What is a homeowners' association?

A homeowners' association (WEG) is created when a property is divided into separate units in a declaration of division . If you buy an apartment in this property, you automatically become part of the condominium owners' association, i.e. a co-owner of the property. Together with the other condominium owners, you then have defined rights and obligations within this community. 

The obligations include, for example, paying the house rent. When you buy a condominium, the community owns certain parts of the property, including you to some extent. This includes, for example, the roof, the façade, the stairwell, the heating system, etc. Each member of the condominium community must pay the house money or housing allowance to cover these community costs.

The rights include the right to vote, which is exercised at the owners' meeting and corresponds to the share in the common property.

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How is a homeowners' association officially established?

The formation of a WEG takes place in several steps. First, a declaration of division is signed. This must then be notarized and entered in the land register. Only then is the homeowners' association official.

How exactly does a homeowners' association work?

The homeowners' association functions like a small democracy. All the owners of a residential complex together form the WEG. There are three important bodies to regulate the common affairs:

• The owners' meeting: this is the parliament of the community of owners, so to speak. All important decisions are made here, for example on the maintenance of the common property or the amount of ancillary costs. Even seemingly small but important decisions such as the uniform color of the front doors are agreed here. The ETV meets at least once a year.
• The management: The property management takes on the tasks of a mayor of the condominium, so to speak. It organizes the owners' meetings, executes the resolutions and generally takes care of the administration of the condominium complex. The rights and duties also include keeping an eye on the finances of the owners' association (e.g. business plan and annual accounts), communicating with service providers and partners, and drawing up a maintenance plan.
• The management advisory board: The management advisory board is an advisor to the property manager and the owners. It monitors the work of the property management, discusses maintenance measures with the management, examines financial matters and generally represents the interests of the community of owners. The members of the management advisory board are elected by the condominium owners' association.

The legal basis for the owners' meeting can be found in the German Condominium Act.

What is an owners' meeting?

At the owners' meeting (ETV), all owners come together to jointly decide on the management of the common property. Financial and structural matters such as the maintenance of the property, the design of jointly used rooms or the election of the manager are discussed and decided here.

Example: Imagine you want to install a new elevator in your property. This decision can only be made by the owners' association at the owners' meeting, as an elevator affects the entire building. Resolutions are usually passed by a simple majority and are binding for all owners.

The invitation to the owners' meeting

The invitation to the owners' meeting is the first step towards a successful meeting. The following points serve as a basis for this:

• Form and deadline: The invitation to the owners' meeting must be made in writing, either by letter or email. The statutory notice period is at least three weeks before the date of the owners' meeting.
• Content: In addition to the place, date and time of the owners' meeting, the invitation must also contain a precise agenda. This allows the community to make the best possible preparations.
• Agenda: Only the items listed in the agenda may be voted on at the owners' meeting. Additional topics can only be discussed if the community of owners agrees.

No obligation to attend the owners' meeting

Have you received an invitation to the next owners' meeting and are wondering whether you absolutely have to attend in person? No, you don't have to. Nevertheless, take advantage of the opportunity to represent your interests, even if you cannot attend in person. What alternatives are there to attending in person?

• Representation by another person: You can authorize another owner from the community to represent you.
• Digital participation: If your community of owners has decided to do so, you may also be able to participate in the owners' meeting by e-mail or video call.

What is the Condominium Act (WEG Act)?

However, to ensure that not every community of owners does what it wants and that the whole thing remains within a regulated framework, there is the Condominium Act. It sets out exactly what the tasks of property management are and which issues must be dealt with by the homeowners' association. The WEG Act was significantly amended by a WEG reform in December 2020. 

WEG reform: the main changes

With the Condominium Modernization Act (WEMoG) of 1 December 2020, the condominium owners' association has undergone a comprehensive modernization. In particular, numerous regulations on the legal position of the community of owners, special property and property management have been revised. Useful information on the positive effects of the WEMoG:

• Accelerated procedures: The WEMoG has simplified and accelerated the adoption of resolutions in WEGs.
• Extended responsibilities of the administrator: In certain cases, the administrator can decide independently on modernization measures, which makes the administration of condominiums more efficient.
• Incentives for energy-efficient renovations: The law creates incentives for energy-efficient renovations, for example by subsidizing the costs of energy consultations.
• Simplified financing: The WEMoG facilitates the financing of modernization measures.
• Improved information obligations: Tenants are better informed about modernization measures and have more rights.
• Extended tasks and powers: The administrator has been given more tasks and powers, which promotes the professional management of condominiums.

What is condominium law?

If several people own a condominium in a residential complex, it is not uncommon for there to be differences of opinion about how the common property in the building should be used and changed. Therefore, in addition to the Condominium Act, condominium law also regulates the acquisition and use of condominiums as well as the rights and obligations of condominium owners.

It is based on the German Civil Code (BGB) with general regulations on ownership, possession and contract law and the Condominium Act, which regulates the special features of a condominium. It also makes a fundamental distinction between land ownership and condominium ownership. While landowners can dispose of their property as freely as possible, condominium owners are subject to certain restrictions in order to protect the rights of the homeowners' association.

What is a declaration of division?

The declaration of division is a notarized document that creates the legal basis for a homeowners' association. It describes in detail how the property is divided into ownership shares. Here, the declaration of division distinguishes between separate property and common property.

The individual property belongs to an individual condominium owner alone, i.e. an individual condominium. The common property in turn refers to the parts of the building that belong to the individual condominium owners only proportionally. This includes, for example, the façade, roof or stairwell, but also load-bearing walls within the apartments.

Furthermore, the declaration of division contains regulations for the coexistence of the apartment owners. It consists of the following documents: 

• a declaration of apportionment (also called an apportionment plan)
• the certificate of completion 
• the community regulations

What do the community rules say?

The community rules are an important part of the declaration of division and are entered in the land register together with it. The so-called "constitution of the WEG" primarily regulates the rights and obligations of the homeowners' association. The most important contents include the following:

• Flexibility in voting rights: The community rules can structure the voting rights at the owners' meeting according to individual requirements. For example, several apartments of one owner can be combined into one voting right or the voting right can be measured proportionally to the co-ownership share. In order to ensure fair representation of interests, the community rules can therefore regulate voting rights in a differentiated manner, for example according to the number of heads or the share of the community property.
• Regulations for keeping animals: The community regulations may prohibit certain types of animals or the keeping of animals in general in the residential complex.
• Quiet times and noise restrictions: The community regulations can specify quiet periods and prohibit certain activities, such as loud music-making, at certain times in the apartments.
• Restrictions on commercial use: The community regulations can restrict or completely prohibit the commercial use of apartments, for example for home offices.
• Appointment of an administrative advisory board: The administrative advisory board supports the administrator in the fulfillment of his/her duties and represents the interests of the community.
• Distribution of maintenance measures: The community regulations determine how maintenance measures are carried out and financed.
• Sanctions for violations: Under certain circumstances, the community rules may provide for the revocation of condominium ownership.

Every community regulation is a reflection of the individual needs and circumstances of a community. In principle, the community rules can be designed by the owners themselves, but must comply with certain legal requirements in order to ensure smooth decision-making in the community.

What is the house rent and how much is it?

As the owner, you must pay a monthly advance for your residential property to cover the ancillary costs and maintenance of the communal property. These expenses are referred to as housing allowance or house allowance. It is paid to the community's property management company, which uses the funds to cover the running costs. 

This also includes the costs of property management, such as property management or should an internal manager be compensated for the work and to generate reserves for maintenance and refurbishment. 

The amount of the house fee depends on the residential complex, its management and the communal facilities. In order to determine the exact amount, there is a legally regulated distribution key that is applied to the individual owners. Ralph usually saves owners money by reviewing and, if necessary, optimizing current contracts. The management fee is also cheaper than the competition. With Ralph, it starts at just €20.

Does every homeowners' association need a property management company?

There are two ways of implementing a condominium owners' association: external management or self-management. 

When is external management worthwhile?

With external management of the community of owners, the tasks are taken over by a third party, the property management company. This person or company is responsible for ensuring that owners' meetings are convened and that the condominium's finances are regulated. 

The external property management company also takes care of the bookkeeping for the community of owners. It has a power of attorney, which authorizes it to commission service providers and pay them from the common funds of the condominium.  

The task of the property management is also to ensure that financial reserves are created in order to be able to carry out maintenance measures or building renovations. These are mainly financed by the housing allowance that the individual owners have to pay each month. 

Competent external management is very worthwhile in most cases. It is particularly important if your community of owners is of a certain size (usually five units or more), if various maintenance work is due, and if not all owners live in the property or do not know each other well. 

Which owners' associations are suitable for self-administration?

Since the amendment to the Condominium Act 2020, the obligation to appoint an external management company for a condominium owners' association has been removed. Since then, the owners have also been able to take care of the rights and obligations of the condominium association independently. 

For this purpose, an owner is elected to represent the homeowners' association as an internal administrator. With this type of condominium management, it is important that the manager is fully familiar with the condominium regulations and enjoys the full trust of the other owners. After all, it is this person who handles the finances of the community of owners. This also means that the management must ensure that reserves for maintenance and renovation work are collected and that the annual accounts are correct. 

Independent management can save a condominium owners' association costs, which is particularly interesting for small condominiums. If you have an experienced accountant in the building and someone with good legal knowledge, self-administration can be worthwhile, especially with a manageable number of owners of less than five. However, it is particularly important that you know and trust each other well, as the internal administrator takes on a great deal of responsibility for their co-owners.

Important: If you do not have the expertise in the building or your community of owners has more than five units, we strongly advise against self-administration!

Ralph is your modern property management company in Berlin

As the tasks involved in managing a condominium are often underestimated, in most cases it is advisable to call in professional outside help. For as little as 25 euros a month, you can hand over the organization of various complex tasks to a professional property management company. Since a lot of money is at stake when you own apartments, the monthly sum will pay off in most cases.