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Each co-owner in a condominium owners' association (WEG) holds an individual co-ownership share. This is because a WEG is not just a house with several apartments - it is a community in which several owners share the building, but not always in equal shares. How is the co-ownership share calculated? How does the co-ownership share affect property tax? And where is the co-ownership share recorded in the land register? This article provides answers to these and other important questions about the co-ownership share of homeowners' associations.
What is the co-ownership share?
If you own shares in a property that belongs to a homeowners' association together with other people, you are referred to as a co-owner. This co-ownership is subject to the civil law provisions set out in sections 1008 - 1011 of the German Civil Code (BGB).
The extent of your participation in the common property is determined by your individual co-ownership share (MEA). This share simply determines the extent to which you participate in the common areas of the property.
An overview of the significance of co-ownership shares
- The co-ownership share defines the extent of each member's interest in the property
- The co-ownership share influences the distribution of costs, rights and obligations within the community
- The higher the proportion of co-ownership shares, the higher the value of an apartment
- The co-ownership share can determine the voting rights in the owners' meeting or for circular resolutions: If the community deviates from the statutory head principle (Section 25 (1) WEG) or the value principle: the larger the co-ownership share, the higher the voting weight
- The co-ownership share is a necessary prerequisite for the establishment of special ownership.
- The calculation is based on the living and usable space.
- Depending on the size of the property, the co-ownership shares are usually divided into 1000th, 100th or 10th co-ownership shares.
Voting rights and co-ownership shares
The co-ownership shares (MEA) play a central role in determining voting rights at the owners' meeting. This system is based on the value principle, whereby the weighting of votes is based on the MEA.
The scope of the voting rights depends on the size of the co-ownership share:
- Larger MEA = more voting weight
- Smaller MEA = less voting weight
This means that owners with higher shares can exert greater influence on decision-making processes within the condominium community.
Since the WEG reform of 2020, there has been a change regarding the quorum of the owners' meeting: at least 50% of the MEA must be represented at the owners' meeting. Otherwise, the meeting cannot take place. This regulation is intended to ensure representative participation in important decisions.
Definition of common property
Common property is everything in the building that is not explicitly assigned to an individual owner as separate property. It includes the areas that are used jointly by all owners. Typical examples of common property in a house are
- Staircases
- Communal washrooms
- Elevators
- Outdoor facilities on the property plot
These communal areas in the property are available for use by all co-owners and are jointly managed and maintained by the community of owners.
Special ownership: definition
The WEG Act allows the creation of special ownership of certain premises in a property. According to Section 3 (1) sentence 1 WEG, special ownership refers to the exclusive ownership of:
- a specific apartment (condominiums)
- certain rooms that are not used as living space and not for residential purposes
These rooms must be located in a building already constructed or to be constructed on the property.
Find out more in our article"Special ownership vs. special right of use. What's the difference?"
Inseparability of special ownership and co-ownership share
An important aspect of special ownership is its indissoluble link with the co-ownership share of the respective owners. This link is so close that:
- Special ownership is always established in connection with the co-ownership share
- separation of special and common property is not possible
- the sale of separate property without the corresponding co-ownership share is excluded (Section 6 (1) WEG)
Calculate co-ownership share (with example)
The Condominium Act does not provide any binding specifications for calculating co-ownership shares. Nevertheless, a fair and comprehensible calculation is important as it has an impact on various aspects:
- to the obligation to bear the costs (Section 16 (2) sentence 1 WEG)
- and the external liability of the owners (Section 9 a (4) sentence 1 WEG)
The formula for the MEA
The calculation is based on the living and usable area. To calculate the co-ownership share of the property, use the following formula:
Co-ownership share MEA = (frame value ÷ number of square meters of special ownership of the property) x number of square meters of special ownership of the owner
The calculation method for the MEA
A common and fair method for calculating the co-ownership share (MEA) is based on the ratio to the separate property. Here are the steps:
- Determination of the framework value:
- The total number of co-ownership shares (MEA) is specified in the declaration of division or in the division agreement.
- Usual frame values:
- Average objects: 1,000 MEA
- Larger objects: 10,000 MEA
- Calculation of the value of an MEA:
- Frame value ÷ total area of the special property = value of one MEA per square meter
- Determination of the individual co-ownership share:
- Value of an MEA × number of square meters of the individual special property
Practical example
Let's assume:
- Framework value of the building: 1000 MEA (co-ownership shares)
- Total usable area of the building: 500 m²
- Area of the individual special property: 70 m²
Calculation:
- Value of an MEA: 1000 ÷ 500 = 2 MEA/m²
- Individual co-ownership share: 2 × 70 = 140 MEA
Result: The co-ownership share is 140/1000.
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The co-ownership share as the basis for the distribution of ancillary costs
The distribution of ancillary costs in the condominium owners' association is generally based on the co-ownership shares. This regulation is enshrined in the Condominium Act and serves as the starting point for cost allocation.
Various common costs are incurred in a community of owners. These include, for example, expenses for cleaning the common areas, insurance for the building or necessary maintenance measures. § Section 16 (2) sentence 1 WEG stipulates that these costs are distributed according to the co-ownership shares in the property. This means that the larger the co-ownership share of a condominium owner, the higher his/her share of the total costs.
In practice, this often means that owners of larger apartments or units bear a higher share of the costs. This is based on the assumption that the co-ownership share is generally determined in proportion to the size of the separate property. This means that the larger the property owned, the greater the obligation to bear the costs.
Important: communities of owners can deviate from this principle. Section 16 (2) sentence 2 WEG allows you to decide on an alternative distribution of costs. For example, it could be agreed to distribute the costs according to the number of residential units per owner, regardless of their size. This flexibility allows you to choose a distribution of costs that is perceived as fair and appropriate for all owners. Find out more in our article:"Creating a service charge statement: How to do it".
Disadvantages of co-ownership shares in condominium owners' associations
The rights and obligations relating to co-ownership shares can also entail disadvantages in certain cases.
One disadvantage is the limited freedom to make decisions, as decisions are often made jointly and individual wishes regarding renovations, maintenance or management of the common property may be restricted. In addition, different opinions and interests of the owners can lead to conflicts within the community, which can make decision-making for the co-ownership and cooperation in the condominium more difficult.
Owners are also obliged to bear their share of the common costs relating to maintenance, repairs and the management of the common property. Finally, the owners are proportionally liable for the joint debts of the community of owners, which can lead to an increased financial burden for the other owners if other co-owners default on payment.
Selling co-ownership shares: What do owners need to consider?
In principle, each owner has the right to dispose of his/her property as he/she sees fit. This also includes the option to sell the co-ownership share. Even if co-ownership shares can be sold in principle, it is not possible to sell individual shares.
As you already know, according to the German Condominium Act (Section 1 (2) WEG), the co-ownership shares and the special property (such as an apartment) form an inseparable unit. In addition, according to Section 6 WEG, special ownership is dependent, which excludes the isolated sale of co-ownership shares. Consequently, co-ownership shares and special property can only be sold together, as is the case when selling an apartment, for example.
Important: Every sale of these shares is subject to notarization and entry in the land register.
Fractional ownership vs. co-ownership share
The term "co-ownership share" is not always used correctly, particularly when selling residential property. In some cases, it is incorrectly used as a synonym for "fractional ownership", for example when an apartment belongs to a married couple.
However, if an apartment or house is jointly owned by several owners, there is only a single entry in the land register. In such cases, the property is not owned separately, but the owners form a fractional community.
If the separate property or a house is inherited by several people, a community of joint owners is created. This community can only decide on the use and management as a whole.
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Is it possible to change the co-ownership shares?
It is generally possible to change the co-ownership share. In order to change the co-ownership share, two essential requirements must be met:
Firstly, a legal transaction in rem is required in accordance with Sections 873 and 925 of the German Civil Code (BGB). This means that all owners whose shares are affected by the change must give their consent. This agreement is known as a "conveyance".
In some cases, this can affect all owners of the community, for example if the total area is changed by an extension to the property building and the co-ownership shares are shifted as a result. In other cases, only individual owners may be affected, for example if they swap rooms and thus want to compensate for a disproportion between the usable area and the co-ownership share.
Secondly, the change to the co-ownership shares must be entered in the land register. The change to the co-ownership shares only becomes legally effective once this entry has been made.
Co-ownership share and property tax
The co-ownership share also plays a role in the calculation of property tax. Each co-owner is obliged to pay an amount corresponding to his or her share. The amount of property tax is determined by the value of the land and the buildings on it.
The co-ownership share must be stated on the property tax return. The exact registration office for the co-ownership share depends on the respective property tax model that applies to the property in question. A distinction is made between the federal model and the various state models.
If in doubt, it is advisable to seek expert advice to ensure that the tax return is completed correctly and that tax is not inadvertently paid on only half of the co-ownership share of the property, which could have legal consequences.
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