What is a homeowners association?Link to this section
A homeowners association (WEG) is created when a property is divided intois divided into separate units. If you purchase an apartment in this property, you automatically become part of the condominium association, meaning you have a share of the property. Together with the other condominium owners, you then have defined rights and responsibilities within this association.
One of these responsibilities is paying maintenance fees. When you purchase a condominium, certain parts of the property belong to the community, which means you also own part of them. This includes, for example, the roof, the facade, the stairwell, the heating system, etc. Each condominium member must pay maintenance fees or housing allowances to cover these shared costs.
The rights include, among other things, the right to vote, which comes into effect at the owners' meeting and corresponds to the share in the common property.
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How is a homeowners association officially established?Link to this section
Establishing a condominium association (WEG) involves several steps. First, a declaration of division is signed. This must then be notarized and entered into the land register. Only then is the condominium association officially established.
How exactly does a homeowners association work?Link to this section
The condominium association functions like a small democracy. All owners of a residential complex together form the condominium association. There are three key bodies to manage common affairs:
The owners’ meeting:This is, so to speak, the parliament of the homeowners' association. All important decisions are made here, for example, regarding the maintenance of the common property or the amount of utility costs. Even seemingly small but important decisions, such as the uniform color of the front doors, are agreed upon here. The ETV meets at least once a year.The administration:The property management team essentially assumes the responsibilities of the mayor of the condominium association. They organize the owners' meetings, implement resolutions, and generally manage the condominium complex. Their rights and responsibilities also include overseeing the finances of the condominium association (e.g., budget and annual financial statements), communicating with service providers and partners, and developing a maintenance plan.The Administrative Board:The Administrative Advisory Board serves as an advisor to the property manager and the owners. It monitors the work of the property management, discusses maintenance measures with the management, reviews financial matters, and generally represents the interests of the homeowners' association. The members of the Administrative Advisory Board are elected by the condominium association.
The legal basis for the owners’ meeting can be found in the Condominium Act.
What is aOwners’ meeting?Link to this section
At the Owners' Meeting (ETV), all owners come together to jointly decide on the management of the common property. Financial and structural matters such as property maintenance, the design of common areas, and the election of the property manager are discussed and decided upon here.
Example: Imagine you want to install a new elevator in your property. This decision can only be made by the homeowners' association at the owners' meeting, since an elevator affects the entire building. Decisions are usually made by a simple majority and are binding for all owners.
The invitation toOwners' meeting
The invitation to the owners' meeting is the first step to a successful meeting. The following points serve as a basis for this:
Form and deadline:The invitation to the owners' meeting must be made in writing, either by letter or email. The statutory notice period is at least three weeks before the date of the owners' meeting.Contents:In addition to the location, date, and time of the owners' meeting, the invitation must also include a precise agenda. This allows the community to optimally prepare.Agenda:Only the items listed on the agenda may be voted on at the owners' meeting. Additional items may only be discussed with the consent of the owners' association.
No obligation to attend the owners’ meeting
Have you received an invitation to the next owners' meeting and are wondering if you absolutely have to attend in person? No, you don't have to. Take advantage of the opportunities to represent your interests, even if you can't attend in person. What alternatives to in-person attendance are there?
Representation by another person:You can appoint another owner from the community with a power of attorney to represent you.Digital participation:If your homeowners association has decided so, you may also be able to participate in the owners' meeting via email or video call.
What is that Condominium Act (WEG Act)?Link to this section
However, so that not every community of owners does what they want and the whole thing remains within a regulated framework, there is the WEG Act This law precisely defines the responsibilities of the property management and which issues must be addressed by the condominium association. The Condominium Association Act (WEG) has undergone significant changes as a result of a reform of the WEG in December 2020.
WEG reform: The main changes
The Condominium Modernization Act (WEMoG) of December 1, 2020, has brought comprehensive modernization to condominium associations. In particular, numerous regulations regarding the legal status of condominium associations, private property, and property management have been revised. Interesting facts about the positive effects of the WEMoG:
Accelerated procedures:The WEMoG has simplified and accelerated decision-making in WEGs.Extended responsibilities of the administrator:In certain cases, the administrator can independently decide on modernization measures, which makes the administration of condominiums more efficient.Incentives for energy-efficient renovations:The law creates incentives for energy-efficient renovations, for example by subsidizing the costs of energy consulting.Simplified financing:The financing of modernization measures is facilitated by the WEMoG.Improved information obligations:Tenants are better informed about modernization measures and have more rights.Extended tasks and powers:The administrator has been given more responsibilities and powers, which promotes the professional management of condominiums.
What is condominium law?Link to this section
When several people own a condominium in a residential complex, disagreements often arise regarding how the shared property in the building should be used and altered. Therefore, in addition to the Condominium Act (WEG), condominium law also regulates the acquisition and use of condominium ownership, as well as the rights and obligations of condominium owners.
It is based on the German Civil Code (BGB), which contains general provisions on property, ownership, and contract law, and the Condominium Act, which regulates the specifics of condominium ownership. It also fundamentally distinguishes between land ownership and condominium ownership. While landowners have largely free disposal of their property, condominium owners are subject to certain restrictions to protect the rights of the condominium association.
What is aDeclaration of division?Link to this section
The declaration of division is a notarized document that creates the legal basis for a condominium association. It describes in detail how the property is divided into ownership shares. The declaration of division distinguishes between separate property and common property.
The special propertybelongs to a single apartment owner alone, i.e. a single condominium. The common propertyagainrefers to the parts of the building that are only partially owned by the individual apartment owners. These include, for example, the facade, roof, or stairwell, as well as load-bearing walls within the apartments.
The declaration of division also contains regulations for the cohabitation of the condominium owners. It consists of the following documents:
a declaration of division (also called a division plan)the certificate of completion the Community regulations
What does the community regulations say?Link to this section
The community regulations are an important component of the declaration of division and are entered in the land register together with it. The so-called "constitution of the condominium association" primarily regulates the rights and obligations of the condominium association. The most important elements include the following:
Flexibility in voting rights:The community regulations can tailor voting rights at the owners' meeting to individual needs. For example, several apartments belonging to one owner can be combined into one voting right, or the voting rights can be proportional to the co-ownership share. To ensure fair representation of interests, the community regulations can therefore regulate voting rights in a differentiated manner, for example, based on the number of residents or the share of the common property.Regulations for animal husbandry:The community regulations may prohibit certain species of animals or the keeping of animals in general in the residential complex.Rest periods and noise restrictions:The community regulations may stipulate quiet hours and prohibit certain activities, such as playing loud music, in the apartments at certain times.Restrictions on commercial use:The community regulations may restrict or completely prohibit the commercial use of apartments, for example for home offices.Appointment of an administrative advisory board:The administrative advisory board supports the administrator in fulfilling his/her duties and represents the interests of the community.Distribution of maintenance measures:The community regulations determine how maintenance measures are carried out and financed.Sanctions for violations:The community regulations may provide for the withdrawal of ownership of the apartment under certain circumstances.
Every community bylaw reflects the individual needs and circumstances of a community. Community bylaws can, in principle, be designed by the owners themselves, but must adhere to certain legal requirements to ensure smooth decision-making within the community.
What is the maintenance fee and how much is it?Link to this section
As the owner of your home, you must pay a monthly advance to cover the utility costs and maintenance of the shared property. These expenses are known as housing allowance or house allowance. It is paid to the community's property management company, which uses the funds accordingly to cover ongoing costs.
This also includes the costs for property management, such as the property manager, or if an internal manager is compensated for their work, and to create reserves for maintenance and renovations.
The amount of the maintenance fee depends on the residential complex, its management, and the communal facilities. To determine the exact amount, there is a legally regulated allocation key that is applied to each owner. Ralph generally saves owners money by reviewing existing contracts and optimizing them if necessary. The management fee is also lower than the competition. Ralph starts at just €20.
Does every homeowners association need a property management company?Link to this section
There are two ways to implement a homeowners association: external management or self-management.
When is external management worthwhile?
With external management of the homeowners' association, the tasks are handled by a third party, the property management company. This person or company is responsible for ensuring that homeowners' meetings are convened and the finances of the homeowners' association are in order.
The external property management company also handles the homeowners' association's accounting. It has a power of attorney, which authorizes it to hire service providers and pay them from the condominium association's community funds.
The property management company's task is also to create financial reserves to carry out maintenance work or building renovations. These are primarily financed through the housing benefit that individual owners must pay monthly.
Competent external management is highly worthwhile in most cases. It's especially important if your homeowners association is large (usually around five units or more), if various maintenance work is required, and if not all owners live on-site or if not all co-owners know each other well.
Which Homeowners associationare suitable for self-management?
Since the amendment to the Condominium Act in 2020, the requirement to engage external management for a condominium association has been abolished. Since then, owners have been able to manage the rights and obligations of the condominium association independently.
For this purpose, an owner is elected to represent the condominium association as the internal manager. It is important for this type of condominium association management that the manager is thoroughly familiar with the condominium association regulations and enjoys the full trust of the other owners. After all, this person is the one who manages the condominium association's finances. This also means that the management must ensure that reserves are set aside for maintenance and renovation work and that the annual financial statements are accurate.
By managing the property independently, a homeowners association can save costs, which is especially attractive for small condominiums. If you have an experienced accountant on staff and someone with legal expertise, self-management can be worthwhile, especially if you have fewer than five owners. However, it's especially important that you know each other well and trust each other, because the internal manager assumes considerable responsibility for their fellow owners.
Important:If you don't have the expertise in-house or your homeowners association has more than five units, we strongly advise against self-management!
Ralph is your modern property management company in BerlinLink to this section
Since the tasks of managing a condominium association are often underestimated, it's usually advisable to seek professional help from outside. Starting at €25 per month, you can outsource the organization of various complex tasks to a professional property management company. Since owning a condominium involves a lot of money, the monthly fee is definitely worth it in most cases.
