WEG account: Managing finances in the condominium owners' association in 2025

What is a WEG account?

The bank account of a condominium owners' association, also known as the WEG account, is the financial basis for your WEG. This specific joint account acts as a central collection point for all financial matters of the condominium owners' association. The WEG account is used to manage the monthly house allowance payments of the individual owners, which are intended to cover the common expenses and maintenance of the common property. The WEG account, sometimes also referred to as the WEG's own account, is strictly separated from private accounts and is used exclusively for the purposes of the community.

Function and tasks of the WEG account

The WEG account is the financial heart of your condominium owners' association, so to speak, and fulfills various important functions in the day-to-day operation and long-term financial planning of the WEG.

• cover services: The main task of the WEG account is to settle all communal costs. This includes regular expenses such as the payment of services, including janitor services, maintenance of green areas or necessary repairs to the shared areas of the complex.
• Financial reserves: The COA account also plays a central role in the formation of financial reserves. Money for larger future investments is systematically saved in a separate reserve account. These earmarked funds are available, for example, for extensive renovation work such as roof refurbishment or replacing the heating system.
• Transparent financial management: The condominium owners' account also creates the basis for transparent financial management. By systematically recording all incoming and outgoing payments, both the owners and the property management can see at any time how the community funds are being used.

This clear structure of financial management through a dedicated condominium owners' account ensures professional handling of community funds. The strict separation of private finances also reduces potential sources of conflict and creates the basis for sound financial management of your condominium owners' association.

Condominium owner accounts vs. fiduciary accounts: What's the difference?

Condominium owner accounts and fiduciary accounts - there is a risk of confusion here. You should remember this: The key difference lies in the account holder.

In the case of a WEG own account, your WEG itself is the holder of the account, with the property management company only having power of disposal. This contrasts with a fiduciary account, where the property management company acts as the account holder. Although the funds are intended for the COA, legal ownership remains with the property manager. Although this model can simplify management, there is a risk that your COA will have less control over the finances.

This constellation can have particular consequences in the event of insolvency of the property management company, as the funds are tied directly to the management company. A detailed trust agreement is essential here in order to protect the interests of the homeowners' association. However, it should be noted that even such an agreement limits the direct control of the condominium owners' association. The community of owners can have less direct influence on the finances and additional costs may arise.

The question of whether a condominium owners' account or a trust account is more suitable for the management of common condominium funds is a matter of concern to many condominium owners' associations. Both models have their advantages and disadvantages, which should be carefully weighed up. While escrow accounts were widely used in the past, condominium owners' accounts offer greater transparency and security.

The choice of the right account depends on individual factors such as the size of the condominium and the complexity of the administration. A well-founded decision based on a careful analysis is essential here.

Our recommendation: The WEG's own account meets the requirements of proper management of residential property, while the fiduciary model simply cannot meet these standards and involves considerable risks. For transparent and efficient management of the common funds, a condominium owners' account is therefore often the better choice.

Administration manages trust accounts - what you can do

Let's assume that your property manager manages your funds with a trust account. To protect the financial interests of your community of owners and ensure maximum transparency, we recommend the following procedures in this case:

• Precise contract drafting: A watertight contract between the community of owners and the administrator is the basis for transparent and secure management of the trust accounts. This contract must clearly define the responsibilities of both parties and the guidelines for the use of the funds.
• Transparent account management and regular updates: To ensure maximum transparency, the administration must regularly prepare detailed financial reports. These documents should break down all financial transactions as well as the current account balance and also provide an outlook for future expenditure.
• Independent control: The performance of regular, independent audits of the trust accounts by external experts such as auditors or accountants can provide additional security and uncover potential irregularities.
• Strict access restrictions: The community has a right to co-decide on the use of community funds. Major financial transactions should therefore always be approved by the condominium owners or the management advisory board. Access to the trust accounts must be restricted accordingly.
• Establishment of a finance committee: A finance committee strengthens democratic decision-making within the condominium. The community can represent its interests in this body and play an active role in shaping financial matters.
• Preference for WEG's own account: Despite all precautionary measures, condominium owners' associations should generally insist that the management maintains a WEG account in the name of the community instead of using trust accounts.

Implementing these strategies can make a significant contribution to ensuring that the financial affairs of your condominium are managed efficiently and in the interests of all stakeholders. Close cooperation between the management, condominium owners and management advisory board is the key to transparent and secure financial management.

Other important account models: House allowance account and reserve account

The financial structure of a condominium is also based on two pillars: the house allowance account for day-to-day operations and the reserve account for long-term investments.

The house deposit account: Financing the day-to-day business

The house allowance account acts as the primary operating account of the condominium. It is fed by the owners' monthly contributions and covers all regularly incurred costs. These include the remuneration of service providers such as cleaners and janitors, the payment of operating costs for communal areas and the financing of minor maintenance work. The administrators' administrative costs are also processed via this account.

In summary, a quick overview of the expenses of the house allowance account:

• Ongoing operating costs
• Minor maintenance
• Administrative costs

The reserve account: Provision for the future

In contrast, the legally prescribed reserve account serves as financial security for larger investments. This maintenance reserve enables your condominium to manage extensive renovation work or the replacement of important systems without additional special levies. Typical uses include renewing the roof, renovating the façade or modernizing the heating system.

In summary, the following expenses are covered by the reserve account:

• Major renovation projects
• Major repairs
• Investment of reserves

The advantages of separate accounts for your WEG

Setting up separate accounts for house money and reserves is more than just an accounting formality. This two-pronged account management ensures a clear separation between day-to-day expenses and long-term provisions, which ensures the long-term financial stability of the condominium.

• Clear financial structuring: The division into two accounts draws a clear line between the funds for day-to-day operations and the long-term savings goals of your COA. This makes it easier to keep track and plan.
• Optimized investment strategy: Separate accounts make it possible to invest the reserves profitably, for example in call money accounts. This allows higher interest income to be achieved without restricting the availability of the funds.
• Promoting stability and transparency: This clear division not only supports efficient financial management, but also promotes the traceability of the use of funds. This strengthens the financial stability of your condominium and creates a solid basis for future planning.

Issue your property management company with a power of attorney

By granting a manager's power of attorney, the condominium owners transfer comprehensive powers of attorney to their management. This enables the management to make decisions independently within the limits set by law and the resolutions of the owners' meeting.

However, in order to prevent abuse and protect your interests as condominium owners, it is essential that the power of attorney sets clear limits and that the administrators are regularly accountable for their activities.

Guide to opening an account

Opening a WEG account is the first step towards transparent and efficient financial management. This account is used to process all of the community's income and expenditure, from monthly contributions to major investments. Proceed as follows:

The bank selection

Your management or the management advisory board should choose a bank with experience of condominiums. Important criteria are

• Low account management fees and interest on reserves
• User-friendly online banking
• Competent customer service
• Clear presentation of all account transactions
• Technical interfaces (EBICS/HBCI) to the administration software

Required documents

To open your WEG account, the bank requires:

• Declaration of division: The official document that defines the division of the building into individual apartments and the rights and obligations of the apartment owners.
• List of owners: An up-to-date list of all apartment owners with their contact details.
• Minutes of the last owners' meeting: Proof that the owners' meeting has instructed the administration to manage the account.
• Powers of attorney: Written authorizations that give the management the authority to act on behalf of the WEG.

Account opening and administration

The management opens the WEG account and concludes the bank agreement. The access rights must be clearly regulated - both for the management and the advisory board.

The management then informs all homeowners about:

• The new account data
• Regular account balance notifications
• Income and expenses

All account movements on the condominium's own account must be carefully documented and the receipts systematically archived. This ensures transparency and creates trust in the condominium's financial management.

Different account types for your own WEG account

The right choice of account types is also important for the financial management of the COA. Two main accounts are usually set up at the bank: The current account as the main COA account and the call money account for maintenance reserves.

Current account as WEG own account

The WEG own account is the central current account of a WEG. It serves as a collection point for all financial transactions relating to the common property.

The most important functions at a glance:

• Operational center: The account is the hub for all current payments.
• Flexibility: It enables uncomplicated processing of all financial transactions.
• Efficiency: Payments can be executed quickly and securely.

Typical transactions:

• Payments to service providers: Cleaners, gardeners or tradespeople are paid via this account.
• Payment of operating costs: Bills for electricity, water, heating and other operating costs are paid via this.
• Income: The owners' monthly house allowance payments flow into this account.

Call money account for reserves

The call deposit account offers a secure investment option for your condominium reserves. Your funds are available at all times and are subject to the statutory deposit protection fund.

The most important advantages at a glance:

• Protection against inflation: Your credit balance grows nominally through interest. This means that the money hedges its value at least partially against inflation.
• Flexibility: You can access the account at any time without having to wait for a notice period.

Typical uses:

Refurbishments, repairs and renovations are classic examples of what reserves can be invested in a call money account for.

New property management, new account? How to master the financial transition

If you change your property management company, your COA will face numerous challenges. One of the most important tasks is handling the WEG's own account. This account requires special attention during the handover process.

Change of administrator: steps for a smooth transition

1. Handover of financial documents: The outgoing management must hand over all relevant documents such as bank statements, outstanding invoices and financial reports to the new management. This information provides a comprehensive overview of the condominium's financial situation.
2. Updating the powers of attorney: Existing account authorizations of the old administration must be revoked and new ones set up for the new administrator(s). This ensures clear regulation of access rights and protects the interests of the COA.
3. Checking the bank: The new property management company should evaluate together with the condominium owners whether the existing condominium owners' account should be retained or a new one opened. Factors such as conditions, fees and service quality of the bank play a role here.

Do you already know Ralph?

Are you looking for a reliable solution for managing your condominium account? Ralph supports you in the smooth opening and management of your account. As your experienced partner, we take care of all the financial aspects of your community of owners. From preparing the statement of charges to the owners' meeting and more - we offer you comprehensive services from a single source.

Benefit from our expertise and ensure transparent and efficient management of your joint finances. Switch to Ralph now.