Cost distribution key: This is how costs are distributed in the WEG

New WEG law: Cost allocation - What is the cost allocation key?

A cost allocation key is a fair distribution of the total costs of the common property among the apartment owners. The statutory cost allocation key is regulated in the WEG Act. This is dispositive, i.e. not obligatory, and can therefore be individually adapted and changed by a resolution in the owners' meeting. 

What has changed in the distribution of costs as a result of the WEG reform?

Since the end of 2022, condominium owners have been able to decide by simple majority how the costs for the common property are to be divided. This applies to all cost items, from operating costs to major renovations.

Cost distribution key: How can the costs of the WEG be distributed fairly?

The Condominium Act stipulates a statutory cost allocation formula, which is regulated in Section 16 (2) of the Condominium Act. Specifically, it states that the costs of the community are distributed in proportion to the co-ownership shares. Alternatively, the condominium owners can define their own cost allocation formula. They have a lot of leeway to do this due to their right of self-organization. The condominium owners can therefore choose any allocation formula that takes appropriate account of the interests of all parties involved.

For example, it is possible to break down the costs according to the following factors:

• Living space
• Usable area (only for partial ownership)
• Residential units
• Consumption
• Causation
• Number of persons (only for small communities)
• Number of objects (only in the case of a multi-housing complex)

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Which costs are distributed with the cost distribution key of the WEG?

Each owner in the homeowners' association incurs various burdens and costs that must be distributed fairly. The Condominium Act defines burdens as payment obligations under public law that affect the entire property. The costs include payment obligations under private law that arise as contractual partners in the WEG. 

Encumbrances and costs include, for example:

• Maintenance and repair costs (e.g. on the facade)
• Modernization costs (e.g. new heating system)
• Costs for structural changes of other kinds (e.g. photovoltaics on the roof)
• Administrative costs (e.g. costs of property management, bank charges, possible lawyer's fees)
• Operating costs (e.g. garbage costs)

The various cost items are part of the house fee.

How is the distribution of costs regulated in the case of income?

If a community of owners generates income, for example by renting out parking spaces or interest income from the maintenance reserve, this income is initially offset against the total costs of the community of owners. Only if a surplus remains after this offsetting are the individual owners entitled to a pro rata payment. As a rule, however, this surplus is offset against the outstanding house payments. The income is distributed according to the co-ownership shares of the individual owners.

How is the distribution of costs regulated for condominiums?

Your separate property includes all areas of your property that are not common property, i.e. intended for the joint use of all owners. This includes, for example, your walls, floors, doors, bathroom and balcony. You are responsible for the costs of all measures required for the maintenance, repair or renewal of these areas. You are also responsible for paying for electricity, water and heating if you obtain these services directly from a supplier.

What options are there for changing the cost allocation key in a WEG

In principle, the allocation of common costs is based on the statutory key of the co-ownership shares in accordance with Section 16 (2) WEG. Although this legal basis for the distribution of costs follows the co-ownership shares, the Condominium Act offers scope for individual solutions.

The cost allocation formula can be adapted to the specific needs of the condominium owners by means of corresponding regulations in the community rules, for example by allocating costs according to living space. The special provisions of Section 16 (3) and Section 21 (5) WEG apply to structural alterations.

Are changes to the cost allocation possible retroactively?

No, for reasons of the protection of legitimate expectations, changes to the cost allocation key can only be decided for future periods. A retroactive change is legally inadmissible and can be contested by any condominium owner.

Can the condominium owners change the entire cost allocation formula?

No, this is not possible in accordance with Section 16 (2) sentence 2 WEG. The community of owners can only decide on any changes for individual costs or certain types of costs. A blanket change to the distribution of costs is excluded.

Is it permissible to charge condominium owners who are exempt from certain costs?

No, such a change is not possible in accordance with Section 16 (2) sentence 2 WEG. If the community rules stipulate that a condominium owner is exempt from certain costs, this regulation cannot simply be changed by a resolution of the community of owners

Conclusion: The allocation of costs pursuant to Section 16 (2) WEG

Although the Condominium Act stipulates a basic key for the allocation of costs in condominiums, this can be changed by a resolution of the owners' meeting.

A permanent change is possible for ongoing operating costs and administrative costs, while a decision must be made on a case-by-case basis for larger measures such as repairs or conversions.

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