As owners, you rely on your property management company to reliably manage your condominium, keep the finances under control, and ensure that all matters run smoothly. Homeowners association (WEG) is a demanding and responsible task that requires professionalism, organizational talent and a high level of communication skills.
But what happens if the property management company itself resigns and terminates the management contract? For many owners, this is an unexpected and unsettling situation that raises numerous questions and uncertainties. In this comprehensive article, you'll learn why a property management company can resign, what legal and practical consequences this has, and how you, as an owner, can best respond and future-proof your homeowners' association.
If the property management resignsLink to this section
Most property owners only begin to seriously consider the role of property management when problems arise. For many, the termination of a property management contract and resignation is an unexpected step. The reasons for this are varied and range from personal changes to financial considerations to conflicts within the community.
The consequences of resignation can be serious, especially if it occurs at short notice and without warning. This makes it all the more important to be prepared and to understand the legal and organizational framework. This article provides you with a detailed guide on how to proceed as a homeowner after resignation, what options you have, and how to best prepare your condominium association for the future.
Typical reasons for resignation by the property managementLink to this section
The reasons why a property management company resigns are as varied as the homeowners associations themselves. Below are the most common reasons that can lead to resignation:
1. Retirement and personal changes
Many property management companies are run by individuals or small teams. When these individuals reach retirement age or wish to change careers, they often face the prospect of stepping down. Smaller property management companies are particularly affected by this, as there are often no successors to continue running the business.
2. Economic considerations
The demands on property management companies have increased significantly in recent years. Legal requirements, digitalization, increasing administrative burdens, and growing demands from owners often mean that managing small or unprofitable condominium associations is no longer worthwhile. The result: The property management company terminates the contract and resigns from office to focus on larger or more lucrative mandates.
3. Conflicts and broken trust
A common reason for resignation is ongoing conflict between the property management company and the homeowners' association. These can arise from disagreements, a lack of communication, unclear responsibilities, or even personal hostilities. If the relationship of trust is permanently damaged, the property management company often sees no other option than to resign.
4. Unacceptable working conditions
If property owners make the work of the property management difficult – for example, through non-payment, missing documents, constant complaints, or even insults – this can significantly impair the management's work. In such cases, resignation is understandable from the property management's perspective and is often legally permissible.
5. Health or family reasons
Personal setbacks, illness, or family commitments can also lead to a property manager no longer being able or willing to perform their duties. Especially in smaller administrations without a large team, this can lead to a short-term resignation.
6. Overwhelmed by new legal requirements
The legal requirements for property management companies have steadily increased in recent years. New regulations, such as the introduction of mandatory certification for property managers, the digitalization of administration, and stricter data protection requirements, pose significant challenges for many administrations. Not every administration is willing or able to undertake this effort, which can ultimately lead to resignation.
Legal basis: What does the law say about resignation?Link to this section
The legal framework surrounding resignation by a property manager is complex and not always easy to understand for laypeople. The general rule is: The manager can resign and terminate the management contract – however, certain requirements and deadlines must be observed.
The separation of order and contract
It's important to distinguish between the appointment of the property manager (i.e., the choice by the owners) and the management contract under the law of obligations. The so-called separation theory states that the appointment and the contract are legally independent of each other. This means that resigning from the position of manager does not automatically mean that the management contract also ends – and vice versa.
Ordinary termination of the management contract
Typically, the property management contract stipulates a regular notice period, usually between three and six months prior to the end of the calendar year. The property management company can terminate the contract subject to this notice period and resign from office at the end of the period. In this case, the owners have sufficient time to find a new property manager.
Extraordinary termination for good cause
In certain cases, an extraordinary, immediate termination of the property management contract is possible. A good cause exists if the property management company can no longer be expected to continue the contract until the expiration of the notice period. Examples of this include:
Massive disruptions in the relationship of trustFailure to pay fees by the ownersRefusal of necessary powers of attorney or documentsInsults, threats or attacks by ownersIncitement to unlawful conduct
In such cases, the property management company can resign from office with immediate effect. The property owners are then faced with the challenge of finding new management at short notice.
Form and access of resignation
The resignation must be declared to the condominium association. This can be done in writing or verbally, for example, at an owners' meeting. It is important that the declaration be communicated to all owners. Individual delivery to each owner is not required – a meeting record or a circular is sufficient.
Compensation for damages at an unfavorable time
If the property management company resigns at a particularly inopportune time and the condominium association suffers damages as a result, it may be liable for damages. This is the case, for example, if important deadlines are missed or payments can no longer be processed. However, case law places high demands on such a claim for damages – in particular, the condominium association must prove that the damages are actually attributable to the resignation.
Resignation process: What happens after resignation?Link to this section
For many property owners, resignation from their office by their property management company is initially a shock. This makes it all the more important to proceed in a structured and prudent manner. Below you'll find a step-by-step guide on how to proceed after a resignation:
1. Information for owners
After the resignation, the condominium association must be informed promptly. This can be done via a circular, email, or a notice posted in the building. The goal is to keep all owners up to date and avoid any uncertainty.
2. Calling an owners’ meeting
To discuss the next steps and make the necessary decisions, an owners' meeting should be convened as soon as possible. This is where all questions regarding succession planning, the transfer of documents, and the search for a new management team can be clarified.
3. Handover of documents and accounts
The property manager is obligated to hand over all documents, keys, contracts, and accounts to the condominium association in a complete and orderly manner. This should be done as promptly as possible and documented to ensure a smooth transition.
4. Appointment of a new WEG administration
The property owners must decide how to proceed: Do they seek a new external property management company, organize the management themselves, or rely on digital support? Appointing a new management company is done by resolution at the owners' meeting or by circular resolution.
5. Transitional arrangements
Until a new administrator is found, the condominium association can appoint a temporary administrator to assume the most important tasks. In exceptional cases, an emergency administrator can also be appointed by the court, for example, if urgent payments are due or important deadlines must be met.
Options after resignation: What options do owners have?Link to this section
After resigning from office, condominium owners are faced with the decision of how to organize the management of their condominium association in the future. There are essentially three options:
1. Appointment of a new external property management company
The traditional approach is to find a new, professional property management company. Owners should obtain various quotes, check references, and carefully compare the terms and conditions. It's important that the new management company fits the size and structure of the condominium association and has sufficient experience.
Tips for choosing a new property management company:
Make sure you have valid certification and adequate insurance.Check the experience with comparable properties.Clarify accessibility and communication channels.Value transparency regarding costs and services.Ask for references and talk to other WEGs.
2. Self-administration of the owners’ association
Self-management can be an attractive alternative, especially for smaller condominiums. Here, the owners take over the management tasks themselves, for example by choosing an internal manager or a Administrative Advisory Board The advantages are obvious: lower costs, greater transparency, and direct influence on all decisions.
Requirements for self-administration:
Sufficient time and commitment from the ownersBasic knowledge of WEG law and accountingWillingness to take on responsibilityClear regulation of responsibilities and distribution of tasks
3. Digital support from service providers
Modern service providers offer digital solutions that facilitate self-management and provide professional support. Here, owners can access expert knowledge, templates, and digital tools to organize their management efficiently and in a legally compliant manner.
Advantages of digital support:
Professional support in all administrative stepsDigital document storage and communicationAutomated accounting and billingSupport with legal and technical questions
4. Transitional solutions: Provisional administrator and emergency administrator
Until a permanent solution is found, owners can resort to temporary solutions:
Provisional administrators
A temporary administrator is appointed by the homeowners' association to assume key tasks and maintain management. This person can be a member of the homeowners' association or an external individual. Appointment is made by resolution and is for a limited period of time.
Emergency administrators
In exceptional cases, the local court may, upon request, appoint an emergency administrator, for example, if no other solution can be found and the condominium association's ability to act is at risk. The emergency administrator assumes all the administrators' duties until a permanent solution is found.
The most important tasks after resigning from officeLink to this section
After resignation, numerous tasks remain that must be taken over by the owners or the acting administrator. These include:
Management of joint accountsCollection of house fees and payment of billsOrganization of repairs and maintenance measuresCreation of economic plans and billingCommunication with service providers and authoritiesPreparation and implementation of Owners' meetings
Especially during the transition period, it is important that all tasks are completed reliably in order to avoid financial and legal disadvantages for the community of owners.
Practical tips for owners after resigning from officeLink to this section
Resigning from office is a challenge, but also an opportunity to reorganize the management of the homeowners' association. Below you'll find practical tips for successfully navigating this phase:
1. Keep calm and act prudently
Even if the situation seems unsettling at first, stay calm and act prudently. Panic or hasty decisions are rarely helpful.
2. Ensure communication
Inform all property owners promptly and comprehensively about the situation. Clear communication builds trust and prevents misunderstandings.
3. Distribute tasks
Divide the most important tasks among the apartment owners, such as managing accounts, organizing meetings, or communicating with service providers.
4. Obtain legal advice
Especially if you have complex questions or are uncertain, you should seek legal advice. A specialist lawyer specializing in condominium law can assist you with clarifying liability issues, reviewing contracts, and appointing a new management team.
5. Obtain and compare offers
If you're looking for a new property management company, get several quotes and compare them carefully. Pay attention not only to the price, but also to the services, experience, and references.
6. Document handover
Obtain written confirmation of the handover of all documents, keys, and accounts. This will avoid future disputes over missing documents or unclear responsibilities.
7. Strive for long-term solutions
Take this opportunity to put your community's administration on a solid long-term footing. Review whether the current administration has met your needs and what improvements are possible.
Challenges and opportunities: The WEG after resignationLink to this section
Resignation is undoubtedly a challenge for any homeowners' association. It forces owners to rethink their management organization and processes. But every crisis also presents an opportunity: Seize the opportunity to modernize your homeowners' association's management, optimize processes, and engage the community more closely.
Digitalization and transparency
Digitalization offers numerous opportunities to make management more efficient and transparent. Digital platforms enable easy communication, central document storage, and automated accounting. This allows all property owners to maintain an overview and actively participate.
Strengthening the community
The period following retirement requires collaboration and commitment. Use this time to strengthen the community, distribute tasks, and foster cooperation. A strong community is the best foundation for a successful administration.
Professionalization of administration
Whether you choose a new external administration, self-management, or digital support, seize the opportunity to professionalize your community's administration. Clear structures, transparent processes, and open communication are the key to success.
Conclusion: Resignation as an opportunity for a new beginningLink to this section
The resignation of a condominium association manager is initially a shock for many condominium owners. However, with the right approach and good organization, the situation can be managed—and even used to the community's advantage. Whether you choose a new external management system, self-management, or a digital solution, it's important that the interests of all owners are protected and the community remains able to function effectively.
Take advantage of this opportunity to modernize your condominium management, optimize processes, and strengthen your community. With commitment, transparency, and open communication, you'll lay the foundation for a successful future for your condominium association.
Do you already know Ralph?
Are you looking for a new condominium management company because your current management contract was terminated following a resignation? Switching to Ralph means your property is in competent hands. Simply send us a message letting us know you're interested in switching – we'll get back to you promptly to discuss all the details regarding terminating your current management contract and ensuring a smooth transition.
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