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House money: The most important questions explained
What does the obligation of the owners according to § 16 para. 2 WEG mean?
Pursuant to Section 16 (2) WEG, the owners are obliged to bear the costs of the common property as well as the costs of maintenance and repair in proportion to their co-ownership shares. The proportion is to be determined on the basis of the co-ownership shares entered in the land register.
Are there any exceptions to the cost allocation requirement?
In really special exceptional cases, e.g. if there is no technical possibility to use the common property, the affected owner could claim an exception, exemption or modification of the proportional joint liability for himself according to § 10 para. 2 sentence 3 WEG old version. However, the lack of interest in use of an individual is irrelevant.
What are typical cost items of the house charges in a WEG?
Cost items are not listed in detail in the text of the law, but are regularly included among the burdens and costs:
- Insurance premiums
- Cost of community antenna system
- Water supply and disposal
- Heating and hot water
- Garbage collection
- House cleaning
- Electricity costs for the community facility
- Chimney cleaning
- Maintenance costs of the outdoor facility
- Costs for elevator system, janitorial services and for other common facilities.
- Maintenance and repair including maintenance reserve
The costs are to be borne according to co-ownership shares (MEA).
How is the house or housing allowance calculated?
The house or housing allowance is calculated from the cost items that must be borne by the community. Each owner must bear his share according to his co-ownership share.
When and how to pay housing allowance?
There is no specific provision in the law on the due date for housing benefit payments. Instead, the submitted individual business plan with the specified monthly advance payments lays the foundation for the housing allowance advance payments. The overall business plan contains the anticipated income and expenses of the entire property for the intended business year. The cost share of each condominium owner is specified in the individual business plan via the distribution key. The resolution wording must refer to the individual management plans and proper management requires appropriate rounding up on the expenditure side and calculation with sufficient certainty. The contribution to the maintenance reserve must also be shown. If the business plan is to continue to apply beyond the business year, this must be expressly resolved.
Can housing assistance payments be withheld?
A condominium owner has no right to withhold housing allowance payments, even if he believes that he can expect a credit balance at the end of the business year. It is strongly recommended to expressly resolve that the business plan shall continue to apply beyond the business year.
What regulatory power do the owners have?
The legislator has granted the owners the majority decision-making power on issues relating to maturity, consequences of default such as interest and other ancillary payments. This regulatory power relates in particular to default interest regulations, due date regulations, flat-rate contractual penalties and a flat rate for removal costs. From 2007, the controversial flat rate for non-participation in direct debit transactions was also regulated by law as a special administrative expense.
Maintenance reserve: everything you need to know
What is a maintenance reserve?
A maintenance reserve (formerly: maintenance reserve) is a monetary reserve formed by the community of owners to finance future maintenance and repair measures. It is not necessary to establish a reserve unless an owner requests it. However, if an owner requests it, a reserve must be established and the amount and purpose must be decided by a majority vote.
Earmarking of the reserve
The maintenance reserve is earmarked and may only be used for future maintenance and repair measures. General expenses and costs of the community may not be paid from the reserve. Only in exceptional cases, if a proper basic reserve and reserve amounts remain, recourse to bridge liquidity bottlenecks is possible.
Amount of the reserve
There is no legal requirement for the amount of the maintenance reserve. However, the reserve should be adequate and there are various formulas to calculate an adequate amount. For example, Peters' formula can be used to multiply the production cost per square meter by a factor of 1.5 and divide by 80 years of building life. Another method is to use the provisions of social housing, according to which 7 to 11 euros per square meter per year (depending on the age of the building) and 68 euros per year for garage parking spaces should be formed. In case of dispute, the courts decide individually according to the technical condition of the building, its age and equipment, and medium-term maintenance needs.
Additions to the maintenance reserve
Additions to the maintenance reserve are part of the monthly housing allowance advances. The annual statement must show both the actual payments and the payments due on the reserve. The former as revenue, the latter as a separate disclosure. As of Dec. 1, 2020, only the "docked" information is required in the property report. If an owner leaves, he cannot claim a paid-in share from the provision. For a commercial owner, the paid-in reserve amounts are not considered operating expenses in the tax sense until the reserve is consumed.
Special levy: The most important questions explained
What is a special levy?
A special levy is a one-time contribution that is decided by the owners by majority resolution. It is comparable to a supplementary business plan. Special assessments are regularly levied for unforeseen and sudden expenses, particularly in the area of maintenance. They are also permissible and necessary in the event of liquidity problems.
How is the special levy distributed?
As a rule, the allocation key should be based on the co-ownership share, unless there are objective reasons that require a deviation from this principle. The special levy becomes due as soon as the administrator requests it.
What is the liquidity reserve?
In order to avoid special levies, the 2020 reform explicitly allows the creation of separate liquidity reserves. This means that the community can set aside money for unforeseen expenses in order to be able to dispense with such special allocations in the future. The creation of the reserve must be decided by the owners' association.
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Distribution key - what you should know
What is a distribution key and when are deviations possible?
An allocation key determines how costs are shared in a community of co-owners. Normally, it is determined based on the co-ownership shares.
However, there are exceptions. In declarations of partition with community regulations, the distribution key can be determined differently. For example, it can be regulated according to area in accordance with the regulations of the Second Calculation Ordinance (II. BV) or according to house groups or other suitable distributors.
Changes to the distribution key
Normally, the distribution key set out in the community rules cannot be changed without the consent of all owners entered in the land register. A resolution passed only by a majority is null and void. To avoid this blockade, the declaration of division with community regulations can contain a so-called opening clause. This allows the community to pass resolutions by a majority if there is an objective reason for deviating from or changing the distribution key.
Operating costs in condominium communities - before and after the amendment to the law
Previously, according to § 16 para. 3 et seq. WEG (old version, from 2007 to 2020), it was simpler to record the operating costs of the common property or the special property as well as the costs of administration according to consumption or causation and to distribute them accordingly or according to another standard. A simple majority of votes was sufficient for this, provided that this corresponded to proper administration. A provision under rental law was introduced in order to achieve legal standardization and simplification.
Although it was not explicitly stated in the law, according to the will of the legislator there should be an objective reason to decide on changes or introductions of other distribution keys. A mere change from the MEAT (co-ownership share key) to the area without any other changes was not considered an objective reason. On the other hand, no special reason was necessary if the distribution key was appropriate to the interests of the condominium owners' association and the individual owners and no one was unjustly disadvantaged.
The legal regulation facilitated changes compared to existing declarations of division and community regulations, but the already existing community regulations were invalidated. If the administrator's community rules already contained a less stringent regulation, this applied in favor of the community. Retroactive changes to the distribution key were and are inadmissible.
With the 2020 reform, the legislator has decided to further open up and facilitate the subsequent amendment of distribution keys. According to Section 16 (2) Sentence 2 of the current version, deviating distributions for individual cost items or certain types of costs can now be decided by a majority. It no longer has to expressly comply with proper management or have a factual reason. However, such resolutions must not be arbitrary. It remains to be seen what impact this will have in practice.
Changes in repair costs
In the old version of Section 16 (4) WEG, the legislator decided that in the case of maintenance, repair or structural changes, a so-called double-qualified majority resolution is required if the allocation of costs is to be regulated differently in individual cases by resolution. The 2020 reform abolished this requirement for a double-qualified majority for a change in the allocation formula for maintenance costs. Now this can be decided by a majority resolution, not only for the individual case, but also permanently.
Changes in individual cases
If there are serious reasons which make it unreasonable for an individual owner to adhere to the distribution key, there is a claim for amendment in accordance with Section 10 (2). In the past, the limit of reasonableness was an additional cost burden of 25%. Nowadays, there is hardly any room for these serious cases due to the simplified resolution options. If an owner does not succeed with his or her request for amendment by way of resolution, he or she can bring an action for annulment or apply to the court for a resolution to be replaced (Section 44 (1)).
Distribution key for heating costs as a special case
A majority decision on the change of the heating cost allocation is permissible, since § 16 in connection with §§ 3 and 10 of the HeizkostenVO allows this. § Section 7 of the HeizkostenVO sets the standard.
Do you already know Ralph?
Now we would like to briefly introduce Ralph, an innovative solution for the management of your WEG. Ralph is a state-of-the-art property management company from Berlin: Ralph combines software with experience. We automate many of the repetitive processes of property management with our proprietary software. This allows us to free up our experienced managers so that they can concentrate on the essentials and have more time for the customers. Our strength lies in our ability to proactively drive forward diverse issues simultaneously and to manage even complex refurbishments.
Are you interested? Then don't hesitate to contact us and arrange a meeting now. Our team is at your disposal and is looking forward to helping you.
