maintenace money

[thelfamily]

Have just read on another forum a question about maintenance fees. The question was should this money be paid before the completion or on the handover (even if the property isn't finished).

Surely, if it is on the handover then the property is finished and maintenace needs to be paid? or I have misread the post?

Has anyone experience of this.

 

[Alan Cockayne]

Annual charges

Have just read on another forum a question about maintenance fees. The question was should this money be paid before the completion or on the handover (even if the property isn't finished).

Surely, if it is on the handover then the property is finished and maintenace needs to be paid? or I have misread the post?

Has anyone experience of this.

Hi guys.

I read it too.

Let's be clear on this... The property is not fully yours until the registration documents (usufruct or general developer registration) are in your possession therefore charges on it are unlawful. Be firm about that. Judicial documents take much longer so you will take the developer's papers till then.

When you have any of these Certificates of Registration you will be charged fees as stated on your contract. It could be for the full years maintenance and/or management fees (up front) or in stages depending on how you've arranged it with your lawyer.

However, generally you are asked for final payments at handover presuming all your snagging and furnishing etc. is completed. You may then want to use it, if only to watch final touches and that's when the managment demand fees kick in.

When you have your keys is not necessarily when you have your papers. Your lawyer may not have completed the signings and stamps, therefore you risk being asked for maintenance fees even if you don't use it.

What I think is a good idea is to take handover keys from your lawyer on receiving the ownership documents. That way he is charged any accrued fees for delays. But this is Egypt and you need a strong character to enforce any stipulations.

Water and electricity charges are paid as and when you use the property, either by the safe method of meterage or by the project management guestimation.

Finally, you may be an early owner faithfully waiting through all the building mess and noise. You will be asked for fees even though the facilities on the project are non-existant. You must negotiate a strategy of fees structured to what you get for your money..... But Egyptian lawyers have little leverage....

It's about what you place on your contract, both in English and Egyptian that gives you the rights under Egyptian Law, irrespective of what site managers say or pressurise you to pay. Putting clauses into it later will not be upheld.

If your project has an owner's association, join and use their strengths to keep from being conned. If there isn't, think about making one. P.M. for advise on this.

Alan.

 

[SHARM-SERVICES]

Hi guys.

I read it too.

Let's be clear on this... The property is not fully yours until the registration documents (usufruct or general developer registration) are in your possession therefore charges on it are unlawful. Be firm about that. Judicial documents take much longer so you will take the developer's papers till then.

When you have any of these Certificates of Registration you will be charged fees as stated on your contract. It could be for the full years maintenance and/or management fees (up front) or in stages depending on how you've arranged it with your lawyer.

However, generally you are asked for final payments at handover presuming all your snagging and furnishing etc. is completed. You may then want to use it, if only to watch final touches and that's when the managment demand fees kick in.

When you have your keys is not necessarily when you have your papers. Your lawyer may not have completed the signings and stamps, therefore you risk being asked for maintenance fees even if you don't use it.

What I think is a good idea is to take handover keys from your lawyer on receiving the ownership documents. That way he is charged any accrued fees for delays. But this is Egypt and you need a strong character to enforce any stipulations.

Water and electricity charges are paid as and when you use the property, either by the safe method of meterage or by the project management guestimation.

Finally, you may be an early owner faithfully waiting through all the building mess and noise. You will be asked for fees even though the facilities on the project are non-existant. You must negotiate a strategy of fees structured to what you get for your money..... But Egyptian lawyers have little leverage....

It's about what you place on your contract, both in English and Egyptian that gives you the rights under Egyptian Law, irrespective of what site managers say or pressurise you to pay. Putting clauses into it later will not be upheld.

If your project has an owner's association, join and use their strengths to keep from being conned. If there isn't, think about making one. P.M. for advise on this.

Alan. Coralife-Style Consultants.

With all due respect to you, it is my understanding that a purchaser is the legal owner of a property, either by freehold right or by 99 years usufruct right, as soon as the contract is signed by both parties - given that the full due diligence checks have been made and the first party is legally owning the property and able to sign the contract etc.

If we are talking about the signature validation case which is used to authenticate property purchases in Sharm El Sheikh (and more often than not used in all property purchases to avoid the restrictions registering the property creates) then this merely proves the signature on the contract belongs to the first party and does not affect the owners owning rights.

Back to topic...

Some properties are sold on the basis of being delivered unfinished for the owner to finish it themselves, but this must be stipulated in the contract and in all cases I know of that offer this the client is fully aware that they will receive their property in this condition. In majority of off-plan property purchases the property is delivered finished.

Maintenance money is paid with a view to cover the upkeep of communal areas, pools, gardens etc. This is normally done on the handover of the property in exchange for releasing the key. The maintenance money is often withheld as a negotiation point between owner and developer to finish the snag list on the property (and should never be paid until the owner is fully satisfied with the property).

Sometimes units within off plan projects are delivered before the project is completed, usually so as not to accrue further late fees. In these cases it is often argued that maintenance money should not be paid as there is no swimming pool, gardens, communal lighting etc to pay for, whilst the developer may argue security staff need to be paid. In these cases, if your maintenance fee is paid as a one-time lifetime payment then by delaying the payment you are not saving anything, but potentially delaying the project further as your maintenance money would probably be used in continuing the build. I recommend in these cases to pay, but have it documented. In the cases where maintenance is paid annually, then I would argue to either delay the payment until facilities are working, or hugely reduce the payment until this time.

 

[Alan Cockayne]

Conveyancing.

With all due respect to you, it is my understanding that a purchaser is the legal owner of a property, either by freehold right or by 99 years usufruct right, as soon as the contract is signed by both parties - given that the full due diligence checks have been made and the first party is legally owning the property and able to sign the contract etc.

Respectfully, you are correct on all points.

However, a contract that is duly signed by both parties does not give the 2nd party (customer) the right to use the property till the Signiture Validity (or Usufruct) document is stamped and signed by the Notary and in the 2nd Party's possession..

We have similar situations in the UK that allows buyers to enter while awaiting full Deeds of Entitlement but not to alter or use the property in case the searches and due diligences find issues. Either party could still pull out of the sale. Once notarised there should be no issues.

That means the legal teams must finish their work on a buyer's behalf in order to invoice them for their duties. In Egypt there is a habit of leaving things half completed. Why take the risk?

That means any maintenance fees can be collected according to the articles stipulated in the contract. In the event of little or no facilities, there may be room for compromise because the buyer placed addendums to the contract by his/her lawyer. Those that allow developer contracts to stand unchecked may not find such friendly arrangements.

Finally, why shouldn't a developer complete the project from his own Bank funds and not have to rely on client monies to keep some incompetent staff in work.

Alan.

 

[SHARM-SERVICES]

Finally, why shouldn't a developer complete the project from his own Bank funds and not have to rely on client monies to keep some incompetent staff in work.

Alan. Coralife-Style Consultants.

I cannot agree more on this point.

When advising clients on safe off-plan projects to buy, one thing we recommend is projects by large developers who have the means to complete with making a single sale.

Unfortunately this is often not the case and projects are either late or even uncompleted due to lack of funds. Knowing the developer is financially sound is important.

 

[thelfamily]

Thank you both very much for this info. The bottom line appears to be go with a developer who has the financial means, rather than a developer waiting for your maintenance to actually finish the pools, gardens etc. Thanks guys.

 

[Alan Cockayne]

Real estate reform.

Thank you both very much for this info. The bottom line appears to be "go with a developer who has the financial means, rather than a developer waiting for your maintenance to actually finish the pools, gardens etc." Thanks guys.

Yes. That's correct.

But how would a "novice" investor know that the project was financially capable of completing the development (lighting, pools, landscaping, shopping malls and cafe's, bars etc.) without doing a legal search on the project and its financial status.

That means enlisting the help of a good sales agent and his legal teams who have paid independently for the correct due diligence reports on the developer and his project. Many internet based companies (those who have multi-country projects) rely on local knowledge as they have little experience of these locations. How would they have the right information if the developer's lawyer was the only source.

This would be biased. It could lead to misrepresentation. It has done in recent cases.

Finally, in a recent Real Estate Conference in Cairo, speakers on each panel were insisting on change and clearer rules and regulation. This can only work if the industry strive for it and if investors are more careful before parting with money.

The phrase "Quick Bucks" springs to mind.

Alan.

 

[madmary1]

Gold sharm a rip off

What is going on at that complex now they are going to charge all owners 300le a month as a standard fee for the water even if you don't stay there. Once you have taken the handover off your propertry they claim they can back date this and charge you this fee. They are refusing to do any work for anyone and if you cause any problems with them then you will be sorry this was what my friend was threaten with at the weekend. They have a cheek how can they get away with this and the compex is a mess rubbish everywhere and I even seen 2 rats god what a dump and it has potential but why will the mamnagement not listen they are greedy for money its such an injustice.What can we do:::

 

[sharmelsheikh]

What is going on at that complex now they are going to charge all owners 300le a month as a standard fee for the water even if you don't stay there. Once you have taken the handover off your propertry they claim they can back date this and charge you this fee. They are refusing to do any work for anyone and if you cause any problems with them then you will be sorry this was what my friend was threaten with at the weekend. They have a cheek how can they get away with this and the compex is a mess rubbish everywhere and I even seen 2 rats god what a dump and it has potential but why will the mamnagement not listen they are greedy for money its such an injustice.What can we do:::

You can write to the Prime Minister of the Egyptian Government; Dr Nazief. You can also write the Ministers for Investment and international co-operation. It would be useful to write to the Minister of Tourism and explain your problems. You can join the group formed to fight managers and management at Gold Shame. If you put your contact they will be in touch with. Apparently this group has written to the Prime Minister and received a response. It seems that Gold Sharm fiasco is under the microscope of the Egyptian Government. By the way the electricity was cut off for 7 hours yesterday at Gold Sharm and they cut the water supply to some residents because they refused to pay maintenance for services not provided. We will have to get together and fight collectively. There is no other way. Keep fighting and keep writing.

 

[jojo]

Hi guys.

I read it too.

Let's be clear on this... The property is not fully yours until the registration documents (usufruct or general developer registration) are in your possession therefore charges on it are unlawful. Be firm about that. Judicial documents take much longer so you will take the developer's papers till then.

When you have any of these Certificates of Registration you will be charged fees as stated on your contract. It could be for the full years maintenance and/or management fees (up front) or in stages depending on how you've arranged it with your lawyer.

However, generally you are asked for final payments at handover presuming all your snagging and furnishing etc. is completed. You may then want to use it, if only to watch final touches and that's when the managment demand fees kick in.

When you have your keys is not necessarily when you have your papers. Your lawyer may not have completed the signings and stamps, therefore you risk being asked for maintenance fees even if you don't use it.

What I think is a good idea is to take handover keys from your lawyer on receiving the ownership documents. That way he is charged any accrued fees for delays. But this is Egypt and you need a strong character to enforce any stipulations.

Water and electricity charges are paid as and when you use the property, either by the safe method of meterage or by the project management guestimation.

Finally, you may be an early owner faithfully waiting through all the building mess and noise. You will be asked for fees even though the facilities on the project are non-existant. You must negotiate a strategy of fees structured to what you get for your money..... But Egyptian lawyers have little leverage....

It's about what you place on your contract, both in English and Egyptian that gives you the rights under Egyptian Law, irrespective of what site managers say or pressurise you to pay. Putting clauses into it later will not be upheld.

If your project has an owner's association, join and use their strengths to keep from being conned. If there isn't, think about making one. P.M. for advise on this.

Alan.


Hi Alan

I am due to take handover of my apartment on the Viva Reef project in Nabq in August. The blocks that have been released for handover are the first wave of handovers so the actual Viva Reef site is still a building site with handovers occurring for another year after mine. I have been told we have to pay the first years maintenance fees to complete the handover and have a zero outstanding balance with the developer. This seems fair enough. However our contract states that the maintenance fees are to cover; -
1. Mains Electricity
2. Domestic Water supply, Drainage and Sewage
3. Garbage Collection
4. Car Parking.
5. Hard and Soft Landscaping.
6. Swimming Pools and Pool furniture.
7. Safe and clear access.
If the site is still going to be a building site for the first year that we take possession of it then some of these facilities won't be in place. Where do I stand with the developer about negotiating a reduced rate of maintenance until all the services that are stated in our contract takes place? I dont want to end up in a site like Gold Sharm but neither do I want to be paying for services I wont be receiving. I am a first time buyer abroad and this is a very exciting but nervy time for us and we want to do it properly but not be taken for fools.
Jo

 

[Alan Cockayne]

Contract clarity

Hi Alan

I am due to take handover of my apartment on the Viva Reef project in Nabq in August. The blocks that have been released for handover are the first wave of handovers so the actual Viva Reef site is still a building site with handovers occurring for another year after mine. I have been told we have to pay the first years maintenance fees to complete the handover and have a zero outstanding balance with the developer. This seems fair enough. However our contract states that the maintenance fees are to cover; - .........

I dont want to end up in a site like Gold Sharm but neither do I want to be paying for services I wont be receiving. I am a first time buyer abroad and this is a very exciting but nervy time for us and we want to do it properly but not be taken for fools.
Jo

These problems occur because your contract has nothing in it to substantiate your rights and is not flexible enough for you to address the maintenance issues in a sensible way without conflict.

What developers expect is for everyone to do it the Egyptian way and pay up. This is down to how strong your contract was and duly signed for in the beginning.

Agents and lawyers originally trusted the developers to complete under contractual obligations, but they knew cash-flow would interfere with completing a project especially if costs rise or funds were missapropriated. The recession hasn't helped. The trust has gone I'm afraid and these developers need to shape up.

Once again I stress how important it is to "Collectively" push for
(a) an understanding of the term of agreement in your management part of the contract through the lawyer you appointed at the point of sales and
(b) to form a home-owners association so that everyone is of the same mind and act accordingly in pushing to resolve these issues.

Queenie on this forum had success in her project by doing just that.

Alan.

 

[jojo]

Thanks Alan
What is the best way to set up this owners association. We have already formed a facebook group to discuss our experiences and have a thread on here. Do you have an email address for Queenie. I have tried to PM her about of couple of things i want to ask her but she doesnt seem to be active on here anymore and her PM box is full.
Jo