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The Procedure for Utilities Payment as per Readouts of Heat and Water Meters in Apartment Houses.


      Can an individual living in a multi-apartment house (a tenant, a lessee, or an apartment owner) be a party to the power supply contract (a contract with a heat- and water-supplying organization), and is para 1, Art. 549 of the Civil Code of RF applicable to such individual (consumer)?

1.      First of all, it is necessary to define the regulations according to which the rules of 6 Power Supply, Cap. 30 of the Civil Code of RF are applicable to the relations connected with heat and water supply. These regulations are specified in Art. 548 of the Civil Code of RF, pursuant to which the rules of 6 are applicable to heat supply via a connected network, unless the law or other legislative acts (Presidential and Government decrees Art. 3 of the Civil Code of RF) stipulate otherwise, and as to water supply - also in case the obligation does not imply otherwise. Consequently, the laws and other legislative acts pertaining to heat and water supply may provide for any exemptions to the rules of power supply in the Civil Code of RF, including those regulating contractual relations.

2.      In the meaning of Art. 539 of the Civil Code of RF the terms a subscriber and a consumer are synonyms. The law (e.g. the Federal Law dated 14 April 1995, No. 41-FZ On State Regulation of Electricity and Heat Tariffs in the Russian Federation) defines the consumer as a subject using electricity or heat, and a supplying organization as an organization selling respective resources to the consumers. Housing exploitation organizations are not consumers in the above sense, since they do not use electricity and heat received from power supply organizations (except for electricity in and heating of the premises they are located in). Hence, proceeding from the meaning of the current laws on electricity and heat supply, the housing maintenance organizations cannot be deemed supplying organizations. They only render to individual consumers electricity and heat supply services provided for value by a supplying organization via connected networks on its balance, at the tariffs regulated in accordance with law.

      The law regulates water supply differently. In compliance with para 1 of the Regulations of Use of Communal Water Supply and Sewage Systems in the Russian Federation approved by the Decree of the Government of RF dated 12 February 1999, No. 167, a subscriber is a legal entity owning, having charge of, or operating water supply and (or) sewage systems and facilities directly connected with the systems of communal water supply and (or) sewage, which have signed with water supply and sewage organization a contract of water supply and (or) sewage discharge. The subscribers may also include organizations owning, or having charge of, or operating housing facilities and engineering infrastructure facilities, organizations authorized to provide communal services to the population living in the state-owned (departmental), municipal, or public housing facilities; partnerships and other associations of residence owners which were assigned to manage the housing facilities. Therefore, as regards water supply, another structure of contractual relations is stipulated for it in full compliance with para 2, Art. 548 of the Civil Code of RF: a supplying organization a housing organization on whose balance is a respective network connected with a water supply and sewage system of the supplying organization, or a partnership of residence owners; a housing organization or a partnership of residence owners - a tenant or an apartment owner in a multi-apartment house. Consequently, the law on water supply expressly stipulate that the supplying organization must sign a water supply contract with a housing organization or partnership of residence owners, and not with an individual consumer.

      Para 2, Art. 548 of the Civil Code of RF does not specify what kind of water supply is meant: cold or hot water supply, or both. Proceeding from Art. 455 of the Civil Code of RF a commodity is a thing of a certain denomination. From the viewpoint of the Code any water is a thing both cold and hot, it differs only in qualitative characteristics. Hence, para 2, Art. 548 is applicable to both cold and hot water supply (hereinafter the tem water means cold and hot water) and, consequently, water supply regulations establishing another structure of contractual relations are applicable not only to cold water supply, but to hot water supply, as well.

3.      In view of the requirements of para 1, Art. 539 of the Civil Code of RF and subsequent articles of 6, Cap. 30, which establish exceptions to the rules of para 1, Art. 539 for individual consumers, an individual can be a party to the power supply contract with a supplying organization. Thus, para 2, Art. 543 stipulates that in case the subscriber under a contract is an individual using power for household needs, the responsibility to ensure a proper technical condition and safety of power networks, as well as of electricity meters, is that of the power supply organization, and not of the individual (subscriber) (and in view of these rules being applicable to heat and water supply of the organizations supplying respective resources), unless the law or other legislative acts provide otherwise. In particular, the Civil Code of RF and the Housing Code of RSFSR impose the responsibility on the landlord under the contracts of social tenancy and contracts of commercial tenancy.

      As to the consumption regime, the individual using power (water, heat) for household needs is entitled to consume it as much as he needs.

      Can a housing organization (a company in charge of exploitation of an apartment house) discharge the functions of a heat supplying organization for an individual (tenant or owner of residential premises), lessee or owner of nonresidential premises? What provisions of the heat supply contract should be included in the contract of tenancy or contract of maintenance of the residential premises? Is the requirement contained in para 2, Art. 534 of the Civil Code of RF applicable to a housing organization? How should the expenses on installment and maintenance of house and apartment heat and water meters, as well as heat distributors, be compensated?

1.      The regulations of 6, Cap. 30 of the Civil Code of RF are applicable to heat supply, since a special legislation on heat supply in force on the territory of the Russian Federation does not stipulate otherwise. Consequently, according to the laws in force, the heat supply contract should be concluded by the heat supplying organization with an individual - tenant or owner. The law or other legislative acts may set an exception to this rule on the basis of para 1, Art. 548 of the Civil Code of RF. If such exceptions are provided for, the organization that will be vested with respective authorities will be a supplier in respect of the tenant or owner of residential premises.

2.      In accordance with the current laws neither the contract of tenancy, nor the maintenance contract regulate the relations in the sphere of electricity, water, gas, and heat supply. Such supply contracts are a variety of sale contracts (para 5, Art. 454 of the Civil Code of RF). Under a tenancy contract the landlord is obliged to provide communal services (Art. 676 of the Civil Code of RF, Art. 50 of the Housing Code of RSFSR). Electricity and other resources supply to the tenant (residential premises owner) is not a service in accordance with the Civil Code of RF. For the same reason supply is not maintenance, either, since maintenance includes simultaneous performance of work (e.g. repair) and provision of services. That is why a contract of maintenance, according to the Civil Code of RF is a mixed contract (para 3, Art. 431 of the Civil Code of RF).

      Hence, an individual tenant or owner may conclude with the heat supplying organization (possibly represented by a housing organization) either a contract of supply of respective resources, or a mixed contract including elements of tenancy and supply contracts or maintenance and supply contracts.

      In accordance with para 2 and 3, Art. 421 of the Civil Code of RF the parties exercise their discretion in deciding what kind of contract they wish to conclude, i.e. they choose one of the above options by mutual agreement.

3.      In compliance with para 4, art. 421 of the Civil Code of RF the terms and conditions of the heat supply contract are defined by agreement of the parties, except for the cases when certain conditions are prescribed by law or by another legislative act. Thus, according to para 1, Art. 432 of the Civil Code of RF any contract must contain material conditions: the subject matter (in respect of the heat supply a commodity para 3, Art. 455 of the Civil Code of RF); the terms and conditions which are specified in the law or other legislative acts as material or necessary for contracts of this kind, as well as all those terms and conditions which, according to one of the parties, must be agreed upon.

      Certain rules pertaining to the terms and conditions, which must or can be specified in a power supply contract, are incorporated in Articles 542, 544, 546 of the Civil Code of RF.

4.      According to the current laws, a housing organization which is a landlord under a social tenancy contract must ensure a proper condition of the sanitary engineering and other equipment.

      Under a tenancy contract the landlords obligation to provide communal services is worded in a general manner, without a concrete definition of services which should be rendered particularly by the landlord in accordance with the All-Russian Classifier of Services. Article 543 of the Civil Code of RF imposes the responsibility to ensure a proper condition of apartment heat meters on the supplying, and not on the housing organization.

5.      The question of how the expenses on installment of the apartment meters should be compensated is not a legal one. Installment of meters should be financed at the expense of the residential premises owner: if the residential premises concerned are state-owned or municipal at the expense of a respective budget, if private (owned by a legal entity or an individual) at the owners expense.

      As regards maintenance, payment for it should be stipulated by a respective contract between the maintenance organization and the organization in charge of the house exploitation.

      Can an individual living in a multi-apartment house consider that a contract of his apartment heating has been concluded between him and the heat supplying organization if he has no text of the public contract of heating, he neither signed the contract concerned, nor was he notified of his obligations as a party thereto? Must the individual concerned pay for the communal service (heating of his apartment) by remitting the money to the account of the heat supplying organization?

      In accordance with Art. 158 of the Civil Code of RF the transactions (as applicable to the heating contract) can be made in an oral or written form (simple or notarized). A contract is deemed concluded, i.e. gives rise to the rights and duties of the parties, the moment an offering party receives the other partys agreement with the offer in a proper form (Articles 432, 433 of the Civil Code of RF).

      Pursuant to para 1, Art. 159 of the Civil Code of RF a transaction for which no written form is stipulated by law or by agreement of the parties can be made orally. Para 1, Art. 540 of the Civil Code of RF, which specifically deals with the procedure for signing power supply contracts with an individual and is applicable to a heat supply contract pursuant to para 1, Art. 548 of the Civil Code of RF, does not provide for a written form of the contract. It sets forth that a contract with an individual using power for household needs (for heating) is deemed concluded from the moment the subscriber is actually connected to the network in a prescribed manner. Para 2, Art. 158 of the Civil Code of RF stipulates that a transaction which can be made orally is deemed consummated also in case a persons willingness to make the transaction is evident from his behavior. Hence, a contract of electricity, heat, gas, or water supply is a tacit contract, rather than a contract executed as a document signed by the parties thereto.

      In connection with the electricity, heat, gas, or water supply contract being deemed concluded from the moment the individual is actually connected to a respective network, the rights and duties of the parties are accrued from the same moment. Hence, the individual must pay for the heat supply from the time of the first actual connection to the heating network.

      If a specialized organization providing respective services is invited to install and maintain heat and water meters (apartment and house ones) and heat distributors, should it conclude a contract with a housing organization or with every tenant in a multi-apartment house? If the heat and water meters are not the property of the specialized organization (installed at the expense of the construction budget), can the contract stipulate the duty of the specialized organization to replace old meters after expiration of their service term without subscribers paying additionally for such service?

      The current laws define the responsibilities of the landlord under social tenancy and commercial tenancy contracts differently. Under the commercial tenancy contracts the landlord is obliged to provide (or arrange provision of) necessary communal services for value (Art. 676 of the Civil Code of RF). The landlord is the owner of residential premises or a person authorized by the owner.

      The landlord of state-owned or municipal residential premises is an organization authorized by a respective owner a housing exploitation office, a housing communal department, a service of unified customer, etc., and in other kinds of housing facilities an owner of the residential premises, as a rule, (though it cannot be excluded that the owner of a departmental private housing facilities will authorize a communal organization to provide communal services, rather than provide it itself).

      According to Art. 676 of the Civil Code of RF the landlord is either an operator providing communal services, or arranges provision of such services by other communal organizations by concluding a respective contract with these. A third option is also possible, when some of the services are provided by the landlord, and others by other communal organizations. Consequently, installment of meters and their maintenance must be done by either the landlord (or by an organization authorized by the landlord), or by a specialized organization under a contract with the landlord (with an authorized organization).

      If the apartment owners in the house concerned have not set up a partnership of the residence owners, then housing exploitation offices, housing communal departments, and other organizations, though these are not the landlords, still retain their duty to provide the owners with communal services.

      If the owners have set up a partnership of residence owners, the house is exploited by the partnership concerned, and in this event the answer to the question of whom the specialized organization must sign the contract with would depend on the authorities of the partnership as defined in its charter. In this case three options are possible: if the partnership is not authorized to sign respective contracts, the contracts concerned should be signed with every individual; if the partnership is authorized with the partnership; if it is an organization providing services to the partnership that is authorized with this organization.

      Pursuant to para 3, Art. 672 of the Civil Code of RF the rules of Art. 676 of the Code are not applicable to the landlords duties under a social tenancy contract. Under the above contract the landlords are organizations authorized by the owners of apartments in the state-owned or municipal housing facilities.

      The duties of the landlord under the contract concerned are defined by the Regulation of Residential Premises Use, Apartment House and the Adjacent Territory Maintenance in the RSFSR and by a Standard Contract of Tenancy in the State-Owned, Municipal, and Public Housing Facilities in the RSFSR approved by the Decree of the Council of Ministers of the RSFSR on 25 September 1985, No. 415, and formulated comprehensively by listing concrete responsibilities. In accordance with points 16 and 6, respectively, the landlord is responsible for:

-      a systematic inspection of the apartment houses and residential premises, prophylactic maintenance of the sanitary engineering and other equipment;
-      a timely overhaul and current repair of the apartment houses, uninterrupted operation of the sanitary engineering and other equipment;
-      a timely preparation for exploitation of apartment houses, sanitary engineering and other equipment in winter.

      Hence, based on the above normative acts, the landlord is not responsible for installation of meters. However, in compliance with Art. 40 of the Housing Code of RSFSR, residential premises provided to the individuals for living should be well-equipped, i.e. possess certain amenities (electricity supply, water conduit, heating, sewage, etc.) as applicable to the given inhabited locality. Naturally, these amenities should be maintained by the landlord.

      Consequently, the landlord must make sure that the residential premises are well-equipped, and if for this purpose installation and maintenance of meters are required in accordance with the established rules, the landlord must install these, or arrange their installment under a contract concluded with a specialized organization.

      Should the hot water-using individual pay for two kinds of resources under the contracts of heat and water supply with two suppliers for the water proper (cold, cu. m) and heat (gram-calories), the use of water for heating, or should the hot water tariff be fixed as a sum of the cold water tariff (Rbl/ gram-calorie) and a part of the heat tariff (Rbl/gram-calorie)?

      The All-Russian Classifier of Services to the Population OK 002-93 is approved by the Resolution of the State Standards Committee of Russia dated 28 July 1993, No. 163 and enforced from 1 January 1994. It is a normative act mandatory for application by all legal entities, irrespective of their business form and ownership. In accordance with Art. 4 of the Federal Law dated 22 December 1995 On Enactment of Part 2 of the Civil Code of the Russian Federation until the normative acts in force on the territory of the Russian Federation are reconciled with the Civil Code of RF, these are applicable to the extent which does not run contrary to the Code.

      Section 04 Housing Communal Services of the Classifier stipulates provision of water supply services (without hot water) 042201 code, and hot water supply 042402 code. According to the Civil Code of RF the population is provided with cold and hot water not under a contract of services for value (Cap. 37), but under a contract of supply via a connected network, which is a variety of the sale contract. The subject of the latter contract (the commodity) is cold and hot water (Art. 455 of the Civil Code of RF). Consequently, pursuant to Art. 483 of the Civil Code of RF the price on cold and hot water should be fixed separately.

      The Classifier does not provide for the services of water heating, therefore no separate payment should be charged for heating.

      What should be the legal status of the document stipulating differentiated (depending on the amount of consumption) tariffs on heat and water? Can the amount of utilities paid for by the individuals exceed the amount of payment by the housing organization under the contracts with heat and water supplying organizations?

      The tariffs on electricity and heat are regulated in compliance with the Federal Law On State Regulation of Tariffs on Electricity and Heat Power in the Russian Federation (the version of the Federal Law dated 11 February 1999). In compliance with Art. 5 of the above Law the Russian Government laid the foundation of price formation with respect to electricity and heating, and the executive authorities of the subjects of the Russian Federation determine the issues of state regulation of the said tariffs for all power supplying organizations (except for the municipal organizations, for which the tariffs are set by local authorities), proceeding from the principles defined by the above Law and the foundation of price formation defined by the Government of RF. On 4 February 1997 the Government of RF issued Decree No. 121 On Foundation of Price Formation and the Procedure of State Regulation and Application of Tariffs on Electricity and Heat Power. Consequently, in order to introduce an ascending tariff scale depending on the amount of electricity and heat consumption, it is necessary to change the principles and foundation of price formation set forth by the above normative acts. The exception are the tariffs on electricity and heat supplied for municipal enterprises. These tariffs and the basis of their computation are determined by the local authorities. The issue of water (cold and hot) tariffs is resolved similarly.

      Can the heat and water supplying organization set in a contract with a housing organization any restrictions (limitations) on the resource consumption in a multi-apartment house where the consumers are individuals each of whom can use the resources in compliance with para 3, Art. 541 of the Civil Code of RF in a required quantity, i.e. without any limitations?

      Based on para 2, Art. 421 of the Civil Code of RF the civil law subjects are free to define their rights and duties in a contract and when determining any terms and conditions not adversary to the law. In compliance with para 4 of the same Article the contract terms and conditions are defined at the parties discretion. Consequently, setting of limitations in consumption of respective resources in a contract between heat and water supplying organization and a housing organization depends solely on the discretion of both parties. A supplying organization has no right to impose such limitations condition, since, first of all, in most cases respective supplying organizations occupy a dominating position on the market; secondly, the parties to the contract can exercise their discretion in determination of the contract terms and conditions only in case the contents of the given condition are prescribed by law or another normative act; thirdly, the failure on the part of the housing organization to observe the limitations condition must not affect the rights of individual consumers.

      What legal status must the Procedure of Utilities Payment as per Readouts of Heat and Water Meters in the Apartment Houses and the Procedure for Provision of Services in Installation and Maintenance of Heat and Water Meters and Heat Distributors in the Apartment Houses have in the conditions when the communal services tariffs are regulated by local authorities?

      The term payment procedure means the procedure of payment for heat, cold and hot water in cash or by transfer, defines what payment documents should be used; whether an advance payment or the payment for the services already provided should be effected. Hence, the term payment procedure defines the way a subscriber must discharge his contractual obligation to pay. Consequently, the Procedure of Payment as a normative act sets forth the rules relating to the discharge of civil contractual obligations. In accordance with Art. 71 of the Constitution of RF civil law is an exclusive competence of the Russian Federation. Neither the subjects of the Russian Federation, nor the local authorities have the right to adopt normative acts regulating relations connected with execution of civil contracts. In the meaning of Art. 426 of the Civil Code of RF electricity, heat, water, and gas supply contracts are public contracts. Pursuant to para 4, Art. 426 of the Civil Code of RF in the cases stipulated by law the Government of RF may set the rules mandatory for the parties concluding and executing public contracts. Para 2, Art. 544 stipulates that the procedure for settling the accounts for electricity is defined by law, other legislative acts, or by agreement of the parties. Consequently, the Procedure of Payment may be approved by a Russian law or by a decree of the Russian Government.

      The legal status of the Procedure for Provision of Services as a normative act, whereby one of the contractual parties is an individual, should be defined similarly. A legal basis for adoption of a respective act by the Russian Government is para 4, art. 426 of the Civil Code of RF and Art. 38 of the Law of RF dated 7 February 1992, No. 2300-1 On Protection of the Consumers Rights. In case the subject of regulation in the Procedure for Provision of Services is the relations between legal entities, the act concerned may be adopted on a departmental level. However, with due regard for one of the major principles of contractual law a freedom of contract (para 1,2, Art. 1 and Art. 421 of the Civil Code of RF), it would be reasonable to adopt such act in the form of Standard Conditions (Art. 427 of the Civil Code of RF).

Tatiana Levshina,
Member of the Scientific and Consultative Council at LEGIST Law Firm,
Senior research fellow of the Institute of Law and Comparative Jurisprudence under the Government of RF.


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