What is the Condominium Act (WEG Act)?Link to this section
The German Condominium Act (WEG) regulates the legal relationships in buildings where individual apartments or commercial units belong to different owners. It defines the rights and obligations of these owners and establishes the rules for the community of condominium owners. Both the private ownership of individual apartments and the shared ownership of common areas such as stairwells or gardens are regulated in detail in the WEG.
Knowledge of the German Condominium Act is essential for owners and property managers to ensure proper management of the homeowners' association. Only those with a solid understanding of the law can act confidently and authoritatively at owners' meetings.
Since when has the WEG law for homeowners associations existed?
The origins of the Condominium Ownership Act date back to the period after World War II. Given the need to create new living space, the idea of transferring parts of buildings to individual ownership arose. Since the German Civil Code (BGB) at the time did not comprehensively regulate this form of ownership, the Condominium Ownership Act was enacted in 1951.
The following explanations are essentially based on the structure of the Condominium Act from 2020. Where necessary, the "old" law before 2007 and the "intermediate law" from 2007 to 2020 are also presented.
The structure of the WEG ActLink to this section
The Condominium Act is divided into four components that regulate the various aspects of condominium ownership.
The first part deals with the creation of condominium ownership and establishes how a property is divided into individual apartments or shared ownership units. It also regulates the rights and obligations of the individual owners and the administration of the joint property. The second part is devoted to the right of permanent residence, a special form of right of residence. The third part contains the procedural rules for any disputes and lawsuits between the owners. Finally, the fourth and final part sets out transitional provisions and supplementary regulations.
‍
What is special property?Link to this section
The Condominium Act (WEG) allows for the creation of separate ownership rights in certain areas of a building, such as apartments. This separate ownership is a distinct form of ownership and has become increasingly important in practice. Although separate ownership rights have become very important in practice, their unique nature presents specific practical and legal problems. For this reason, the legislature has provided for the role of a condominium administrator in the Condominium Act (WEG).
‍‍
What is the difference between a BGB community and a WEG community?Link to this section
A BGB community (also called a fractional community) owns a house jointly owned by several owners. Each owner owns a fraction of the total property, but there is no allocation to specific parts of the house, such as specific apartments.
In a condominium association, on the other hand, a buyer acquires a co-ownership share in a house and land according to a declaration of division. This share is linked to a specific private ownership of a particular apartment. The co-ownership share cannot be easily separated or changed. To effect changes, all owners must have a new declaration of division notarized.
‍
What important definitions does the WEG Act contain?Link to this section
Rooms for living: Residential premises can be converted into condominium ownership (§ 1 para. 1 1st alt.).Other rooms: Partial ownership of other rooms can be established (§ 1 para. 1 2nd alt.).Home ownershipPrivate ownership of an apartment in connection with a share in the common property (§ 1 para. 2).Partial ownershipPrivate ownership of other rooms in connection with the share in the common property (Section 1 (3)).Joint property:The property and other structures that are not considered to be separate property (Section 1, Paragraph 5), for example all “supporting” parts of the building and the common facilities (Section 5, Paragraph 2).
Contact us for a free quote
The emergence of condominium ownership and shared ownershipLink to this section
The Condominium Act offers two options: the contractual granting and the unilateral allocation of special property.
How does the justification by contract work?
Multiple owners can grant each co-owner separate or partial ownership through a contract, even if the buildings have not yet been constructed. This is called a division agreement and must be notarized. However, the term "declaration of division" is often used instead. The division agreement establishes the ownership structure—allocation of separate and common property, co-ownership shares, and special usage rights. The community regulations usually include provisions regarding how the condominium owners intend to regulate their relationship with each other. For example, developers can divide their property.
What is a declaration of division?
A declaration of division is a declaration by the sole owner of a property in which they divide the property into co-ownership shares and assign residential or partial ownership to each share. This is done through a unilateral declaration submitted to the land registry office via a notary. Example: A property developer GmbH divides the property.
What is a certificate of completion?
A certificate of self-containedness is a confirmation from the responsible building authority that the rooms of an apartment or condominium are self-contained and can therefore be registered as separate property. This self-containedness is verified based on the floor plan and must be verified.
WEG reform brings changes for homeowners’ associationsLink to this section
With the entry into force of the German Condominium Modernization Act (WEMoG) on December 1, 2020, the German Condominium Act (WEG) has undergone its most significant revision since its introduction in 1951. The WEG reform (German Condominium Modernization Act)has fundamentally changed condominium law—particularly with regard to the administration of the homeowners' association, the role of the property manager, and the procedures for owners' meetings. Property managers were given greater decision-making powers, and owners were granted more rights. The conduct of owners' meetings has become more flexible, and structural changes to the residential complex are now easier to implement. Furthermore, property managers must now be certified.
What changed with the entry into force of the WEG reform?
Renovations and modernizations are easier to implement
Before the new WEG Act, it was often difficult to implement changes within the condominium association, as individual condominium owners could block them – to the detriment of the condominium association. The reform changed this as follows:
Easier decision-making:In the future, homeowners' associations will be able to decide by a simple majority to carry out necessary work on shared property. This makes it easier to approve structural changes and improvements.Cost distribution:By majority decision–Those who vote for the measure bear the costs proportionately. With a two-thirds majority – If more than two-thirds of the votes approve (and these represent more than half of the co-ownership shares), all owners must pay proportionately.Protection against disproportionate costs:If the costs are extremely high, they cannot be imposed on all property owners. However, all property owners must contribute if the costs are amortized within a reasonable period of time (often 10 years is assumed).
Changes to the rights and obligations of administrators
The German Condominium Modernization Act (Wohneigentumsmodernisierungsgesetz) has significantly tightened the requirements for property managers. As of December 1, 2023, every manager managing a homeowners' association must hold a certification. This certification is issued by a Chamber of Commerce and Industry (IHK). It certifies that the managers possess the necessary knowledge and skills to properly perform the duties of a property manager.
For smaller homeowners associations with fewer than nine units, the certification requirement can be circumvented if at least one-third of the homeowners do not request it.
Stronger position for administrators
The aim of this reform is to make the administration of condominium owners more efficient. Minor decisions should be made more quickly, without the need to convene an often lengthy owners' meeting each time. Therefore, the following resolutions were passed:
More personal responsibility:The property management company can carry out minor measures such as repairs or the conclusion of contracts independently.Larger facilities, greater powers:The larger the residential complex, the more scope the manager has for his or her own decisions.Limits:The property owners can determine the extent to which the management may act independently.Legal representation:The administrator represents the entire community of owners before courts and authorities. Only major decisions, such as the purchase of land or the taking out of loans, still require a resolution from the owners' meeting.
Easier dismissal of the administration
The Condominium Modernization Act has not only strengthened the rights of property management companies, but also the owners' ability to control the management.
Less bureaucracy:Previously, a "good cause" was required for the removal of property management. This hurdle has been abolished.More flexibility:A simple resolution by the owners’ association is now sufficient to terminate the management contract.Notice period:The contract ends no later than six months after the dismissal.More participation:The size of the administrative board can now be freely determined.Monitoring function:The advisory board is responsible for monitoring the activities of the property management.Liability protection:The liability of the voluntary advisory board members is limited to intent and gross negligence.
Changes for special property
Under the new legislation, garden areas or terraces that are clearly assigned to an apartment can now be registered as separate property. Previously, such areas were often considered common property with special usage rights. The new regulation creates greater legal certainty for owners.
Owners’ meeting becomes more flexible
The reform makes owners' meetings more flexible and modern. The new rules allow decisions to be made more quickly and make it easier for owners to participate in the meetings.
Quorum:Before the reform, owners' meetings often had to be canceled because not enough owners attended. This is now different: If the meeting has been properly convened, the meeting has a quorum regardless of the number of condominium owners present. This saves time and money.More flexibility through digital participation:The owners can now alsoon-lineattend the owners' meeting. However, in-person meetings must still be possible.Easier invitation:The invitation to the meeting can now also be sent bye-mailPreviously, a letter was required. The invitation period was extended from two tothree weeks extended.
Utility billing is simplified
Until now, there were often discrepancies in the billing of utility costs in condominiums, as billing based on living space and co-ownership shares existed side by side. The WEMoG (Federal Housing Act) has simplified and clarified this situation: Now, the co-ownership share can be used as the basis for billing utility costs. This significantly simplifies billing, as many condominium associations already bill based on co-ownership shares.
Previously, owners often relied on the timely preparation of utility bills by property managers. If the bill was prepared late, owners could potentially waive additional payments. The WEMoG now provides better protection for owners: If they can prove that the property manager requested them to submit the bill on time, they are not liable for a late bill.
Homeowners association: Does it always make sense to hire a property management company?Link to this section
The Condominium Act (WEG) is a complex area of law that is often difficult for laypeople to grasp. The distinction between ownership of one's own apartment and joint ownership of parts of a building, such as a stairwell or garden, is not always clear. Furthermore, the provisions of the Condominium Act are often very detailed and allow for different interpretations in individual cases. For example, the question of whether a balcony floor is considered private property or common property can be answered differently from case to case.
In smaller properties, you as owners can often divide the management responsibilities among yourselves, provided that cooperation within the owners' association works smoothly. However, for larger buildings, professional property management is usually essential. A property management company like Ralph has the necessary expertise to meet the complex legal requirements of the German Condominium Act and represent the interests of all owners.
Looking for a new property management company? Contact us for a free quote and switch to Ralph.
