How to settle service charges with tenants

In this guide, settling with tenants means the settlement of services connected with the flat, not a rent statement and not interest on the deposit. It is governed by Act No. 67/2013 Sb. The landlord, called the service provider in the act, compares actual costs with the advances paid and settles the difference with the tenant.

What the settlement must contain#

The settlement must show the actual cost of each service, the total advances received, and the difference. It has to be possible to see the rules used to allocate the costs. Those rules are in the lease. If they are not, the statutory rules apply.

• Water, heat, hot water, lighting of common areas, cleaning, the lift, waste, and other services the landlord arranges for the flat.
• Allocation by meters, floor area, or number of people. The tenant reports a change in the number of people without undue delay (§ 12).
• Heat costs are split into a basic component and a consumption component. The formula is set by the implementing decree.
• Building depreciation, inspections, and the cost of preparing and delivering the settlement itself do not belong here.

The tax depreciation of the building is the landlord's expense for income tax. It is not charged to the tenant as a service.

When the settlement must be delivered#

The billing period is at most twelve months. A calendar year ends on 31 December. The settlement must be delivered no later than four months after the period ends, so by 30 April. The overpayment or underpayment is then settled in the agreed time, and in any case within four months of delivery.

Defects in the settlement do not postpone the due date of an overpayment. They also do not postpone an underpayment when the defect does not change the calculated amount. Keep proof of delivery: a data box, a registered letter, or a receipt the tenant signs.

Objections and supporting documents#

Within 30 days of delivery the tenant can ask in writing for the costs, the allocation method, how the advances were set, and a chance to copy the documents. That request is answered within 30 days. Objections to the method and the contents are filed within 30 days of delivery, or within 30 days of receiving the documents if the tenant asked for them first. If no objections arrive in time, the tenant is treated as having agreed. Timely objections are dealt with within 30 days.

If the settlement goes out late#

A party who misses a duty under the act, in particular by not delivering the settlement, not providing documents, or not dealing with objections, pays the other party a penalty under § 13. Unless a different amount is agreed, it is CZK 50 for each started day of delay. An agreement with at least two thirds of the tenants in the building, or a decision of the cooperative or the owners' association, can set less, but not more than CZK 50 a day. The penalty is not due when meeting the deadline could not fairly be required, or when the other party caused the delay.

How to put the settlement together#

• Close the billing period and collect the suppliers' invoices.
• Read the meters and check the number of people used for the allocation.
• Split the costs the way the lease says: meters, area, or people.
• Add up the advances the tenant actually paid in the period.
• Calculate the balance for each service and in total.
• Deliver the settlement in a way you can prove.
• Settle the difference within four months and keep the documents.

When services are not settled#

The parties can agree a flat fee for services, and that fee is not settled. For a lease longer than 24 months, or an open-ended lease, the flat fee cannot include heat, centrally prepared hot water, the supply of water, or sewage. Those are always settled.