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Once a year, the moment of (financial) truth arrives and a condominium receives its annual statement. It is a key instrument for understanding and tracking the income and expenditure of the condominium.
In this article, we will take a closer look at the WEG annual statement. You will find out what it means for owners, how the statement is structured and what important information it contains. We will also give you tips on how to read the statement correctly and what rights you have as an owner.
What is an annual statement?
The annual statement of accounts, usually also referred to as the WEG statement of accounts or the house allowance statement, is the central document for condominium owners that provides information on how the community of owners has managed in the past year. It records all income and expenditure for the common condominium property.
A key point is the calculation of additional payments or refunds for owners. These arise when the advance payments made do not match the actual costs, i.e. so-called settlement peaks.
The main purpose of the annual statement of accounts is transparency and cost control. It enables the condominium owners to view the financial situation of the condominium in detail and to monitor and check the work of the administrator.
The content of the annual statement
Since there are no fixed specifications for the design and content of the WEG statement, it may look different depending on the administrator.
Essentially, the annual statement of accounts for the condominium contains a detailed presentation of all income and expenditure for the previous year. The income includes the owners' house allowance payments, any rental income from common property and interest income from reserves. The expenses include all costs incurred for maintenance, administration, insurance and supply and disposal services.
The individual statements for the condominium owners and the distribution key used must also be included in the WEG statement.
Another important point in the annual statement is the presentation of the development of the maintenance reserve. It shows how much money has been saved for future repairs, renovations and modernizations for the homeowners' association . In addition, the individual account balances of the owners with regard to their house allowance payments are shown in order to determine additional payments or refunds.
In addition to the mandatory information, the annual statement may contain further information. This includes a certificate from the administrator about services and craftsmen's services.
An overview
- Revenue:
- House payments by the owners
- Rental income from jointly owned property
- Interest income
- Other income
- Expenditure:
- Maintenance (repairs, servicing)
- Operating costs (e.g. heating, water, electricity)
- Administration costs (administrator's fee)
- Insurances
- Cleaning and garden maintenance
- Other expenses
- Development of the maintenance reserve:
- Opening balance
- Additions
- Withdrawals
- Closing stock
- Account balances of the owners:
- Overview of advance payments made (house money)
- Actual cost shares
- Determination of additional payments or reimbursement
- Balance sheet:
- Summary of the overall financial situation of the community of owners
- As an attachment:
- List of individual cost items
- Minutes and resolutions of the owners' meeting
Tip: Compare the annual statement with the business plan
A comparison of the COA statement with the annual business plan of the COA is always informative. If the figures in the business plan and the annual statement of accounts largely match, this shows that the management has done a solid job and has a good understanding of the business plans.
If, despite careful preparation, there are deviations in the annual accounts for the previous financial year, an adjustment for the following year is advisable. However, one-off events with temporarily higher costs do not necessarily justify an adjustment to the economic plan. Valuable tips for checking the WEG statement are provided below.
What is the deadline for the WEG statement?
The Condominium Act has deliberately not set a rigid deadline for the annual statement of accounts in order to take account of the different circumstances of condominium owners' associations. A smaller COA with simple financial circumstances may need less time to prepare the annual statement than a large COA with complex income and expenditure.
However, three to six months after the end of the financial year can be taken as a guideline. Some courts have even considered a period of three months to be appropriate, while six months is also acceptable if there are good reasons.
The WEG statement is usually sent together with the invitation to the annual owners' meeting. One of the purposes of this meeting is to discuss the WEG statement and the maintenance reserve and to pass resolutions on them. After the resolution on the annual statement of accounts, additional payments or refunds are due, which are listed in the individual statement of accounts.
Who prepares the annual statement of accounts for the condominium owners' association?
It is not the community itself that prepares the annual WEG statement, but the WEG administrator, who is responsible for this task in accordance with Section 28 (2) of the Condominium Act. In contrast to tenancy law, which stipulates a deadline of 12 months for the service charge statement, there is no statutory deadline for the house charges statement. However, as you already know, as a condominium owner you have the right to demand that the management prepare the statement promptly.
Especially if you rent out your apartment, you are dependent on the timely delivery of the COA statement in order to be able to prepare your service charge statement for your tenant. If the manager repeatedly attracts attention due to delays or errors in the COA statement, this may be a reason to change the property management company. Furthermore, your condominium owners' association is not obliged to approve an incorrect annual WEG statement.
Who bears the costs of preparing the annual statement?
The costs for the preparation of the property maintenance account are borne by the condominium as a whole, with each individual condominium owner paying a certain share. The amount of this share is usually based on the respective co-ownership share of the condominium owners or another previously determined distribution key (see also the new Condominium Act on cost distribution).
The specific costs for the settlement are listed in the annual individual settlement of the WEG. These costs, unlike other running costs such as janitor fees or waste disposal, cannot be passed on to the tenants.
Get more information in our article on apportionable house charges.
The annual statement in the event of a change of ownership: who has to pay?
Changes of ownership can lead to ambiguities. The WEG annual statement is always sent to the person who is registered as the owner in the land register at the time it is drawn up.
This means that even if the apartment was sold during the year, the original owner will receive the statement. This owner must then independently reach an agreement with the new owner on the allocation of costs.
Missing or late annual statement? You must pay attention to this
Proper and timely preparation of the WEG statement is not only a legal obligation for WEG administrators, but also a central building block and component for trusting cooperation with the condominium owners. But what happens if the management fails to meet this obligation or submits the statement late? What rights do owners have in such cases? And what are the consequences for the management?
Missing billing
Preparing an annual statement of accounts and submitting it to the owners' meeting for a resolution is one of the statutory duties of property management companies, as stipulated in the management contract and in Section 28 (3) WEG.
Every condominium owner has a right pursuant to Section 21 (5) No. 5 WEG to the submission of the statement of charges, which he/she can also assert in court. If the management fails to comply with this obligation, this may constitute good cause for dismissal.
Delayed settlement
If the annual statement of operating costs is provided late by the management to the community, this can lead to problems for you as a landlord/landlady in meeting the statutory deadline for the statement of operating costs for your tenants. This is particularly annoying as additional payments can no longer be claimed from the tenants if the statement of operating costs was delivered late.
This also applies if the condominium management is responsible for the delay in the statement of charges (BGH, AZ: IIIV ZR 249/15).
The change to Ralph is uncomplicated.
Tips for owners on checking the WEG annual statement of accounts
A careful review of the annual statement of accounts is important for condominium owners and the management advisory board to ensure that all financial transactions have been processed correctly and transparently. A thorough audit helps to uncover errors or discrepancies and strengthen confidence in the management. To help you with this, we have put together 10 essential tips for checking the annual statement of accounts:
10 tips
- Receipts: Every euro must be supported by a corresponding receipt. Proper bookkeeping is the be-all and end-all. Check randomly, especially larger payments.
- Originals: Trust is good, control is better. Insist on presenting the originals of invoices, bank statements and other important documents. Copies could be fake.
- Account balances: Do the simple test: Do the income and expenses listed in the statement match the actual account balance at the end of the year? Calculate the total of the opening balances, add up all income and subtract all expenses. Does the result match the closing balance? If not, ask your administrator to explain the reasons.
- Overviews: The property management company should provide you with the following documents:
- Total statement: With all bank account balances.
- Individual settlement: For each individual owner.
- Development of the maintenance reserve: both the planned (TARGET) and the actual (ACTUAL) values.
- Results of the individual accounts: Shows whether there are any house money arrears (not required by law).
- Balance sheet: Not required by law, but very useful.
- Transfers: The various parts of the annual statement must flow seamlessly into one another. Ensure that the figures carried forward are consistent.
- Reserves: The maintenance reserves are an important component of the community assets. Check whether the amount of the reserves is in line with expectations and ask for an explanation of any discrepancies.
- Individual accounts: Each condominium owner is responsible for checking their own individual accounts. Are the cost allocation keys correct? Have all costs been calculated correctly?
- House money arrears: Arrears of house money are a nuisance for the entire community of owners. Check whether these are being recorded and whether the administrator is taking measures to collect them.
- Explanatory report: A good administrator encloses a written report with the WEG statement. This report explains any special features, discrepancies or liquidity problems.
- Resolution on the annual statement of accounts: The resolution on the WEG statement of accounts must not contain any reservations. The annual statement must be clear and the result (balance) must be fixed. Subsequent amendment of the statement by the administration without a new resolution is not permitted.
Do you already know Ralph?
Clarity and transparency for your WEG. At Ralph, your property management company from Berlin, we know how important it is to have correct and punctual annual accounts. That's why we prepare them with the utmost care and accuracy. This means you always have a clear overview of your community's income and expenditure.
Rely on our expertise for transparent and comprehensible billing. Get a free quote now and switch to Ralph!
