Managing shared property, private property, or rental apartments is a demanding task that requires expertise and diligence. This makes a clearly defined management contract that governs the collaboration between owners or condominium owners' associations (WEG) and managers all the more important. This article highlights all the key aspects of a management contract. You will also receive information on legal requirements and a sample contract.
Definition: What is the management contract?Link to this section
The management contract forms the legal basis for the collaboration between a condominium management company and the owners (condominium associations, rental apartments, or apartment buildings). The contract clearly and precisely defines the rights and obligations of all parties, thus creating transparency and security.
The core contents of a management contract
Tasks and responsibilities of the WEG administration: Here, the specific activities of the administration are listed in detail. This can include the organization of Owners' meetings , the creation of economic plans and Annual statements , the maintenance of common property or the handling of rental matters.Remuneration and costs: The contract stipulates the amount of the administrator's remuneration and regulates which costs are covered by the administration. It also clearly defines possible special services and their billing.Contract term: The duration of the contractual relationship between the homeowners association and the administratoris determined, as are the termination regulations.Scope of services: The “basic scope of services” varies depending on the type of manager(s) and the individual agreements, based on legal obligations.
The legal basis and significance of a management contract
The WEG management contract is a business management contract according to §§ 675 ff. BGB.A contractual relationship between property managers and property owners arises as soon as a remuneration is agreed upon.Although a written form is not mandatory by law, it is strongly recommended to ensure legal certainty for administrators and the community.
Management contract: Important contract contents for smooth cooperation with the managerLink to this section
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 cooperationClear definition of the contract term between the community and the administratorClear notice periods and conditions to avoid unexpected contract terminations.Liability issuesDetailed liability provisions that define the responsibilities of both parties in the event of damage.Scope of administration servicesA complete and comprehensible list of all tasks that the manager assumes for the respective house or condominium property.This also includes the definition of special services.Powers and authorizationsA clear definition of the rights and obligations of the administration in the course of its activities.Basic informationComplete information about the administration and the condominium association to ensure clear identification of the contracting parties.Detailed information about the property being managed by the ownersDocumentation and handoverAn overview of the documents to be taken over by the administrator.Remuneration agreementsTransparent regulations on administrative remuneration, including any special remuneration.
Typical contract terms for property managers: between stability and flexibilityLink to this section
The duration of a management contract usually ranges between three and five years.
The reform of the condominium association (WEG) has created an important framework in this regard: a maximum term of three years is provided for the initial appointment of an administration, especially for newly established condominium associations. This serves to protect the community and allows for an initial assessment of the cooperation.
For follow-on 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 become familiar with the situation and eliminate any legacy issues left over from their predecessors. A five-year period thus offers the opportunity to establish sustainable and efficient administration.
Compensation: How much does an administrator cost?Link to this section
The costs for appointing a property manager are not standardized, but depend on the specific requirements of the property. Monthly costs for managing a typical apartment unit can range from €20 to €40.
This range may vary depending on the following factors:
Type of management (condominium management, rental management, etc.)Number of units in the propertyAge of the buildingLocation of the propertyEquipment and technical facilitiesCondition of the property (possible need for renovation)
When and how can a property management company be changed?Link to this section
The legal distinction between the appointment of a manager and the associated management contract is crucial here. The appointment of the manager can be revoked immediately, but this does not automatically mean the termination of the management contract.
This contract expires no later than six months after the end of the contract. This regulation was introduced by the legislature to protect property management companies from sudden contract termination.
At the same time, this regulation also offers security to owners and means the following:
Regardless of the agreed term of the current contract and without giving reasons, an administrator can be dismissed following a corresponding resolution of the owners' association with a maximum notice period of six months.
In the event of a breach of duty by the current property management, the contract may even be terminated without notice.
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