The Ministry of Development has proposed a solution to limit long-term housing at the expense of its neighbours. The government is preparing a reform on the basis of which debtors will bear the consequences of failing to pay their bills. Insolvent residents may lose their homes.
How's it been so far?
Article 16(1) Local Property Act (i.e. Journal of Laws of 2020, item 1910) allows the housing community to demand the sale of the premises by auction if the owner is late long-term with payment of due fees. It is worth mentioning that the person whose apartment has been sold has no right to apply for a replacement place.
However, the problem is the word "long-term" which can be understood in various ways. Following the referral of debtors to court, the courts often refuse to grant permission to sell. The reason for this is that the apartment is worth far more than the amount of debt, and throwing people out on the street is the ultimate.
Debtors must bear the consequences of their debts
The amendment of the Local Property Act of the Ministry of Development, Labour and Technology is to be passed in 2021 The most important change concerns the treatment of debtors. Finally, it will be clarified how long it will be possible to bid on their apartments.
First of all, it is asked to indicate in the law the quota threshold from which bids would be possible. This solution will make people not lose their apartment for small amounts of a few one thousand. The government has a solution to this situation.
As a result, the biding arrears are expected to be equivalent to a minimum of nine months' fees. In any case, the bidding decision would still be made by the court. In an exceptional situation, when the tenant does not pay for an important reason, such as illness, the court might refuse to take his apartment.
Expert doubts about the amendment
Lawyers criticise some issues concerning the new idea of the Ministry of Development.
The legislator should consider the creation of an effective recovery mechanism which would be applied even before the start of depriving the premises. The idea to help debtors pay off their debts is, at least, to spread the debt into instalments.
It does not seem appropriate to set the moment when this mechanism is initiated by means of a period of catching up. According to the expert opinion, a specific quota ceiling should be set from which the community could take action against the debtor.
The idea of creating a real redress mechanism should be assessed positively. The amendment may be a tool to address the problem of the debtor being kept by the general population of the building. However, it cannot be a tool that will break the lives of people who actually fail to cope with debt due to illness of their own or their child. Perhaps replacements should be prepared for such people.