Dismissal of a WEG administrator - how does it work?

Dismissal of the administrator: what you need to know

Ideally, a condominium should work with its property manager on a long-term basis. However, if the cooperation is to be terminated, condominium owners need to know the legal situation for dismissing the manager. How and when is dismissal possible? We have summarized the essentials for you.

Dismissal of administrator is possible without good cause

The dismissal of administrators is a frequent topic in condominium law. The new Condominium Modernization Act (WEMoG), which came into force on 01.12.2020, has significantly simplified the requirements for dismissal. The condominium management can now be dismissed at any time without the need for good cause. It is sufficient if the condominium owners are dissatisfied with the work of the administrator or if they find a more favorable provider.

This new regulation also applies to administrator contracts that were concluded before the WEMoG. This means that administrators who were appointed before the WEMoG and whose dismissal was originally linked to a fixed term can now be dismissed without good cause. Clauses in old administrator contracts or provisions in the declaration of division with community regulations are no longer relevant since the 2020 reform.

Dismissal is decided by condominium owners in owners' meeting

As a rule, the decision to dismiss the administrator lies with the condominium owners, who vote on it with a simple majority, i.e. more than 50 percent of the votes cast. Alternatively, the dismissal can also be decided in writing by all owners. If such a resolution is not possible, an individual owner can also apply for dismissal in court if a prior resolution would obviously be futile.

The administrator has the right to take legal action against a termination or dismissal that he considers to be unjustified. The significance of good cause for dismissal is likely to become irrelevant.

Observe 6-month deadline for dismissal of the administrator

With the announcement of the dismissal of the manager, the manager's position as an organ expires immediately. However, the contractual relationship between the community of owners and the property manager continues to exist. This means that if the condominium owners dismiss the property manager, the latter may cease their work immediately, but remain contractually bound to the community of owners for a while longer. In accordance with section 26 (3) sentence 2 WEG, the management contract then ends no later than 6 months after the manager is dismissed.

The property management company is entitled to the contractually agreed management fee until the end of the notice period or for a maximum of six months, less any expenses saved or income earned elsewhere. In the case of fixed-term contracts, there is an entitlement to the pro rata management fee for this period.

In short: the administrator contract ends automatically six months after the dismissal. The six months apply from the time the administrator is dismissed (section 26 (3) sentence 2 WEG). In this case, no additional notice of termination is required. 

However, if the COA wishes to terminate the management contract before the six months have expired, this is possible in accordance with the notice periods agreed in the management contract or the statutory provisions.

Extraordinary termination without notice for good cause

Since the WEG reform of the Condominium Act, an administrator can also be dismissed without good cause. Another option is the extraordinary termination of the management contract without notice.

The difference between termination and dismissal: The termination of the management contract requires good cause. If the property management contract is terminated in this way, the contract ends upon receipt of the termination without notice. In addition to the existence of the dismissal resolution, a separate resolution on the termination of the management contract must also be observed.

Possible grounds for extraordinary termination of the management contract without notice:

• Poor accounting and transparency: failure to draw up business plans and annual accounts, dishonesty in the management of funds or late preparation of the annual accounts
• Repeated omissions: The administrator repeatedly fails to pay due bills or renew insurance contracts, resulting in financial disadvantages for the community.
• Ignorance of owner complaints: The manager does not respond to justified complaints from the homeowners' association regarding defects in the property or the management.
• Neglect of administrative tasks: Failure to carry out proper maintenance and repair
• Violation of the WEG: The administrator disregards the provisions of the Condominium Act, for example by embezzling funds or failing to keep proper minutes of meetings.
• Endangering owners: The manager commits criminal offenses against the condominium owners or endangers their safety.
• Breach of trust and conflicts of interest: The administrator awards contracts to companies or service providers in which he/she has an interest without disclosing this.
• Publication of false information: The manager disseminates false information about the financial situation of the condominium owners' association or misleads the owners about the condition of the property.

Basic information on the appointment of a WEG administrator

When choosing an administrator, it is important to understand the legal distinction between the appointment and the administrator contract. Why is this important? A well-drafted management contract ensures clarity and avoids disputes later on. It forms the basis for successful cooperation between the administrator and the COA.

• Appointment of the administrator: The administrator is appointed by a resolution in the owners' meeting in accordance with section 26 (1) WEG and establishes a relationship as an organ.
• The administrator contract: The management contract, on the other hand, is a contract under civil law between the WEG and the property management company that regulates the specific activity. This is concluded in writing and, in addition to general points such as contract term, termination and remuneration, should also contain specific provisions on the following topics:
  • Recovery of arrears
  • Maintenance provision
  • Conclusion and termination of contracts
  • Cooperation with the Advisory Board
  • Organization of owners' meetings
• Five-year term of office: The term of office of an administrator is limited to a maximum of five years. There is no automatic renewal. At the end of this period, a new administrator must be selected.
• Forms: Professional associations and publishers offer helpful templates for administrator contracts. These can serve as a basis and should be adapted to the individual needs of the WEG.

Basic information on the tasks of the administrator

The duties of the administrator are essentially regulated in Sections 19, 20, 27 and 28 of the Condominium Act. Since the recognition of the partial legal capacity of the community of owners in 2007, the administrator has represented the condominium owners as co-owners of the common property and the community itself as an executive representative. The administrator's duties and powers of representation were therefore comprehensively formulated in Section 27 (old version until 2020). The structure of the provision was significantly streamlined with the WEG reform.

A core aspect of the property manager's work is the implementation of maintenance measures. The property manager carries out regular inspections and takes care of maintenance measures. Cost estimates are obtained for larger measures. The preparation of the business plan and annual accounts as well as the holding of owners' meetings are further core areas of management.

Whether the powers of the administrator can be effectively defined in the administrator agreement is controversial. Approval of the administrator contract by resolution should make it clear that the tasks defined therein correspond to those provided for in section 27. An alternative possibility is the drafting of a standing resolution on certain areas of responsibility within the scope of which the administrator may act.

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