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The management of communal property, separate property or rental apartments is a demanding task that requires specialist knowledge and diligence. This makes it all the more important to have a clearly defined management contract that regulates the cooperation between the owners or homeowners' association (WEG) and the manager. This article highlights all the important points of the management contract. You will also receive information on legal requirements and a sample contract.
Definition: What is the management contract?
The management contract forms the legal basis for the cooperation between a condominium manager and the owners (condominium owners' associations, rental apartments or apartment buildings). The contract clearly and precisely defines the rights and obligations of all parties and thus creates transparency and security.
The core contents of an administrator agreement
- Tasks and responsibilities of the condominium management: The specific activities of the management are listed in detail here. This may include the organization of owners' meetings, the preparation of business plans and annual accounts, the maintenance of the common property or the management of rental matters.
- Remuneration and costs: The contract specifies the amount of the administrator's remuneration and regulates which costs are covered by the administration. Possible special services and their invoicing are also clearly defined.
- Contract term: The duration of the contractual relationship between the condominium owners' association and the administrator is defined, as are provisions on termination.
- Scope of services: The "basic scope of services" varies depending on the type of administrator and the individual agreements, based on the statutory obligations.
The legal basis and significance of a management contract
- The WEG management agreement is an agency agreement pursuant to Sections 675 et seq. BGB.
- A contractual relationship between managers and condominium owners arises as soon as remuneration is agreed.
- Although a written form is not mandatory by law, it is strongly recommended in order to ensure legal certainty for administrators and the community.
Administrator contract: Important contractual contents for smooth cooperation with the administrator
In order to create a solid basis for cooperation between the homeowners' association (WEG) and the management, the management contract should regulate the following points precisely and comprehensively:
- Contract duration and termination of the cooperation
- Clear definition of the contract term between the community and the administrator
- Clear notice periods and conditions to avoid unexpected contract terminations.
- Liability issues
- Detailed liability provisions defining the responsibilities of both parties in the event of damage.
- Scope of management services
- A complete and comprehensible list of all tasks that the property manager performs for the respective house or condominium property.
- This also includes the delimitation of special services.
- Powers and authorizations
- A clear definition of the rights and obligations to which the administration is entitled within the scope of its activities.
- Basic information
- Complete information on the management and the condominium to ensure clear identification of the contractual partners.
- Precise details of the property managed by the owners
- Documentation and handover
- An overview of the documents to be taken over by the administrator.
- Remuneration agreements
- Transparent regulations on the remuneration of the management, including any special remuneration.
Typical contract terms for property managers: between stability and flexibility
The duration of a management contract is usually between three and five years.
The WEG reform has created an important framework for this: A maximum term of three years is provided for the initial appointment of an administrator, particularly for newly established WEGs. This serves to protect the community and enables an initial assessment of the cooperation.
In the case of follow-up contracts, i.e. when an existing administration is replaced by a new one, terms of up to five years can be agreed. This longer perspective often makes sense, as new administrators generally need time to familiarize themselves with the property and to eliminate any legacy issues from the predecessor. A period of five years therefore offers the opportunity to establish sustainable and efficient management.
Remuneration: How much does an administrator cost?
The costs for appointing a property manager are not standardized, but depend on the specific requirements of the property. The management of a typical residential unit can cost between 20 and 40 euros per month.
This range may vary depending on the following factors:
- Type of management (WEG management, rental management, etc.)
- Number of units in the property
- Age of the building
- Location of the property
- Equipment and technical facilities
- Condition of the property (possible need for renovation)
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When and how can a property management company be changed?
The legal distinction between the appointment of an administrator and the associated administrator contract is crucial here. The appointment of the administrator can be terminated immediately, but this does not automatically mean the end of the administrator contract.
This expires at the latest six months after the end of the appointment. This regulation was introduced by the legislator to protect property management companies from sudden contract termination.
At the same time, this regulation also offers owners security and means the following:
Irrespective of the agreed term of the current contract and without giving reasons, an administrator can be dismissed following a corresponding resolution by the community of owners with a maximum notice period of six months.
In the event of a breach of duty by the current property management company, it is even possible to terminate the contract without notice.
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