How to resolve overpayments and arrears in billing?

Practical instructions for settling overpayments and arrears from service billing. Deadlines, procedures and problem solving.

TL;DR – Quick Answer

Financial settlement generally follows within four months after delivery of the bill under the Services Act, subject to the current statutory rule and any valid agreement. Check the applicable due date for both an overpayment and an underpayment before transferring or pursuing the balance.

What is an overpayment and what is an underpayment

Overpayment

The tenant paid more in advances than the actual cost of services.

Example:

Advances for the year: 42,000 Kč
Actual costs: Kč 38,500
Overpayment: Kč 3,500 → You return to the tenant

Underpayment

The tenant paid less on deposits than the actual costs.

Example:

Deposits for the year: Kč 36,000
Actual costs: Kč 41,200
Arrears: Kč 5,200 → Tenant pays extra

Deadlines for settlement

Statutory deadline

Generally four months from delivery of the bill under § 7 of Act No. 67/2013 Coll.; confirm the current statutory rule and any valid contractual arrangement.

For illustration only, a four-month period beginning on March 15 would end in July; calculate the date under the applicable rule and agreement.

Other agreement

You can agree on a different period in the rental agreement, but:

It must comply with the applicable statutory limits and not unreasonably prejudice either party
It must be clearly formulated
It applies to both parties

How to return overpayment

Ways of return

1. By bank transfer (recommended)

The safest way
You have proof of payment
Fast and safe

2. In cash

Get confirmation of receipt
Better against signing the income document

3. By crediting the rent

Only if the tenant agrees to it
A written agreement is necessary

4. By crediting the advances of the next period

Also only with the tenant's consent
Attention - it can affect cash flow

What if you don't know the tenant's account?

Ask him in writing to communicate the account number
Set a reasonable period (e.g. 14 days)
If he doesn't respond, save the amount (you will prove an effort to return it)

Beware of foreclosures

If the tenant has a foreclosure, the overpayment may be affected. In this case:

Contact the executor
Do not release money to the tenant without instructions from the executor
You are responsible for the correct handling of the amount

How to recover the arrears

Step 1: Wait for the due date

You can recover the arrears only after the due date has passed. Until then, the tenant is not in arrears.

Step 2: Reminder

After the due date, send a written reminder:

Indicate the amount of the arrears
Remind when it should have been paid
Set a replacement period (e.g. 7 days)
Warn of the possible consequences (interest on late payment, legal enforcement)

Step 3: Second reminder

If the first one doesn't work, send the second one. More emphatically.

Step 4: Pre-suit Notice

A formal notice stating that you will file a lawsuit. It often occupies.

Step 5: Legal Enforcement

Sue for payment. For arrears of up to Kč 10,000, you can use the proposal to issue a payment order - faster and cheaper.

Late payment interest

Late-payment interest may be claimed where the legal conditions are met; the rate is set by the current government regulation and should not be hard-coded in a template.

Special situation

The tenant has moved out

You send the overpayment to the address the tenant provided at the end of the lease. If he did not specify it, you send to the last known address.

You collect the overpayment by default. Just because he moved out doesn't mean he doesn't have to pay.

Former tenant is uncontactable

Send by registered mail to the last known address
Attempt to contact by email/phone
Records for eventual court
"Freeze" the overpayment and wait (you may hear back)

The tenant advertises the bill

If the tenant files objections:

You have 30 days to respond
The due date of the overpayment/underpayment is postponed
The tenant does not have to pay the disputed part until the objections are resolved

More of overpayments/underpayments

If the tenant has an overpayment and owes rent at the same time, you can set it off. But you have to inform him about it (one-sided netting).

How to prevent problems

Correctly set deposits

Deposits should correspond to the expected costs. If they are:

Too low: Arrears occur, the tenant is then surprised
Too high: Overpayments occur, the tenant feels robbed

Tip: Adjust reserves according to current consumption and prices. Once a year, check if it fits.

Continuous communication

If you see that the costs are increasing significantly (energy prices), inform the tenant in time. It is better to adjust advances during the year than to deal with a large arrears.

Clear documentation

Billing must be clear and transparent. A tenant who understands advertises less and pays better.

Accounting and tax aspects

For landlords

Overpayment: It is not your income, you return it. Accounting liability.
Arrears: Receivable from the tenant. Income only upon payment.
Advances: They are not income until they are billed.

DPH

If you are a VAT payer and overinvoice services:

Overpayment = credit note (reduction of VAT base)
Underpayment = additional invoice (increase of VAT base)

Most landlords do not deal with this (you are not payers VAT).

Sample documents

Notification of overpayment

[Landlord header]

Dear Ms. Svobodová,

based on the service bill for the period 1/1/2024 – 12/31/2024, you incurred an overpayment in the amount of 2 Kč 350.

The amount will be transferred to your account within the applicable statutory or agreed settlement period.

If you have any questions, please contact me on tel. 777 888 999.

Best regards, [Signature landlord]

Reminder of arrears

[Landlord header]

Dear Mr. Novák,

I would like to inform you that the arrears from the service bill in the amount of 3,450 Kč have not yet been paid. The due date was 7/15/2024.

I am asking you to make payment to account no. 987654321/0100, VS: 20240715, within 7 days of the delivery of this reminder.

In case of non-payment, I will be forced to take further steps, including legal enforcement and charging interest for late payment.

Regards, [Landlord signature]

How Grento handles it

Tracking overpayments and underpayments is annoying. Grento offers:

Automatic calculation – The system calculates the overpayment/underpayment
Maturity monitoring – Reminders of approaching deadlines
Record of payments – Overview of what has been paid
Generation of reminders – Templates for reminders
Connection with the bank – Automatic matching payments

No Excel spreadsheets, no missed deadlines. All in one place.

Summary

Situation	Deadline	Procedure
Overpayment	Generally four months after delivery	Return or credit only as permitted and agreed
Arrears	Generally four months after delivery	Follow the applicable due date and reminders
Objections	Use the applicable statutory period	Does not automatically change every other deadline
Delay	From day one	Late payment interest

The key to a smooth settlement is:

Correctly set backups
Timely and clear billing
Adherence to deadlines
Communication with the tenant

And if problems still arise? Address them in a timely and consistent manner. The longer you wait, the harder it is to recover.

> Czech-law scope and editorial note: Legal, tax, accounting, tenancy, service-charge, condominium, metrology, insurance and data-protection statements in this article refer to the Czech Republic and the rules effective for the relevant date. Figures and examples are illustrative, not legal or tax advice. Verify current rules with the relevant Czech authority or a qualified adviser.

> Tenancy-law clarification: Under the Czech Civil Code, three months of unpaid rent or service charges may be evidence of a particularly serious breach, but it does not automatically terminate the tenancy or evict the tenant. A landlord must use the correct statutory route, including a prior call to remedy the breach where § 2291 applies. A tenant challenging a landlord notice generally applies to a court within two months of delivery under § 2290; this is not an automatic suspensive objection.

> Service-accounting clarification: Under Czech Act No. 67/2013 Coll., distinguish delivery of the settlement within four months after the accounting period, financial settlement generally within four months after delivery, and the separate 30-day periods for supporting documents or objections under § 8. A statutory per-day penalty under § 13 is conditional; verify the current amount and cap rather than applying a universal figure.

> Metrology and heat clarification: Verification periods depend on the instrument type and current UNMZ rule. Heat allocation uses the current Czech decree and may use a 40%, 50% or 60% basic component according to building energy performance, with possible adjustments; hot-water allocation is separate. Do not treat a 30/70 or ±20% statement as universal.