Utility and Service Charges Settlement in Leases: How to Do It Right and Defend Against Errors

By When Must the Landlord Deliver the Settlement?

The rules for services associated with the use of an apartment are governed by Act No. 67/2013 Coll. According to its Section 7(1), the landlord must settle the actual amount of costs and advances for individual services and deliver the settlement to the tenant no later than 4 months after the end of the billing period.

In practice, the billing period is most often the calendar year, i.e., the period ending on December 31. If so, the four-month period means that the settlement must be delivered to the tenant no later than the end of April of the following year. Attention – the law explicitly speaks of delivery, not just sending.

In my legal practice, I very often see landlords underestimating this deadline. Yet its non-compliance has real consequences: according to Section 13 of the Act, a tenant may demand a penalty from a landlord who fails to deliver the settlement on time amounting to up to CZK 50 for each commenced day of delay. The same penalty applies if the landlord does not allow the tenant to inspect the settlement's underlying documents or fails to handle objections on time.

What Must the Settlement Contain?

A settlement is not just a single number at the bottom of a page. To be valid and reviewable, it must, according to Section 7(2), contain the actual amount of service costs broken down by individual services, together with the total amount of monthly advances received. The goal is for the settlement to show a clear and verifiable amount of any overpayment or underpayment – the tenant must be able to verify how the landlord arrived at the numbers and what allocation key was used to distribute the costs.

Under Section 8(1), the tenant has the right, within 30 days of receiving the settlement, to ask the landlord in writing to provide the underlying documents for the settlement – i.e., to present invoices and records proving the costs for individual services and the method of allocation. The landlord must comply with such a request within 30 days of its delivery.

Any overpayments and underpayments are then settled within the agreed period, but no later than 4 months from the delivery of the settlement (Section 7(3)).

Which Costs Belong in the Settlement and Which Do Not?

The landlord cannot include all costs paid in connection with the apartment in the service settlement. They may only include costs for services – and a service is only something from which the tenant directly benefits.

Act No. 67/2013 Coll. contains a non-exhaustive list in Section 3(1), stating that services include in particular:

• supply of heat and centralized provision of hot water,
• supply of water and wastewater disposal,
• operation of the elevator,
• lighting of common areas in the building,
• cleaning of common areas in the building,
• disposal of wastewater and cesspool cleaning,
• enabling the reception of radio and television signals,
• operation and cleaning of chimneys,
• municipal waste collection.

Conversely, a service is not a number of costs that, while related to property ownership, do not directly benefit the tenant. The service settlement therefore does not include, for example:

• contributions to the repair fund (fond oprav),
• remuneration for members of the homeowners' association (SVJ) committee,
• overhead costs,
• building insurance,
• building management costs,
• costs for meter readings and allocation,
• administrative costs.

These costs are borne by the landlord as the owner. This does not mean, however, that they cannot project them into the lease relationship – quite the opposite. The landlord can reflect these items upfront when negotiating the lease, specifically in the amount of the rent itself. However, they cannot be retroactively rebilled as part of the service settlement. Thus, if a repair fund or building insurance appears in the settlement, it is a defect that the tenant can object to.

How Can the Tenant Defend Against a Defective Settlement?

If the tenant discovers an error in the settlement – whether incorrect allocation, uncredited advances, or exactly those costs that do not belong in the settlement at all – they must act quickly. The law gives them a relatively short deadline for defense.

According to Section 8(2) of Act No. 67/2013 Coll., the tenant must submit objections to the method and content of the settlement to the landlord within 30 days of the delivery of the settlement (or from the delivery of the underlying documents, if requested). If the tenant does not file objections within this period, the law automatically presumes that they agree with the method and content of the settlement. By doing so, they practically lose the opportunity to challenge the settlement later. The landlord must handle timely raised objections within 30 days of their submission.

From practice, I therefore recommend always submitting objections in writing and demonstrably — ideally by registered mail or via a data box (datová schránka). Only then will the tenant be able to prove in the event of a dispute that they filed the objections on time. In the objections, it is enough to clearly identify the settlement in question, describe the specific defects (for example, that it includes the repair fund or building insurance), and call on the landlord to correct it. If the landlord fails to handle the objections or disagrees with them, I recommend further resolving the matter with a lawyer who will determine the optimal course of action. Timely filed objections are in any case the absolute foundation for a possible future defense.

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Summary: What to Watch Out For

🚩 4-month deadline: The landlord must deliver the settlement to the tenant within 4 months of the end of the billing period — for a calendar year, usually by the end of April.
🚩 Only actual services: The settlement only includes costs for services from which the tenant directly benefits (e.g., electricity, heat, water, cleaning).
🚩 What doesn't belong: The repair fund, committee members' remuneration, building insurance, management costs, overhead costs, and administrative activities are not services — they are borne by the landlord and can only be accounted for upfront in the rent amount.
🚩 Objections within 30 days: The tenant must challenge a defective settlement within 30 days of its delivery; otherwise, under the law, they are deemed to agree with it. Submit objections in writing and demonstrably.
🚩 Penalty for delay: If the settlement is not delivered on time (and in case of other statutory violations), the tenant can demand a penalty from the landlord of up to CZK 50 for each day of delay.

Did Your Utility Settlement Get Complicated?

Utility settlements tend to be technical and prone to errors – whether you are a landlord who wants an unquestionable settlement or a tenant who feels someone is asking them to pay more than they should. As a lawyer specializing in real estate and lease relationships, I will help you assess the settlement, draft or handle objections, and represent you in a dispute over an overpayment or underpayment.

Do not hesitate to contact me — the sooner the better, as deadlines in this area run fast. Contact me here or take a look at my other real estate law services.