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Is it illegal for a property not to pay property fees or collect water charges?

Illegal.

According to the Property Law of People's Republic of China (PRC) and the Contract Law of People's Republic of China (PRC), property companies are obliged to provide corresponding services, and owners are also obliged to pay property fees and water fees. If the property company refuses to provide services or refuse to collect water charges, it is a breach of contract and illegal. Owners can protect their rights and interests through legal channels, including requiring property companies to fulfill their contractual obligations and compensate for losses.