Ownership Communities: Equitable Cost Distribution and Legal Considerations
In residential property management, Wohnungseigentümergemeinschaften (WEGs), or ownership communities, are legal entities formed by all owners of apartments or commercial units within a specific property. These communities are responsible for managing shared building affairs, including the distribution of costs related to maintenance and utilities. The allocation of expenses among individual owners can often become a contentious issue, frequently leading to disputes that end up in court.
Legal Framework
The legal basis for WEGs is the Wohnungseigentumsgesetz (WEG), or Condominium Act. This law outlines the rights and responsibilities of individual owners and the community as a whole. It has undergone reform in recent years, most notably in 2020 by the Grand Coalition government.
Cost Allocation Principles
As a general rule, costs related to the shared property, such as roof maintenance, facade upkeep, stairwell repairs, and heating system operation, are borne by the community. Unless otherwise agreed upon, these expenses are distributed proportionally among all owners based on their respective ownership shares.
Conversely, costs associated with individual apartments, known as "Sondereigentum," are the responsibility of the respective owners. This includes maintenance measures within the apartment, such as interior painting, flooring, and private sanitary facilities.
Exceptional Cost Distribution
With majority consent, the community can deviate from the statutory cost distribution scheme if deemed reasonable. For instance, it may be decided that window replacements are always to be paid for by the owner of the apartment in which the windows are located.
Hausgeld: Covering Operating Costs
Hausgeld, or community fees, are collected from owners to cover ongoing expenses for the operation, maintenance, and administration of the shared property. The amount of Hausgeld is determined by an annual budget prepared by the administrator. Typically, the fees are distributed according to ownership shares, unless otherwise specified in the community’s founding declaration or by resolution. At the end of the fiscal year, a financial report is presented, reconciling actual expenses with the advance payments made by owners.
Role of the Administrator
The administrator is appointed and dismissed by the WEG members. "The administrator’s authority is generally limited to decisions of minor importance," explains Lothar Blaschke of the Verein Deutscher Wohnungseigentümer (Association of German Homeowners). "Significant matters, especially those involving financial implications, must be approved by resolution at an owners’ meeting." However, many communities establish a spending threshold within which the administrator has independent authority.
Community’s Authority to Modify Cost Distribution
According to the WEG, the ownership community can resolve to modify the cost distribution for specific expenses or types of expenses. "The issue at stake is the extent of this authority," says Blaschke.
Current Legal Dispute
A recent case before the Bundesgerichtshof (BGH), Germany’s highest civil court, exemplifies the contentious nature of cost allocation. A homeowner who does not own a parking space in the property’s garage complex is contesting her obligation to contribute to the cost of roof repairs on that garage. The community had passed a resolution to distribute the costs among all homeowners according to their ownership shares, effectively imposing a new financial burden on the plaintiff.
Legal Remedies for Dissenting Owners
In March 2024, the BGH ruled that existing exemptions from cost contributions could be revoked through amending resolutions, expanding the authority of the community. "The BGH has emphasized the flexibility available to communities in this regard," says Beate Heilmann, chair of the Working Group on Tenancy Law and Real Estate at the German Bar Association.
Decisions made within the community typically require a simple majority, but minority protection is ensured by the right of affected owners to challenge resolutions perceived as unlawful, arbitrary, discriminatory, or malicious. Courts will then examine whether the resolution falls within the community’s discretionary authority.
Dissatisfied owners can seek legal recourse by filing either an annulment or nullity lawsuit at the local Amtsgericht (district court). An annulment suit aims to have a resolution declared invalid and must be filed within a month of its adoption. It can be based on arguments that the resolution violates the law, the community’s founding declaration, or principles of proper administration, or that it unfairly disadvantages certain owners.
In contrast, a nullity suit seeks to establish that a resolution was void from the outset, for example, due to breaches of mandatory legal provisions or the absence of authority for the resolution’s subject matter. Unlike annulment suits, nullity suits are not subject to a time limit.
Considerations for Plaintiffs
Owners considering legal action should be aware that if they win their case and the WEG is ordered to pay court costs, these costs may be partially distributed among all owners, including the winning plaintiff. The BGH upheld this principle in a 2024 ruling, acknowledging that it could potentially deter potential plaintiffs in smaller communities.
