When renting a residence, the tenant is generally required to pay, in addition to the agreed monthly rent, for other consumed services such as electricity, water, gas, and waste collection. However, tenants are often also asked to contribute to the repair fund and the homeowner association loan payments. What does a lawyer think about this, and what does case law say? Can paid fees be claimed back from the property owner retroactively? Additionally, find out at the end of the comment whether the property owner has the right to ask for a service fee from the new tenant.
HUGO lawyer Merike Roosileht explains:
In the case of a rental agreement, it is a use agreement regulated by Chapter 15 of the Law of Obligations Act (hereinafter LOA). According to LOA § 271, the tenant is obligated to pay the landlord rent, and under LOA § 292(1), in addition to paying rent, the tenant must bear other costs related to the rented property (additional costs) only if agreed upon. Additional costs include fees for services and actions provided by the landlord or third parties related to the use of the property.
Therefore, the tenant is not required to pay additional costs if not agreed upon. If the tenant has agreed to pay additional costs in addition to rent, the Supreme Court Civil Chamber in case no. 3-2-1-91-15 p. 12 stated that the tenant must reimburse the landlord for presumed costs related to the use of the property that the landlord has paid to a third party. The fee for electricity consumed by the tenant should be considered as a cost related to the use of the property according to LOA § 292(1), whether the usage occurs through a legal or illegal chain.
“It is unreasonable to demand payment for the repair fund and purpose-specific loan payments from the tenant”
To avoid future disputes between the landlord and the tenant, it is advisable to specify in the rental agreement which specific additional costs related to the rented property the tenant is obligated to pay. These usually include water, electricity, heating, gas (according to meters), and maintenance fees that the landlord is obligated to pay to a third party. All these costs are related to the use of the rented property and should only be paid if agreed upon. It is unreasonable to demand payment for the repair fund and purpose-specific loan payments from the tenant, as these costs are not directly related to the use of the rented property (the rental object), according to LOA § 292(1).
Under LOA § 273, an agreement is void if the tenant’s obligation is not directly related to the use of the rented residence. Payment for the repair fund and loan payments for an apartment building are not directly related to the use of the rental apartment, and these costs should be borne by the landlord, not the tenant. According to the Apartment Ownership and Apartment Associations Act, which came into force on January 1, 2018, § 35(2) items 5 and 6, it is the apartment owner’s obligation to create a sufficiently large repair fund and pay loan installments for the repair of the co-owned property. The landlord is the owner of the apartment property, who is responsible for the repair fund and loan payments. These payments are made by apartment owners for the repair of the co-owned property and for improving the condition of the building, and these costs are not related to the use of the apartment property as real estate. Therefore, these are not considered additional costs under LOA § 292(1) that can be demanded from the tenant in addition to rent.
“The tenant can claim back the paid repair fund and loan payments”
Even if the tenant has paid these fees or agreed with the landlord, the tenant has the right to claim them back from the landlord based on unjust enrichment provisions, considering the invalidity of the agreement under LOA § 273 and LOA § 1028(1) on unjust enrichment. Such an agreement that deviates from the law to the tenant’s detriment is void, and the proceeds from the void transaction must be returned according to the unjust enrichment provisions.
According to the General Principles of Civil Code Act (hereinafter GPCCA) § 84(1), a void transaction has no legal effect from the outset. The proceeds from a void transaction must be returned according to the unjust enrichment provisions unless otherwise provided by law.
LOA § 1028(1) states that if a person (recipient) has received something from another person (transferor) as payment for an existing or future obligation, the transferor may claim it back if the obligation does not exist, does not arise, or is later extinguished.
Therefore, the tenant has the right to claim back the repair fund and loan payments that were paid unjustly. Under GPCCA § 146(1), the limitation period for claims arising from a transaction is three years.
According to the law, the tenant must pay for services and actions related to the use of the residence but is not required to bear costs related to the maintenance of the building or residence. Therefore, if it has been agreed that the tenant must bear costs related to the maintenance of the building, such an agreement is void. The landlord must return to the tenant the amounts that the tenant has paid for the repair fund and loan balances of the building. The Tallinn Rental Commission also held the same position in its decision no. 11-1/203/11 of May 4, 2012.
Additionally, the tenant may demand interest on the returned amount from the date the claim is made under LOA § 113, at the rate specified in LOA § 94, which is currently 0.02% per day.
“The property owner has no right to demand a service fee”
It is quite common to encounter situations where an apartment is rented directly from the owner without the involvement of a real estate agent, but the owner still demands a service fee.
A service fee may only be requested if the rental property was found through the services of a real estate agent. This fee is for the real estate agent, not the owner.
The owner is entitled to request a deposit of up to three months’ rent. No other fees may be demanded by the owner. If a real estate agent concludes the rental agreement, the service fee includes the corresponding charges, which the agent receives as compensation for the mediation services.
