Annual service charge statement: checking it line by line before the GM

The annual service charge statement from your property manager (syndic) has just landed in your letterbox or inbox. At the bottom of the page, there is a balance to pay that is higher than last year, or a refund that seems too small. Before paying or protesting, take the time to reread it: it is often the only accounting document a co-owner really reads, and it deserves it.

It fits on one or two pages, but it summarises a year of invoices, meter readings and allocation calculations. A single key applied wrongly or a single reading copied badly is enough to skew your share for years if nobody points it out. Our view: a statement is not judged by its final balance, but by its keys and its meter readings.

The principle is simple: during the financial year, you paid advance payments calculated on the annual budget. The statement compares them with your share of the actual expenses. If the result is a balance in your favour, it is refunded or carried over; if not, you pay the difference. The rules are the same in Flanders and in Brussels.

What does an annual service charge statement contain?

The layout varies with the syndic and the software used, but a complete statement always has the same blocks.

If the column with totals per item or the indication of the key is missing, ask for it. Without these two pieces of information, no check is possible. If the co-ownership keeps its books according to the Belgian standard chart of accounts (MAR/PCMN), these totals come straight from the year’s expense accounts.

Are the allocation keys the ones in your articles of co-ownership?

This is the most rewarding check, and that is why we put it first: a wrong key repeats itself every year until someone challenges it. The starting point is your unit’s share (quotités)GlossaryTerm used by the Civil Code for the fraction of the common parts attached to each unit, also called quotités. It is set in the deed of division according to the respective value of the private parts and determines each co-owner's number of votes at the general meeting. See the glossary in the common parts, set in the deed of division (acte de base / basisakte). But the articles can provide a usefulness criterion for certain charges: a unit with no access to the lift, or a ground-floor shop, may be excluded from certain costs.

Take the deed of division and co-ownership regulations and check three things:

• the denominator used matches the total provided for (1,000, 10,000 or another figure);
• items with a specific key (lift, heating, garages, private garden) are shared only among the units concerned;
• no key has changed from one year to the next without a decision.

The syndic cannot change an allocation key on their own, even if it seems unfair to them. The change is a matter for the general meeting, by the majority set by law, or for the justice of the peace at the request of a co-owner. The applicable majorities are set out in the page on voting rules and majorities.

Water and heating: how do you check the meter readings?

Individual consumption is the main source of discrepancies. It depends on a reading taken by a person or remotely, a meter number and a date.

Ask yourself these questions. Is the opening reading the same as the closing reading on the previous statement? Is consumption consistent with last year, allowing for an absence or a change of occupants? Is the meter number really yours? Has an estimated consumption been flagged as such?

For heating, most buildings combine a fixed share, allocated by shares or a floor-area key, and a variable share based on heat cost allocators or heat meters. Check that the percentage of the fixed share is the one that was decided. How allocators work and the pitfalls of water billing are covered in the page on splitting water and heating costs.

A large gap between the sum of the individual meters and the main water meter must be explained: a leak in the common parts, a stuck meter, water used for watering or cleaning. The difference must not quietly disappear into a ‘miscellaneous’ line.

Which charges should not be in your share?

Some expenses concern only one co-owner and need not be borne by everyone:

• reminder, formal notice or debt collection costs relating to another unit’s arrears, where the regulations or the syndic contract provide for charging them to the debtor;
• a repair in a private part, for example a pipe serving only one apartment;
• fees charged by the syndic for a service requested by one co-owner, such as a sale file.

Keep an eye on insurance claims too. When the building’s insurance pays out, the excess and the uncovered part must be shared as provided in the articles or in the decision taken, and the payment received must appear as income. Arrears themselves, if they are large, are easier to read in the accounts than in the statement: see the page on a co-owner who is not paying.

Finally, the contribution to the reserve fundGlossaryTotal of the periodic contributions intended for non-recurring expenditure, such as replacing the heating system or the lift. It becomes mandatory no later than five years after provisional acceptance, with an annual contribution of at least 5% of the previous financial year's ordinary service charges, unless the general meeting decides otherwise by a four-fifths majority. See the glossary is not a charge that has been used up. It must appear on a separate line, not buried in current expenses. The page on working capital and reserve fund sets out its rules.

From last year’s balance to the amount to pay: an example

The carried-over balance is an inconspicuous item, where a sign error easily goes unnoticed. Take a fictitious unit:

Check that the previous balance matches the amount on the previous statement exactly, and that a refund already paid has not been carried over a second time. Also match the advance payments on the statement against your bank statements: a payment booked to another unit or recorded late can happen, especially when several co-owners share the same name.

You find an error: how do you get it corrected?

First things first: do not stop paying all your charges because of one disputed line. Pay the undisputed part, and start by writing to the syndic, quoting the line, the amount and the reason for your question. Ask for the documents: the syndic must give co-owners access to the non-private documents and information of the co-ownership (Art. 3.89, § 5). A data-entry error is often settled at this stage, with a correction in the next statement.

If no answer comes, contact the accounts auditorGlossaryPerson, whether or not a co-owner, appointed each year by the general meeting to check the accounts of the owners' association. Their powers and duties are set out in the house rules. See the glossary, whom the general meeting appoints every year (Art. 3.91), and the co-ownership council if there is one. You can also ask for an item to be added to the general meeting (GM) agenda.

At the meeting that approves the accounts, vote against or ask for approval to be conditional on the correction, and have your intervention recorded in the minutes. If the decision seems irregular, fraudulent or abusive to you, you can bring the matter before the justice of the peaceGlossaryJudge with jurisdiction, since 1 January 2019, over all disputes relating to the co-ownership of buildings, whatever the amount claimed. A clause in the articles that would refer such disputes to an arbitrator is deemed unwritten. See the glossary within four months of the date of the general meeting (Art. 3.92, § 3). The procedure is described in the page on challenging a GM decision.

To place the statement within the full cycle of the building’s finances, budget, funds and accounts, go back to the page on co-ownership service charges.