timing.

For example: If your building experiences heavy summer seasonal occupancy, you can plan to organise these works prior to, or after the season. Remember, if you plan to organise these works before the season, keep in mind that they can easily overrun, so make sure there is a suitable buffer period before the summer season starts to accommodate any delays.

Protect yourself against liability

If you select a poor-quality provider or hire someone operating illegally without relevant qualifications & insurance, you can be held ultimately liable for the consequences. 

Remember the committee hold the ultimate duty of care towards the building/resort and its owners.  So check that they are a registered company or a registered sole trader, that they include their registration numbers on their quotes, invoices and receipts and that they hold insurance for the work you are requesting them to do.  If they are working on electrics, ask to see their EAC cert card.  If they are maintaining your pool, ask to see their operator qualifications and so on.

Also avoid any company who is trying to avoid paying VAT or taxes.  While the lower cost is tempting, this is always a red flag as it demonstrates their lack of respect and willingness to play by the rules, and they could have the same attitude towards safety and work quality.

Also don’t just take a provider’s word on their warranty.  A warranty is only a strong as the company that provides it. 

If that company goes out of business or if its not even a company and that contractor decides to retire or change careers your warranty could be worthless.  You could always take legal action, but this is itself expensive, there is no guarantees and even if you win getting the money can still be difficult.

Ask for how long that provider has been in business, details on their registered address, who holds the warranty is it them or an equipment manufacturer and ask for the warranty terms to be provided in a separate document.

Financing Major Works

Ideally you will have a detailed maintenance plan so major maintenance items will not come unexpectedly, and you will have a contingency fund and/or a maintenance fund ready to pay for these works when required. 

That’s the ideal, however things rarely work this way.  You may need to approach unit owners and ask for them to pay an extra payment on top of their normal communal fees to cover the cost of this maintenance.

It’s not a pleasant task, but it is in everyone’s interest to keep the building well maintained, and most units would stand to lose far more in property value than the extra payment if these are not organised. 

The bidding processes

Unless it is part of an existing contract or management agreement, you should always obtain quotations/bids from at least three different providers.  

This can be quite a challenge, as many companies are reluctant to quote on communal developments. 

This is because many of these contractors have learnt that its quote common for developments to waste their time by asking for quotes for jobs even though they have no intention in proceeding and they just to get an idea on the price. 

So to combat this, only get quotes when you know you are very likely to proceed with the work, inform the bidders of this and give a fixed timeline for the bidding process, also you may need to pay for their time when providing a quote. 

I know we are all used to this whole free quotation thing but providing quotes costs these companies money and so offering to cover this cost can help get the magic 3 quotes you need to make a decision.

It’s important to make sure that any vendor selected as part of this bid process is suitable and has all relevant qualifications.  Remember, you get what you pay for, so the lowest bid is not always the most cost effective. 

Leed into next Video. Selecting third party vendors

If you have a copy of ‘The Ultimate Committee Handbook’, Chapter 8: ‘Maintenance of your Building’ explains in detail how to organise a fair and professional bidding process and how to select the winning contractor.

But if you don’t have a copy of this book yet, stay tuned as I will be covering how to select third party vendors in more detail in the next episode of this communal property essentials video series.

In this Tenth episode of our communal property essentials series I’m going to cover the pros and cons of self-managing your building or using the services of a communal property professional.

I have a bias in being a professional Property Manager, so it may surprise you when I say that I am not against self-management of apartment buildings. There are many circumstances where self-management is a viable option, and some where it is not. 

Committees right to contract.

While the management committee are the ultimate authority when it comes to the decision making of a apartment building or resort and are put in charge of the finances, administration and management.  The regulations recognise that these volunteer committee members may not have the necessary time, ability, skills or experience to fulfil all the day to day tasks of running communal property.

So these regulations allow the committee to decide to employ a individual or company to assist them with their duties, and the cost for this is a communal expense and can be included in the communal budget.

So how do you decide what to keep in-house and when to hire these tasks out.

Assess your committees skills and available time.

The first step to take when considering the option of self-management is to assess the skill levels of the members of your management committee. 

If you are looking at self-management you will need someone with good book keeping skills, preferably someone with some form of accounting training.  They also need to be able to deal with debtors and difficult owners as the collection of the communal fund can be a time intensive and sole destroying task.

You will also need someone who can handle large scale project management, some experience of dealing with third party contractors, setting up strong operational structures and so on.

Also you will want someone who is good at recordkeeping and can work with owner databases, setup email mail merges, write notices /letters and minutes.

The next step is to assess the time commitments required to fulfil these roles as not just important to have the necessary skills, these individuals need to be willing and able to commit to the time required to fulfil these roles.  There is simply no point having a fully qualified accountant on the committee if they work 60 hours a week while juggling family and personal commitments.

Self-Management can be expensive.

If you have these type of individuals, and they have the time available to fulfil their tasks then 100% self-management is a good option and will ensure you have complete control while keeping costs down.

But the most common reason we find for buildings self-managing is not because they can do everything in-house but because they have financial problems, and are trying to save money. If this is the case, then self-management is NOT the solution. It’s a dangerous trap with potentially devastating consequences.

Most of these scenarios end up with individuals without enough time and/or experience dealing with essential tasks like credit control and administration. This can result in higher default rates, which generally makes the communal fees for each owner being higher than a development which is professionally managed. 

Also this can result in a higher risk of liabilities as they are more likely to miss an important requirement of their duties.

Consider a hyrid solution

Only a few years ago you effectively had two choices, 1) to use a property manager to fully manage your building or 2) do it all in-house.

Now the industry has evolved. While there are still a number of companies that only offer full service packages (and there is nothing wrong with specialising in a service), many property managers will offer custom services to perform specific key tasks.

The building can benefit from using the committee to organise the direct staff, use that local pool cleaner you like, but also have a professional property manager handle the collection of the communal fund, or the administration, or the record keeping, or a combination.

You need to find out what balance you want. How many and what specific tasks do you want to keep in-house and what do you want to hire out to a professional?

Well that covers the essentials on self vs professional management.  In the next episode of the communal property essentials video series I will cover how to properly plan for major maintenance works on your apartment building / resort.

All joking aside, this is a subject that I get asked about a lot. 

Someone will contact me through the advice website with a question like “My neighbor has enclosed their balcony”, or “They have painted their balcony Green”, “Are they allowed to do this?”.

When someone buys an apartment, they now have a shared investment with their neighbors.  What they do affects others around them and vice versa.

Buildings are built to a particular style and aesthetic, I am all for people being able to make an apartment their home, while people have individual taste or style this should be limited to inside the properties only. 

When you drive around and see a building that looks more like a Favela as some balconies are enclosed with different materials and outsides are painted different colours, It not only makes the building look unsightly, it can also damage the value of the property for resale, or rental.

The problem with unauthorised alterations to an apartment building or other communal property.

If someone has made alterations to their property without proper planning approval it can effect the ability of all unit owners getting their title deeds, and could make the buildings unsafe if building codes have not been followed.

To help prevent this there are regulations which are very strict to protect people and their property investment.  These are part of the Immovable Property Regulations which govern communal property. 

These regulations state, and excuse the legal speak,

No owner can make any alteration to their property that:

• Shall prejudice the rights of the owner of any other unit or interfere with its enjoyment by the owner of the other unit;
• Shall affect in any way the jointly-owned property, its smooth functioning or its enjoyment; and
• Shall in any way affect the walls supporting the jointly-owned property and its external walls, shall endanger in any way the safety of the jointly-owned property or shall affect its external appearance.

There of course additional regulations regarding building permits, planning approval etc.

How can you prevent unauthorised alterations to your communal property.

The easiest way to avoid this problem, is to keep unit owners and new owners informed.  Remind owners of the rules of residence at each AGM and list on your building notice board the important rules along with an important note about altering the exterior of the property along with a notice that any unauthorised alterations will be reported to the local authorities and if required subject to legal action.

This also helps if people go ahead and do it anyway as they cannot argue they were not aware they were not allowed to install that 18-foot statue in dedication to their personal hero. 

What you should do if they ignore you and make the alterations anyway.

It’s important to remember yourself, if someone ignores these rules it is a breach of the law, and the owners management committee can and should act to restore the property including legal action for damages/costs involved. 

If you need to act, it’s important to act immediately.  Have your developments lawyer send a notice to terminate works or restore the property or consider getting an emergency injunction from the court should this be ignored.  If you don’t have a lawyer for your development, you should look at getting one to be on hand for situations like these.  There are many out their that operate on a fixed price service where you pay an annual or monthly fee which covers all their work for items like this, contacting debtors, sending notices and so on.  If this may be of interest you can send me a message through Facebook or via our website and a member of my team can help put you in touch with a firm that offers this.

If it is a case of an unauthorized alteration to the building such as enclosing a balcony, you should also speak to the local municipality and planning office and file a complaint.  They have their own legal processes for dealing with this and can save you needing to go to the expense of legal action.

With this information you should be able to keep your building looking the way it should, of course its also important to keep it maintained, as an argument about aesthetics is harder to make if the building is 10 years overdue for a repaint.  I have lots of communal management articles and communal management videos about maintenance on this website.

In this seventh episode of our communal property essentials series I am going to clarify how you demonstrate to owners and authorities you are a legal management committee and have the powers granted under Section 38 of the Immovable Property Law.

One of the most common questions I am asked through my Facebook page and website is once you have setup your committee, do you need to register it?

It’s quite common to read on forums and social media about a requirement to register your management committee and submit the minutes of your annual general meeting each year with the land registry.

However, this is a myth as there is no requirement under the regulations to register your management committee with the land registry.

While there is no requirement to register a committee with the land registry, there is a requirement to register a copy of any ‘Custom Regulations’ drafted under the immovable property regulations. It’s this requirement that many people confuse as a need to ‘register’ the committee.

It’s also important to note that submitting a set of custom regulations is not mandatory, there is a set of default regulations included in the law which are suitable for most committee’s needs. 

How do you make sure you are a legal committee?

You must make sure that your Annual General Meeting is held in strict accordance with the requirements of the immovable property regulations.  Paying special attention to quorum and voting requirements.  If you want a copy of these regulations, I will include a link in the video description.

As an optional step, you can employ an independent legal advisor or communal property specialist to assist the development and monitor the General Meeting. 

What evidence do you need to prove you are a legal committee.

You need to create an accurate and comprehensive set of minutes for your general meeting.  These minutes must go into specifics on how the meeting was held. Make sure you include notes on the key requirements of quorum and how voting was held.   These minutes should then be signed by the meeting president and secretary and sent out to unit owners with a note to contact if any owner fees these are not an accurate representation of the meeting.

If you employed a legal advisor or communal property specialist to assist/monitor the meeting, you should also ask them to sign the minutes as a witness, or produce a separate letter stating the meeting was held within all legal requirements in their professional opinion.

To help the clients of my communal management company and the developments who me to help organise their AGM’s I also produce a validation certificate which details all the steps were followed. 

It is these minutes and any accompanying documents that any government authority, bank or court will require to verify your committee’s legal status.

So by following all the requirements of the regulations, and making sure you document everything to show you are a legal management committee, how do you make sure to protect your building and your committee from potential liability.  Well that’s the subject of the next episode in the Communal Property Essentials Video Series.

In this seventh episode of our communal property essentials series I am going to discuss the election of the Management Committee. Who can be on the committee, the different roles of the committee members and what to do if no one volunteers?

The management committee are responsible to co-ordinate the maintenance and management of the communal areas of the building. Their primary role is performing the administration of the communal accounts, obtaining insurance, setting the budget, organising maintenance and pursuing non-paying unit owners.

Who can be on the management committee?

The management committee is made up of individuals or legal entities who volunteer their time and expertise to the management and administration of the communal property.

Any person or even a legal entity such as a limited company can be elected onto the management committee by the unit owners.

The committee must have between 1 to a maximum of 5 individual members.  If you have a small committee of 1 or two members, they must be unit owners.  But providing you have a committee of 3 to 5 members anyone can be elected onto the management committee.  For example, I am on a number of management committees as a independent specialist even though I do not own units in those resorts. 

While you can elect anyone to your management committee, and this is the temptation to accept anyone who volunteers their time, its important to recognise the responsibility and powers the committee have, so choose your committee members wisely.  You want people who are helpful, trustworthy and have the necessary time and skill to be a positive influence on your building and resort.

Different Committee Roles?

Generally the committee is made up of a President, who is not the sole decision maker but is there to break the tie and have a casting vote in the event of a tie committee vote.  The committee president generally has the role of organising the AGM and is proposed to be the AGM president to hosting the Annual General Meeting.  However, if you employ a communal management professional or use an AGM Done for You service, they will likely host the AGM as part of their duties.

You then have a Committee Treasurer who is responsible for the supervision of the communal finances.  If you hire a professional communal property manager, the treasurer’s role is generally oversight of that manager.  However, if your committee selects to self-manage your property then the treasures role can be quite intensive as it would include setting budgets, setting the communal fee, dealing with payment to suppliers, issuing receipts, collecting communal fees, chasing debt and producing monthly summary reports along with the annual financial report. 

Many committees will designate one of the management committee members as the secretary.  The role of a committee secretary is to be the direct contact for any unit owners who wish to ask any questions or submit complaints.  The secretary is also responsible for keeping all the development records and taking minutes of all committee meetings.  The committee secretary is also usually designated to be the AGM secretary and be responsible to recording the AGM minutes.

How are the management committee Elected?

The Election of the Management Committee takes place at a properly formed AGM.  This is why it is so important to make sure your AGM follows the strict rules of the immovable property regulations as if the AGM is invalidated the elections and votes that took place during that meeting will also be invalidated.

The process of election is usually by a show of hands of those eligible to vote at the meeting (which is basically every unit that is represented and paid up with their fees). 

However, it can be requested for a formal vote, where every unit vote will count for more or less depending on their share of the jointly owned property.  If you have a copy of my book The Ultimate Committee Handbook I cover how to perform and calculate this method of voting in the AGM chapters. 

What is the Term Length of a committee member?

By design the term of each committee member is roughly one year.  At each Annual General Meeting all positions on the committee are automatically vacated and a new committee needs to be elected by the unit owners for the next year.

There is nothing to stop members of the committee putting themselves forward for re-election and it is quite common for committee members to hold that position for many years.  But they must be re-elected at each annual general meeting.

What if no one volunteers?

It always surprises me that many apartment buildings, developments and resorts struggle to get people to volunteer to be on the management committee.  To me this is crazy as I don’t know why so many unit owners underestimate the importance of the committee and recognise the benefit on having a far more direct role in how their valuable property investment is operated, managed and maintained. 

But if you do find yourself without even one committee member and no one putting their hand up then one of your building’s unit owners should inform the local land registry department. e

The regulations allow in the event there is no committee and a new Election of the Management Committee has not taken place the director of the land registry can intervene.

So, we have covered the basics on the committee and how they are elected, we now need to cover what records you need to prove the legitimacy of your committee and any requirements for its registration.  And that is exactly the subject of the next episode of my communal property essentials video series.

In this sixth episode of our communal property essentials series I am going to discuss why increased attendance at your Annual General Meeting is important, and how to get more owners to turn up.

You don’t need good attendance at your Annual General Meeting.  While under the law you are required to have quorum, which is 50% of the eligible owners in attendance in person or by proxy, there are measures within the law that allow you to proceed with lower than this 50% providing the quorum steps are taken.

But low owner participation in the AGM has its own problems. 

Owners who are not aware of the challenges faced by their committee and the steps the committee are taking to overcome them are far less likely to be supportive of the committee. 

Uninformed and unsupportive owners are reluctant to pay anything more than the absolute minimum and even are at risk themselves of not paying their fees on time or at all.

So lets go through 4 steps you can take to increase attendance at your AGM.

Make the AGM meeting interesting

No one wants to sit through a 3-hour PowerPoint presentation giving every minute fact and itemising every single expense.  Of course, you have a legal requirement to present the accounts, so do this in two ways.  1^st create a detailed annual financial report which can be inspected at the meeting and is sent out with the minutes of the meeting.  2^nd create a summary presentation where you provide the Key Facts.

Limit the financial summary presentation to the Annual total figures. And make use of images, and easy to follow graphs to get that important information across.

At the meeting include some case stories detailing any major challenges the committee faced over the last 12 months and how you overcame those challenges.

You should emphasise the importance of their ongoing support and participation in their buildings and detail any challenges you predict you will face over the next 12 months, and how the committee plan to deal with them.

Set your AGM Location Convenient for the Majority

Unless you have an apartment building with 10 apartments or less, I strongly advise against holding your AGM in one of the committee members apartment, or in the carpark of your building.

This does not give a good professional impression of a meeting reviewing the committees operation of valuable property.  Additionally, you will likely struggle if you want to use visual aids such as projectors, live streaming, videos and so on.

If you plan to hold your meeting near the property’s location talk to local hotels, restaurants, bars to see if they have meeting facilities or a events room which you can use.  If you pick a time when they are normally empty you can usually negotiate a much lower rate or even a free room.  Many venues will give these rooms away free knowing that the attendees will use the bar/restaurant or as a way of promoting their venue in the local arear.

If the majority of your unit owners do not live in the building or in the local area, consider setting the meeting location to a place that is convenient to the majority.

There is no rule under the regulations that state you must have the AGM in or near to the building.  In fact, every year I attend allot of AGM’s in the UK, which makes sense for those buildings as most of the unit owners live in the UK

Live attendance at your AGM

One of the great advancements in the last few years is the ability to live stream your meeting to unit owners who are unable to attend them in person.  There are many platforms that allow you to do this, and many of them offer a free or low-cost option. 

Live attendees can watch a live stream video, ask questions and participate in voting.

The only warning on this is the regulations were drafted before the Internet really existed in the mainstream.  So to make sure you don’t fall foul of Quorum or voting requirements I would suggest you make it a requirement that anyone who wishes to attend via the live stream also submits a written proxy for someone who will be physically at the meeting.

Make your AGM part of an Event

One of my favourite ways that a committee can increase attendance is hosting an owner event to coincide with the meeting, this is because it has a second benefit in that it creates a community spirit which is a key part of a healthy building.

So why not hold an annual BBQ, Pub Quiz, Race Night, Dinner & Dance or whatever takes your fancy. And, before this annual event hold the Annual General Meeting. This will get more people to attend, and get them talking with each other, building relationships and respect for the fellow owners and the Management Committee. 

Now that you know how to increase attendance at your AGM, the next thing is how to organise the election of the management committee for the next year, and I will be covering that subject in the next episode of the Communal Property Essentials Video series.

In this fifth episode of our communal property essentials series I am going to give an introduction on What is an Annual General Meeting, where this meeting should be, what is Quorum and why is it important, how your meeting should be recorded.

In this Communal Property Essentials Series, I give you an introduction on the core subjects surrounding being on your properties management committee.   The Annual General Meeting is such an important topic as there are so many ways you can accidentally invalidate your meeting and the committee even when you think you are doing things for the right reasons. 

This video is to give you a general introduction to the AGM and is not a comprehensive step by step instruction on how to organise it.

This is such an important topic I run regular online live training events on how to organise your AGM and if you have a copy of my book you will see a very large chunk of my book is all about the AGM.

So, if you are planning your next AGM, I would strongly suggest once you have watched this video attend one of my next free AGM live training online events, or pick up a copy of my book The Ultimate Committee Handbook.

Now, if you want 100% assurance that your AGM follows all the rules and requirements, I do offer a ‘Done For You AGM service,  which basically my team organises your AGM for you and either myself of one of my experienced team members physically attends your meeting to help guide you through every stage and provide a certificate showing all of the required steps were taken.

This Done For You AGM service does not break the bank either, these packages are available from just €297 which is not a bad investment to make sure your AGM, committee and communal fund are all within the requirements of the regulations. If you want to know more about this, I will put a link to this in the video description.

So now I have got all that out the way, lets go through the essential components of an AGM.

What is the Annual General Meeting (AGM)

Every year there should be a meeting for your unit owners to get together and discuss the management, maintenance and administration of your Apartment Building or Resort.

At this meeting the financials for the last year should be presented and your unit owners will elect the management committee for the next year.  If you have not already watched my video on the management committee and its role, you can find this on CyprusCommunalGuide.com under the communal property essentials video series. 

Your AGM is also the place where you would give any additional presentations on things like Maintenance reports, management company reports and anything else that would be of interest to the unit owners of your communal property.

When and Where to hold your Apartment Buildings Annual General Meeting?

The name ‘Annual General Meeting’ gives a clue that this should be held once per year.  The exact date is up you, but I usually suggest you have this close to the end of your financial year.  That way any decisions on the budget can be put into effect shortly after the meeting.

The AGM does not need to be held at your building, in fact unless your building has only a few owners I don’t like on-site meetings as they give the wrong impression on the importance of the meeting and add additional difficulties like restrictions on presentations, internet streaming options, numbers that can attend and so on.

I generally recommend looking for a formal meeting place such as a hotel conference room or an events room at a bar/restaurant.  Somewhere where you can hold a formal meeting in comfort with all the facilities available to give your presentations professionally.  If you use a Many of these you can negotiate a low cost rate or even FREE room if you pick a quiet day and they know they will get good bar sales out of it.

Also this location should be where the majority of the unit owners can attend easily.  There is no restriction in the regulations that require the AGM to be held in Cyprus.  So if most of your buildings owners are in the UK for example, then rather than expecting 100 people to fly to Cyprus for the meeting which many will not or cannot do.  Why not hold the meeting in the UK?

What is Quorum at the AGM

You need to have 50% of the eligible owners in attendance at your meeting for it to go ahead.  This is important as if you proceed without quorum then your meeting and any votes/elections that took place during that meeting can be invalidated.

If you struggle with attendance there is allowances in the law, but you need to make sure you follow the exact requirements of the regulations.

Organising Your Management Committee Elections

As I covered in one of the earlier videos in this series, day to day decisions are made by a small group of individuals who are representatives of the property owners. 

The committee is made up of 5 individuals, who are in charge of the day to day decisions of your building or resort.

On a committee you usually have the president, a treasurer, a secretary and up to 2 general committee members.

All positions on the management committee must go up for election at each AGM.  No committee members position automatically rolls over, they must be elected or re-elected at each meeting even if no one else wants to join the committee. 

Which is crazy as I don’t understand why unit owners would not want to have a say in how their property investments are managed.

Presentation of Developments Financial Accounts

The AGM is also where you will present the summary reports for the last year, discuss any differences between budget estimates and actual costs, talk about any problems with bad debt and discuss the budget for the next 12 months.

If you have a small development you may be able to print and hand out these reports, but if you are a larger development you will likely find that a small PowerPoint or Keynote  presentation will help.

Its really important to have full transparency with your financial records, so make sure your Accounts presentation is clear and comprehensive.  You don’t need to read out every fact and figure, but you should present the most important key facts, and then have a more detailed report available to be distributed or included in the minutes.

Recording the Meeting

The most important step of an AGM is not getting quorum, voting in the committee or presenting the budget.  The most important part of the AGM is how you record of the AGM. 

The record of the meeting is called the Minutes.  Even if you do everything correctly, if you don’t have a detailed set of minutes to prove this, you may as well not have had the meeting.

These minutes should include details of everyone in attendance, quorum figures, voting and election results and be signed by the meeting president and secretary.

You can get a template for your AGM minutes on the Cyprus Communal Guide community hub.  I will include a link to this document in the video description.

What to do if no one turns up to your General Meeting.

So you set the date, notify all owners about the meeting and on the day only a few turn up.  While there are regulations that allow you to proceed with the meeting with low attendance (providing you follow the strict quorum steps in the regulations) this is still not great.  A lack of owner interest in the building is a negative environment and leads to higher default rates and difficulties in running the building.

So how do you increase attendance rates?  Well I will be covering that exact topic in the next episode of the communal property essentials video series.

In this fourth episode of our communal property essentials series I will discuss what type of records you should be keeping, why they are so important, what should be available for inspection by owners & how to easily distribute them.

Importance of accurate record keeping.

You will have heard me say it many times before, but I will say it again, your management committee is responsible for what is most likely millions of euros of people’s property investments. 

So, it should go without saying that your duties should not be performed ad-hoc, you should have structure in the administration tasks of your committee and one of the foundations of this structure is keeping good records.

While pretty much everyone knows they should be keeping some form of records, it may surprise you that when my communal management company takes on a new contract, our biggest challenge usually isn’t arranging staff or organising the maintenance, its decoding years of muddled records. 

This is one of the unavoidable problems with the volunteer-based committee structure.  Your members may change over time, different people each have different levels of administration and bookkeeping skills and different ways they keep their records.

This results not in a lack of information, but way too much conflicting information, with no clear way to identify which is the most up to date. 

Fortunately over the years my communal administration team have got very good at finding order in the chaos but this is a skill they have needed to build over time and is easily preventable. 

As a committee should not only make sure that you keep accurate and detailed records, but that they are kept in a consistent way that someone else can easily and clearly understand them. 

Why is this important? Well if you take a debtor to court and they question the amount they are being asked to pay you will need to present a copy of these records.

If you have an incident at your pool, you may be requested for the records of the pool maintenance, chemical levels and so on.

If you don’t have these records, they are inaccurate, or they are not very clear then this could put you at risk of losing your legal battle and potentially open you up to liability. 

You can also use your records to help identify potential problems and increase efficiency.

So, if you have records of how much water you use in August for the last 3 years and suddenly the usage jumps up this can identify a pool leak. 

Also, as I covered in the previous episode, if you have accurate historic records of expenses you are more likely to calculate your budget more accurately.

The Different types of records your management committee should keep, and why they are so important

There are many different types of records you should be keeping but these fall into two general categories. Financial Records, and General Administrative Records.

Financial records will include Itemised monthly Income & Expense reports, financial summaries, copies of the bank account statements, original invoices, receipts and so on.

General Records would be the unit owner database, records of contacts with owners, records of maintenance, swimming pool test logs, equipment service records, contractors and staff contracts and so on.

The minutes for the Annual General Meeting are also part of your General Records, and the AGM is a subject I will be covering in more detail in the next episode of this communal property essentials video series.

Create a Record of how you keep the records

One of the easiest ways to prevent problems when committee members change, is to put together a committee manual for each position.  This manual details step by step the roles and duties of that committee member.  How things are calculated, how they should be recorded, where particular records are kept and so on.

To create this manual, next time you perform a task simply note each step as you take it and then write this up.  Think how much easier your first few days of being on the committee would have been if you had been handed small ring binder with all this information clearly laid out.

Of course, as you improve on the systems and processes you can update this manual and over time this will improve the efficiency of the management committee and reduce the stress and hassle of its members.

Problems with lack of transparency

While embezzlement from the communal fund is rare, suspicions and accusations are very common.  Almost every committee will have had some form of accusation at some point.  These are usually made by a debtor but any accusation or concern raised can quickly spread and cause damage to the reputation of the committee severely effecting your ability to operate and collect communal funds. 

If you keep accurate and comprehensive accounts you can help prevent these accusations being made, and allow you to easily respond with fact if they are.  If when a comment or accusation is made you don’t have the records to support you, even though you have done nothing wrong the suspicion will remain.

Should everything be available to all unit owners

Many of the records of the committee will contain personal data and/or confidential information.  So the committee will need to follow the rules of the GDPR along with the confidentiality terms of any service agreements they enter into.  If you have not heard of GDPR, effectively this is the new law which has strict requirements and heavy penalties for misuse of personal data.

Due to this there are some records that cannot be distributed to unit owners, such as a list including names of other unit owners, unit owner contact information and so on.

I will be publishing an entire article dedicated to the GDPR regulations and how this effects the committee on my website next month.

I also suggest that the committee draft a non-disclosure and confidentiality agreement which should be signed by any new member of the committee so that it is clear what can and cannot be sent out.

How to distribute reports

The most common way to send out financial summary reports to owners is by email. 

However, email delivery is sometimes hit and miss, and not everyone reads the emails they get. 

Instead I suggest setting up a online cloud storage like dropbox, google drive, onedrive etc. 

Most of these online storage services have some form of free plan and allow you to provide a passworded read-only link to a folder where all the owner reports will be deposited.  This link can be included on all payment notices/receipts and the AGM notice and minutes so unit owners can access this folder whenever they need it  

Remember only documents should be placed in this shared folder that do not contain any personal data or confidential information.

Annual Reports

At your Annual General Meeting of owners your records will be essential as you will need to present an annual summary of finances.  And will also be useful if you present other information such as maintenance updates, pool updates and so on.

If you want to know more about the Annual General Meeting, including how to organise one, make sure its legal and what needs to be included, this will be the subject of the next episode of the Communal Property Essentials Series.

In this Third episode of our Communal Property Essentials series I will cover the 4 key components you need to create an accurate annual budget for your apartment building or resort. 

Why is an accurate budget important?

As a management committee one of your important tasks is the calculation of the budget. Personally I think this is probably the most important duty of the management committee.

When you think about it, If you calculate your budget incorrectly your either going to end up with unpaid bills & reduced service levels, or you will need to scramble to get owners to make an extra payment in the middle of the financial year. Fun!

On top of this, you will also have exposed yourself to liability as a unit owner argue you failed to meet the committee’s legal obligations to maintain the building.  Your building could be sued under the disabilities law over that lift that had to be closed, or because you are left uninsured due to a unpaid insurance policy when an accident happens on site.  

So, how do you create an accurate bud get… well you look at 4 key components.

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1: The Importance of Historic Records

Hopefully you have folders with years of communal expenses for your building.  You should put all these together into a single spreadsheet showing the total for each expense type year by year.  To the total spent on electricity in 2016, a separate total for 2017 and so on.

With utilities don’t just put the cost, I suggest you put down the usage as well.

This way you have a record showing how many units of electricity you use each year.  And you can then use the current price per unit to estimate the cost at the current prices for that usage.  Providing the electricity price does not change drastically, but I will cover that in the next component.

You should also highlight anything out of the ordinary for that year.  So if you had a major water leak last year, you know why the usage was higher than normal last year and that this is not an ongoing increase to plan for this year.

If you don’t have records, or know what types of records to keep, well I will let you into a small secret, that’s going to be the subject of the next video in this series.

2: Budgeting for the unexpected

Wouldn’t it be great if everything always went to plan all the time.  Yea that’s not gonna happen.  The only thing you can guarantee to expect, is the unexpected. 

But you can plan for that too. 

So when you have your estimated costs you should add a small contingency margin to cover any difference.  I generally recommend about 10% on top of whatever the estimate is for that expense. 

You should add this contingency margin to anything that’s subject to change like utility costs, general maintenance budgets and so on.  Anything that is highly unlikely to change like a fixed management fee you can skip this step.

In addition to these individual contingency margins to cover if a individual expense is more than predicted, I also suggest you also include an extra budget item to cover anything that’s completely out of the unexpected.  You call this “out of budget expense”.  The amount is up to you, but I find that if you set this as 10% of the overall budget amount for all the expenses.

If you do this, then you have allot more protection against running out of funds due to higher than expected expenses, or a unexpected out of budget expense.

But if these don’t happen, this money does not disappear, you will have these as a surplus at the end of the financial year which can either be transferred back to unit owners (a welcome bonus especially if your financial year runs January-December) or it can be carried over to the next budget lowering next years fees. 

And Yes, you should be changing your fees every year based on this budget! I have another article all about this which you can read on my website.

3 One off Budget Items

If you know your swimming pool is on its last legs, and needs a new liner urgently, this is a one-off expense, but it needs to be planned for.  Otherwise you will end up with an empty pool or need to find the money by stealing from one of the other budget items.  And stealing’s not cool!

This is where you will find good records helps, as most items in your building have a predicted life expectancy, so if you know a pool liner normally lasts 10 years, and yours is 9 years old.  Its going to be an expensive year!

4 Bad Debt Adjustment

One of the other things most commonly overlooked is budgeting for those unit owners who don’t pay their fees during that year. 

Of course, you shouldn’t be ignoring theses owners and you must take every measure possible to collect this debt, but some of these recover actions, especially legal action through the backlogged Cyprus court system take time.  Time where you have less income but the same level of expenses.

The way to budget for bad debt is using your records look at those units who you feel are unlikely to pay their share of this budget and add those expected unpaid fees together.  So if you think that there will be 10,000 of unpaid fees last year then you need to budget for this bad debt this year. 

You put this on its own budget line item and is called Bad Debt.  The legal justification to include bad debt in the budget is a whole topic on its own and something I will cover in another video later in the year. But sufficed to say you need to include it, otherwise you guarantee to have a cash shortfall.

You will see that all of these key components have one thing in common, its far easier to implement if you have good records.  And the different types of records you should keep and how to keep them will be the subject of the next episode in our communal property essentials Video Series.