Proper settlement of service charges
Published:
Receiving a paper titled "Service Settlement" once a year can be a stressful experience, especially if it ends with a high balance due or if it is your first time and you "miscalculated" your advances. However, many tenants (and unfortunately, many landlords) believe that the process ends with the delivery of any cost overview. Some even think it is sufficient to simply send invoices from energy suppliers. However, the law recognizes the concept of **"proper settlement"** (řádné vyúčtování). If a settlement does not meet these parameters, from a legal perspective, it is as if it does not exist — and this has significant consequences for both parties.
In this article, we will analyze what a settlement must contain to be valid and how to defend yourself if the owner presents you with an unclear scrap of paper or if it contains errors.
## What does it mean for a settlement to be "proper"?
For a settlement to be considered proper (and thus capable of making an overpayment or underpayment due), it must meet the requirements set forth by Act No. 67/2013 Coll. (the Services Act). Propriety is not just about correct calculations, but primarily about clarity and verifiability.
**A proper settlement must specifically include:**
1. **Actual cost amount:** It must be clear how much the service provider (e.g., heating plant, waterworks) actually invoiced for the services provided and consumed.
2. **Amount of advances paid:** The exact sum of all advance payments the tenant paid during the accounting period.
3. **Allocation key:** It must state the rule used to divide costs among tenants (e.g., according to floor area, number of persons, or meter readings).
4. **Clarity:** The tenant must be able to understand from the document how the final figure was reached.
If the settlement is missing, for example, information on the total amount you paid in advances, or if it includes items that do not belong in services (e.g., contributions to the repair fund), **the settlement is not proper**.
However, if the settlement merely contains defects—e.g., a calculation error, a double entry of an item, etc.—but is calculated correctly and generally meets the above requirements, it is proper, merely defective. We will discuss this distinction later.
## Deadlines you must monitor
The law sets a clear schedule. Unless otherwise agreed in the contract, the following applies:
* **Delivery of the settlement:** The landlord must deliver it to you no later than **4 months** after the end of the accounting period.
* **Financial settlement:** Overpayments and underpayments must be settled no later than **4 months** from the date the settlement was delivered to the tenant.
## What to do when the settlement is not in order?
If you receive a settlement that is incomprehensible, incorrect, or lacks legal requirements, you must not remain silent:
### 1. Right to inspect supporting documents
You have a legal right to request that the landlord provide documentation for the service costs. They must allow you to make copies of invoices from suppliers or meter readings. If they refuse, the settlement cannot be proper.
### 2. Filing objections
This is the most important step. If you disagree with the settlement, you must file **written objections**.
* **Deadline:** You have **30 days** from the date of delivery of the settlement (or from the inspection of supporting documents).
* **Content:** This varies depending on what you are objecting to. If it is an obviously improper settlement (e.g., the landlord only sent an invoice from the housing cooperative and information that you owe an underpayment for electricity...), then it is sufficient to object that the settlement "is not proper." (If it is not proper, it does not legally exist, so you do not even have to send this letter—but for the sake of mutual relations and legal certainty, it is better. The owner will not feel they got away with it and that money is coming, while you live under the impression that you don't have to pay anything).
The difference is if the settlement is proper—it contains all important requirements but something is wrong (there is an error)—then the error must be specifically stated (e.g., "the number of persons does not match," "the overpayment from last year was not included," "the settlement does not include total costs for the building," etc.).
**Warning:** If you do not file objections on time, your right to dispute the settlement in the future becomes significantly complicated.
## Consequences of an improper settlement
If the landlord presents an improper settlement and does not correct it even after your objections, unpleasant legal consequences arise for them:
1. **The underpayment does not become due:** As long as the settlement is not proper, you are not obliged to pay any underpayment. Therefore, you cannot fall into arrears, you cannot be charged default interest, contractual penalties cannot be applied, nor can the lease be terminated for this reason.
2. **Late payment penalty:** According to the law, you are entitled to a penalty for delay with non-monetary performance (unless agreed otherwise, this amounts to CZK 50 for each day of delay in delivering a proper settlement). For stubborn landlords, this can wipe out your entire underpayment after a few months. For truly ignorant ones, it can bring a nice income after several years. (Yes, it really happens more often than you think—tenants might not receive any settlement for 3 years, usually because there is an overpayment, and then suddenly an underpayment appears that the owner wants, and here they can fail fundamentally).
**Final advice:** Always communicate in writing (by registered letter, or as agreed in the contract—email is often listed as official communication, in which case an email is sufficient. However, a registered letter is a certainty—it is considered delivered on the 3rd day after sending, regardless of whether it actually was or not). If the owner only tells you verbally or writes in an email "you owe five thousand extra this year," consider it information, not a proper settlement that you should pay. As you learned earlier—point this out to them; it will be better for everyone, but know that this is not how it works.