The WEG law simply explained

What is the Condominium Act (WEG Act)?

The German Condominium Act (Wohnungseigentumsgesetz, WEG) regulates the legal relationships in buildings in which the individual apartments or commercial units belong to different owners. It defines the rights and obligations of these owners and lays down the rules for the community of apartment owners. Both the individual ownership of the individual apartments and the joint ownership of common areas such as stairwells or gardens are regulated in detail in the WEG.

Knowledge of the Condominium Act is absolutely essential for owners and property managers in order to ensure proper management of the community of owners. Only those who are well versed in the law can act confidently and authoritatively at owners' meetings, for example.

Since when has the WEG law for homeowners' associations existed?

The origins of the Condominium Act date back to the period after the Second World War. In view of the need to create new living space, the idea arose of also giving parts of buildings into individual ownership. As the German Civil Code (BGB) at the time did not comprehensively regulate this form of ownership, the WEG Act was passed in 1951.

The following explanations are essentially based on the structure of the German Condominium Act of 2020. Where necessary, the "old" law prior to 2007 and the "interim law" from 2007 to 2020 are also presented.

The structure of the WEG Act

The Home Ownership Act is divided into four components that regulate the various aspects of home ownership.

The first part deals with the creation of condominium ownership and determines how a property is divided into individual apartments or partial ownership shares. The rights and obligations of the individual owners and the management of the common property are also regulated here. The second part is dedicated to permanent residential rights, a special form of residential right. The third part contains the procedural regulations for any disputes and lawsuits between the owners. Finally, the fourth and last part contains transitional provisions and supplementary regulations.

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What is special property?

The WEG Act allows for the creation of special ownership of certain rooms in a building, such as apartments. This special ownership is a separate form of ownership and has become increasingly important in practice. Although special ownership has become very important in practice, it poses specific practical and legal problems due to its special nature. For this reason, the legislator has provided for the condominium administrator in the WEG.

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What is the difference between a BGB community and a WEG community?

A BGB community (also called a fractional community) owns a house that is jointly owned by several owners. Each owner owns a fraction of the total property, but there is no allocation to specific parts of the house, such as specific apartments. 

In a WEG community, on the other hand, a buyer acquires a co-ownership share in a house including land according to the declaration of division. This share is linked to a specific condominium in a specific apartment. The co-ownership share cannot be separated or changed without further ado. To effect changes, all owners must have a new declaration of division notarized.

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Which important definitions does the WEG law contain? 

• Rooms for living: Residential property may be created in residential premises (§ 1 para. 1 1st alt.).
• Other rooms: Partial ownership may be established in other rooms (Section 1 (1) 2nd alternative).
• Condominium Own ership of an apartment in conjunction with a share in the common property (§ 1 para. 2).
• Partial ownership Special ownership of other rooms in connection with the share in the common property (§ 1 para. 3).
• Common property: The plot of land as well as other buildings which are not to be assigned to the individual property (Section 1 (5)), for example all "supporting" parts of the building as well as the common facilities (Section 5 (2)).

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The emergence of condominium and part ownership 

The Condominium Act offers two options: the contractual granting and the unilateral allocation of special property.

How does justification by contract work?

Several owners can grant each co-owner special or partial ownership by means of a contract, even if the buildings have not yet been erected. This is called a partition agreement and must be notarized. However, the term "declaration of division" is often used instead. In the partition agreement, the ownership relationships - allocation of special and common property, co-ownership shares and special rights of use - are defined. The community regulations regularly include provisions on how the condominium owners wish to regulate their relationship with each other. Example: Building owners can share their property.

What is a declaration of division?

A declaration of division is a declaration by a sole owner of a property in which he divides the property into co-ownership shares and attaches residential or partial ownership to each share. This is done by a unilateral declaration to the land registry via the notary. Example: A property developer GmbH divides up. 

What is a certificate of seclusion?

A certificate of seclusion is a confirmation from the responsible building authority that the rooms of an apartment or condominium are self-contained and can therefore be registered as separate property. The seclusion is checked on the basis of the partition plan and must be proven.

WEG reform brings changes for community of owners

With the entry into force of the Condominium Modernization Act (WEMoG) on 1 December 2020, the Condominium Act has undergone what is probably its biggest overhaul since its introduction in 1951. The WEG reform (Wohnungseigentumsmodernisierungsgesetz) fundamentally changed condominium law - particularly with regard to the management of the community of owners, the role of property management and the procedures at owners' meetings. Property managers were given more decision-making powers and owners were given more rights. The holding of owners' meetings has been made more flexible and structural changes to the residential complex are now easier to implement. In addition, managers must be certified in future.

What has changed since the WEG reform came into force?

Renovations and modernizations are easier to implement

Before the new Condominium Act, it was often difficult to implement innovations in the community of condominium owners, as individual condominium owners could block them - to the detriment of the condominium. The reform changed this as follows:

• Simpler decision-making: In future, communities of owners will be able to decide by simple majority to carry out necessary work on the common property. This will make it easier to decide on structural changes and innovations.  
• Distribution of costs: In the case of a majority decision - whoever votes in favor of the measure bears the costs proportionately. With a two-thirds majority - If more than two-thirds of the votes are in favor (and these represent more than half of the co-ownership shares), all owners must pay proportionately.
• Protection against disproportionate costs: In the case of extremely high costs, these cannot be imposed on all owners. However, all apartment owners must participate if the costs are amortized within a reasonable period of time (often assumed to be 10 years).

Changes to the rights and obligations of administrators

The Condominium Modernization Act has significantly tightened the requirements for property managers. Since December 1, 2023, every property manager who manages a condominium owners' association must be certified. This certification is issued by an IHK. It certifies that the managers have the necessary knowledge and skills to properly perform the tasks of a property management company.

In the case of smaller condominium associations with fewer than nine units, the certification obligation can be avoided if at least one third of the condominium owners do not request it.

Stronger position for administrators

The aim of this reform is to make the administration of condominiums more efficient. Smaller decisions should be made more quickly without having to convene an often lengthy owners' meeting each time. The following resolutions were therefore passed:

• More personal responsibility: The property management company can carry out smaller measures such as repairs or the conclusion of contracts independently.
• Larger complexes, greater powers: The larger the residential complex, the more leeway the manager has to make their own decisions.
• Limits: The condominium owners can determine the extent to which the management may act independently.
• Legal representation: The administrator represents the entire community of owners in court and before authorities. Only major decisions such as the purchase of land or taking out loans still require a resolution by the owners' meeting.

Easier dismissal of the administration

The Condominium Modernization Act has not only strengthened the rights of property management, but also the possibilities for owners to control the management.

• Less bureaucracy: In the past, "good cause" was required to dismiss the property manager. This hurdle has been removed.
• More flexibility: A simple resolution by the community of owners is now sufficient to terminate the management contract.
• Period of notice: The contract ends no later than six months after dismissal.
• More co-determination: The size of the management advisory board can now be freely determined.
• Monitoring function: The advisory board has the task of monitoring the activities of the property management company.
• Liability protection: The liability of honorary members of the Advisory Board is limited to intent and gross negligence.

Changes for special property

With the new legal situation, garden areas or terraces that are clearly assigned to an apartment can now be registered as separate property. Previously, such areas were often associated with special rights of use as common property. The new regulation creates more legal certainty for owners.

Owners' meeting becomes more flexible

The reform makes owners' meetings more flexible and modern. The new rules mean that decisions can be made more quickly and owners can participate in meetings more easily.

• Quorum: Before the reform, owners' meetings often had to be canceled because not enough owners attended. This is now different: if the meeting has been properly convened, it is quorate, regardless of the number of owners present. This saves time and money.
• More flexibility through digital participation: Owners can now also participate in the owners' meeting online. However, face-to-face meetings must still be possible.
• Easier invitation: Invitations to the meeting can now also be sent by e-mail. Previously, a letter was required. The invitation period has been extended from two to three weeks.

Service charge billing is simplified

Until now, there have often been discrepancies in the billing of ancillary costs in condominiums, as billing according to living space and billing according to co-ownership shares existed side by side. The WEMoG has provided relief and clarity here: the co-ownership share can now be used as the basis for billing service charges. This simplifies billing considerably, as many communities of owners already bill according to co-ownership shares anyway.

In the past, owners were often reliant on the timely preparation of the service charge statement by the administrator. If the statement was prepared late, owners could possibly waive the right to additional payments. The WEMoG now provides better protection for owners: if they can prove that the administrator requested them to prepare the statement on time, they are not liable for a late statement.

Community of owners: Does it always make sense to commission a property management company?

The Condominium Act is a complex area of law that is often difficult for laypersons to understand. The distinction between ownership of one's own apartment and joint ownership of parts of the building such as the stairwell or garden is not always clear. In addition, the regulations in the Condominium Act are often very detailed and allow for different interpretations in individual cases. For example, the question of whether a balcony floor belongs to separate property or common property can be answered differently from case to case.

In smaller properties, you as owners can often divide the management tasks among yourselves. Provided that cooperation within the community of owners works smoothly. With a larger building, however, professional property management is usually essential. A property management company like Ralph has the necessary expertise to meet the complex legal requirements of the Condominium Act and represent the interests of all owners.

Looking for a new property management company? Contact us for a free quote and switch to Ralph.