Service charge settlement deadline - You need to know these deadlines

As landlords, you know one thing above all: once a year, you have to prepare a service charge statement and send it to your tenants. In order to be able to assert your claims, this must be done by a certain deadline. However, there is always confusion about the right time. When is a service charge statement considered too late and what other deadlines are there? We will clarify this for you.

All deadlines for the service charge settlement at a glance

The most important deadlines for the service charge settlement are

Deadline for preparing the service charge statement: According to Section 556 (3) of the German Civil Code (BGB), landlords must prepare the service charge statement and send it to the tenants within twelve months of the end of the billing period at the latest.

Deadline for objections: Pursuant to Section 556 (3) of the German Civil Code (BGB), tenants have the right to review and object to the service charge statement within a period of twelve months after receipt of the statement.

Deadline for asserting additional claims: Landlords can make additional claims from the service charge statement up to twelve months after the end of the billing period.

Statute of limitations for additional claims: After three years have elapsed since the end of the settlement period, subsequent claims arising from the service charge settlement are time-barred, unless the landlord/landlady has submitted the settlement within the twelve-month period.

Deadline for the preparation of the service charge statement

The most important service charge settlement deadline for asserting your claims as a landlord/landlady is the deadline for preparing the service charge settlement. You have one year to do this, calculated from the end of the billing period.

Example: The billing period is the calendar year 2025, i.e. from 01.01.2025 to 31.12.2025. The service charge statement must then be received by the tenant by noon on 31.12.2026 at the latest. If December 31 falls on a Saturday or Sunday, the deadline is postponed to the next working day in accordance with Section 193 BGB. In this example, that would be 02.01.2027.

Deadline missed? Subsequent claims are not possible

What happens if you miss a deadline and prepare the service charge statement, but too late? If you miss the deadline, you can generally no longer claim additional charges, at least if you are renting out privately used apartments. However, you can claim a credit balance. In the case of commercial tenancies, claims for additional charges remain valid even if the deadline is missed.

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Good to know: Tenants may reclaim advance payments of service charges as long as they have not received a statement. The reason for this is that the advance service charge payments for the previous year have already been made. Landlords are therefore entitled to the statement as proof that the owners have in turn paid the service charges with the advance payments made. Commercial tenancies are less strictly regulated in this respect. Different agreements can always be made with the tenants. 

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No exceptions for incorrect or incomplete service charge settlement

If the service charge statement was formally incorrect or incompletely given to the tenants, the deadline for its preparation is not extended. No exceptions are made to the annual deadline for service charge statements.

Important: When preparing the service charge statement, landlords must observe certain requirements in order to prepare a legally compliant statement. This includes the correct allocation of costs to the individual tenants based on the living space or according to individually agreed distribution keys. In addition, landlords should carefully keep all relevant documents such as invoices and contracts.

Tenants can check and object to utility bills

Tenants have the right to check the service charge statement and lodge an objection. If an error is discovered in the statement, they have until one year after receipt of a legally valid service charge statement to lodge an objection. What happens if tenants miss the objection deadline? After the twelfth month has passed, any objections raised after this time can no longer be asserted.

‍Erroneous service charges?! 10 common mistakes in service charge billing

There are many pitfalls when preparing a service charge statement. Here are the 10 most common sources of billing errors:

1. Incorrect cost types: Not all costs can be passed on to tenants. Costs for maintenance, modernization or administration costs are often incorrectly allocated to operating costs.
2. Missing or incorrect receipts: The statement must be supported by appropriate receipts. If these are missing or incomplete, the statement of service charges can be contested.
3. Inaccurate allocation formula: The costs must be allocated to the individual tenants according to a fair and transparent formula, e.g. according to living space or individual consumption values.
4. Calculation errors: Even simple calculation errors can lead to considerable discrepancies in the statement and can be objected to by the tenant.
5. Outdated regulations: The legal provisions change regularly. It is important that the billing of service charges is always based on the latest legislation.
6. Late delivery: The deadline for delivery of the service charge statement is 12 months after the end of the billing period. If this period is exceeded, it may no longer be possible to assert additional claims.
7. Incomplete delivery: The statement of service charges must be sent to all tenants concerned.
8. Formal errors: The service charge statement must meet certain formal requirements, e.g. a clear designation of the parties and a precise indication of the billing period.
9. Lack of transparency: The service charge statement must be comprehensible for the tenants of the property.
10. No consideration of tenant changes: If there is a change of tenant during the billing period, the billing of service charges must be adjusted accordingly.

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What is the 15 percent reduction right?

In some cases, tenants are allowed to reduce their heating costs by 15 percent - according to Section 12 of the Heating Costs Ordinance, this means that the landlord is not allowed to pass on 15 percent of the heating costs incurred to the tenants - the landlord or landlady is therefore left with these costs. 

The 15 percent reduction right exists, among other things.

• if the heating costs were not billed according to consumption, but according to the living space
• If the apartment is not equipped with a recording device in the first place
• if the acquisition device has been mounted incorrectly
• if the landlord/landlady has not carried out an interim reading when there is a change of tenants
• if the consumption display of the heat cost allocator is defective

Special case of a change of tenant: a challenge for service charge billing

A change of tenant presents landlords with the challenge of correctly settling the service charges for the old and new tenants. If there has been a change of tenant during the current billing period, landlords are obliged to prepare a service charge statement for the new and old tenants in accordance with the shortened usage period. The service charges incurred are calculated pro rata for the respective period of use.

In addition, the meter readings must be taken in order to determine the exact consumption of the respective tenant.

If the apartment is vacant between two tenancies, the landlords are obliged to bear the costs of the vacancy. Exceptions are possible if there is another contractual agreement.

In order to avoid legal disputes, landlords should take particular care when preparing the statement in the event of a change of tenant and keep all relevant documents.

Summary: Central provisions of §556 BGB

The legal basis for the settlement of service charges and the associated deadlines is set out in Section 556 BGB.

Agreement on operating costs

Section 556 of the German Civil Code stipulates that landlords and tenants can contractually agree that the tenants bear the operating costs. This forms the basis for the allocation of ancillary costs to the tenant.

Accounting obligation of the landlord/landlady

Landlords are obliged to issue an annual statement of the advance payments for operating costs. This statement must meet certain formal requirements in order to be considered valid.

Settlement period

The most important billing deadline in the context of service charge billing § 556 BGB states that the statement must be delivered within twelve months of the end of the billing period.

Rights and obligations of the landlord

1. Duty to prepare: The landlord must prepare an annual service charge statement that meets the formal requirements.
2. Compliance with the deadline: The statement must be received by the tenant within the 12-month period.
3. Obligation to provide evidence: In the event of significant cost increases (over 10%), the landlord must provide detailed evidence and invoices.
4. Exclusion period: If the landlord fails to meet the billing deadline, he/she generally loses the right to make additional claims.

Rights and obligations of the tenant

1. Right of inspection: Tenants have the right to inspect and object to the service charge statement.
2. Objection period: Tenants have twelve months from receipt of the statement to lodge an objection.
3. Right of reduction: Under certain circumstances, e.g. if the heating bill is incorrect, tenants can reduce the costs by 15%.
4. Right to reclaim: Tenants may be able to reclaim advance payments of service charges if the statement is not issued on time.

Precise knowledge of these legal principles is important for both landlords and tenants in order to protect their rights and fulfill their obligations. A correct and timely service charge statement also contributes significantly to a smooth tenancy.

How we can help you as a property manager with the deadlines for the service charge settlement

As your property management company, we can help you with the deadlines for the service charge settlement. Compliance with the statutory deadlines and the precise checking of invoices and receipts are of great importance in order to clarify possible discrepancies and secure financial claims. To this end, we at Ralph pursue the following approaches and processes:

Structured documentation of service charges: Ralph can collect all relevant receipts, invoices and documents in a digital database and store them in compliance with the law. This means we have all the necessary information at our fingertips to prepare the service charge statement on time.

Updating the billing period: For our customers, we always keep a close eye on the billing period and make sure that we prepare the service charge statement within the deadline and send it to the tenants.

Regular communication with the tenant/s: Ralph can ensure that the tenant receives the service charge statement in a timely manner by communicating with the tenant on a regular basis. For example, we send a reminder email or inform the tenant that the statement will be sent shortly.

Fast processing of objections: If tenants raise objections to the service charge statement, we examine them as quickly as possible and make any necessary corrections. This enables us to ensure that any subsequent claims are asserted within the twelve-month period.

Through a structured approach and adherence to the aforementioned approaches, we take care of the deadlines for the service charge settlement and thus fulfill your rights and obligations as a landlord/landlady.

A professional property management company like Ralph relieves you as a landlord/landlady of the time-consuming task of settling service charges. This minimizes the risk of legal disputes and ensures smooth cooperation with your tenants.

Switch to Ralph now

Would you like to switch to Ralph? You can find out all about our services on our information page Property management costs. Don't hesitate to contact us and arrange a meeting now. Our team is at your disposal and looks forward to helping you.

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