Disadvantages of co-ownership: What are they and why?

Co-ownership shares serve to clearly and bindingly regulate the rights and obligations within a homeowners' association, in particular voting and co-determination rights as well as the distribution of costs for the common property. However, there are still disadvantages. You can find out what these are in our article.

Definition: What is co-ownership?

Co-ownership describes a form of property ownership in which a property is not owned by a single person, but by several people together. In contrast to sole ownership, where a property/land is owned by a single owner, co-ownership means that several people share ownership. Each co-owner owns a certain co-ownership share of the property.

Co-ownership shares in the WEG

Co-ownership shares, often abbreviated to MEA, therefore refer to the arithmetical share of an owner in the common property of a homeowners' association (WEG). The co-ownership shares essentially determine which share of the jointly used building is attributable to an owner.

The distribution of costs

Without a clear breakdown of the ownership shares, as set out in the declaration of division, it would not be possible to distribute the costs of managing and maintaining the common property fairly.

The German Condominium Act (WEG) stipulates that these costs must be divided according to the co-ownership shares (Section 16 (2) WEG).

The calculation of co-ownership shares

The co-ownership shares are calculated based on the ratio of the individual living space to the total area of the building. These shares are usually expressed as hundredths, thousandths or ten-thousandths.

The formula for the calculation is: MEA = (living space of the individual unit / total area of the building) * frame value.

The right to vote

This share is entered in the land register and forms the basis for the owners' right to have a say in joint decisions. The co-ownership share therefore has a direct influence on voting rights in the homeowners' association. The larger the co-ownership share, the stronger the voting rights in decisions affecting the common property.

Since the 2020 WEG reform, at least half of the co-ownership shares must be represented in order to hold an owners' meeting.

The rights and obligations of co-ownership shares

The rights and obligations of the co-owners basically correspond to those of a sole owner. However, decisions relating to the common property must generally be taken jointly by all co-owners or at least by a majority. This means that important decisions, such as major repairs or conversions, require the consent of all or at least most of the co-owners.

Why are there co-ownership shares?

Co-ownership shares are used for the clear and binding distribution of rights and obligations within a community of owners, particularly in condominium owners' associations. They regulate how voting and co-determination rights as well as the costs for the common property are divided among the owners.

Co-ownership shares not only give owners the right to their own apartment (special ownership), but also a corresponding share in the common property. The share determines the extent to which the owners are involved in decisions and which costs they have to bear.

The legal basis for co-ownership shares in Germany is the German Condominium Act (Wohnungseigentumsgesetz - WEG), in particular Section 16 (1) WEG. Pursuant to Section 6 WEG, special ownership is inseparably linked to the co-ownership shares. This means that separate property cannot be sold or mortgaged without the associated co-ownership shares.

When does co-ownership arise?

Co-ownership can arise in various situations, for example when several people buy a property or through an inheritance in which several heirs become joint owners of a property.

If several people purchase a property together, co-ownership is automatically created. The shares of the individual co-owners, the so-called co-ownership share, are precisely defined.

This can also be created by converting another form of ownership into co-ownership. Both sole ownership and joint ownership can be converted into co-ownership. This can happen, for example, if a sole owner sells shares in the property to another person. Conversion to co-ownership can also occur as part of the division of an estate if the heirs inherit the property jointly.

It is important to know the rights and obligations associated with co-ownership in order to avoid conflicts and ensure smooth cooperation between the co-owners.

Co-ownership vs. joint ownership and other forms of ownership

The different forms of ownership can be distinguished mainly by the degree of connection between the owners and the type of power of disposal over the property.

Demarcation from joint ownership

• The main difference lies in the way in which the owners are bound. In the case of co-ownership, there is no mandatory community relationship, which gives the co-owners greater flexibility, particularly when selling their shares.
• In contrast, joint ownership requires a legal or contractual obligation, as is the case with communities of heirs or married couples, for example. Here, the consent of all parties involved is required for the sale of a share.

Demarcation from condominium ownership

• Condominium ownership is a special form of co-ownership that is characterized by special legal regulations.
• It is used to assign condominiums in apartment buildings to individual owners.
• There is also a community of owners, but the condominium owners can dispose of their spatially defined property shares independently.

Differentiation from sole ownership

• Sole ownership is the simplest form of ownership in which a property belongs exclusively to a single person.
• This person has sole power of disposal over their property.

Co-ownership shares have these disadvantages and challenges

Co-ownership shares, especially in the context of homeowners' associations, can also pose some challenges despite their advantages:

• Limited individual freedom of choice
  • As many decisions have to be made jointly, individual owners are restricted in their freedom of action. This applies in particular to decisions regarding renovations, maintenance and the management of the common property.
• Potential conflicts within the community
  • Differing opinions and interests among owners can lead to conflicts that make decision-making and coexistence more difficult.
• Financial obligations
  • Co-owners are obliged to contribute to the joint costs, which can mean unexpected financial burdens.
• Liability for joint debts
  • If individual owners default on payment, this can lead to an additional financial burden on the remaining homeowners' association.
• Limited flexibility when selling or renting
  • The sale or rental of an apartment with co-ownership shares can be complicated by the need to obtain the consent of the owners' association or to comply with specific requirements. This can slow down and complicate the entire process.
• Dependence on other owners
  • The condition and value of your own property depend to a certain extent on the care and behavior of the other co-owners. Both inadequate maintenance and disputes with other owners can have a detrimental effect on the value of the property.

Switch to Ralph now

Would you like to change your property management company? Switching to Ralph means that your property is in competent hands. We attach great importance to the correct calculation and management of your co-ownership shares and ensure transparent and fair accounting for your property.

Simply send us a message to let us know that you are interested in switching and we will contact you immediately to discuss all the details.

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