As an owner of a condominium and a member of a Homeowners association You may have to pay a special levy. This article explains exactly what a special levy is, when it applies, and how much the contributions typically are.
What is the special levy?Link to this section
With the special levy, WEG administrators cover extraordinary financial needs within the homeowners association. The special levy is levied in addition to the House fee and the Maintenance reserve and is used to finance unforeseen or larger expenses.
The special levy is regulated in Section 16, Paragraph 2 of the German Condominium Act (WEG). The amount of the special levy is not legally limited.
When does a special levy make sense?
Major measures:If major repairs or renovations are required that are not or only partially covered by the maintenance reserve, a special levy can close the financing gap.Larger purchases:A special levy may also be required for larger purchases, such as a new heating system.Liquidity bottlenecks:If current revenues are not sufficient to cover running costs, a special levy can restore the community's liquidity. This can be the case, for example, if the economic plan the calculation was too tight or if there are defaults on the maintenance fee.Settlement of old liabilities:A special levy can also be used to pay off old debts of the condominium association.
When and how often is the special levy due?Link to this section
As you now know, a special levy in a condominium association is due when a specific, unforeseen need for funds arises that cannot be covered by the owners' existing reserves from their regular funds, i.e., the maintenance fee. It is advisable to specify a clear due date in the resolution on the special levy. This creates transparency and helps avoid disputes.
In principle, the special levy is a one-time payment that is due in addition to the owners' regular contributions. Only those owners registered in the land register at the time of the due date are liable for the special levy.
For higher special levies used to finance major projects, it may be advisable to split the payment into installments. This allows owners to better manage the financial burden.
Specific reason:There must be an actual need for additional funds, e.g. due to unexpected repairs, renovations or other unforeseen expenses.Insufficient reserves:The existing reserves are not sufficient to cover the needs.Resolution of the owners’ meeting:Each special levy must be approved by a separate resolution of the Owners' meeting be approved.
The frequency of special levies
How often a special assessment is required in a homeowners' association depends on various factors. These include, firstly, the amount of regular maintenance fees: Higher contributions allow for greater savings and reduce the likelihood of special assessments. Secondly, the extent of maintenance and modernization measures also plays a role. The more measures required, the higher the risk of unexpected expenses for the property.
The decision on the special levyLink to this section
The owners decide by resolution on the imposition of the special levy. However, the condominium association administrator has discretion in determining the amount of the special levy. It is important that the special levy is calculated in such a way that it covers the actual financial needs.
The following aspects must be taken into account when calculating the special levy:
Realistic needs assessment:The special levy must fully cover the expected costs.Consideration of payment defaults:If it is foreseeable that not all owners will be able to pay on time, this must be taken into account when determining the amount of the special levy.Dealing with maintenance fee defaults:Owners in default must also contribute to a special levy resulting from unpaid maintenance fees. However, the expected shortfall in these payments must be taken into account in the calculation.Calculating further failures:If further losses in maintenance fees are to be expected, this should be factored into the special levy in order to ensure the liquidity of the owners' association.
Contest a decision on the special levyLink to this section
Property owners often have concerns about paying a special levy. In such cases, owners have the right to appeal the decision to impose a special levy. This may be the case, for example, if the decision does not comply with the principles of sound management, such as unnecessary renovation measures.
At the owners' meeting, it is possible to vote against the special levy. However, if the majority votes in favor of imposing the special levy, even those who voted against it are obligated to pay, provided the following conditions are met:
The majority of owners voted in favor of the special levy.The expenses are proportionate or the costs are spread over a reasonable period of time.
Challenge the levy in 4 steps
If the special levy is to be contested, the following steps must be followed:
Timely challenge:The decision must be challenged within the statutory period (usually one month after the decision is made).Written justification: The objection should be made in writing and the reasons for the challenge must be set out in detail.Legal review:It is advisable to consult a lawyer specializing in condominium law to assess the chances of success of the objection.Legal proceedings:If necessary, a lawsuit must be filed with the competent district court to have the legality of the decision reviewed.Evidence: In the procedure, it must be explained why the decision to impose a special levy is not lawful, e.g. due to formal errors or the disproportionate nature of the measure.
Please note that the obligation to pay the special levy is not suspended for the time being. Owners should pay the levy with reservation to avoid consequences for late payment.
Furthermore, the imposition of a special levy cannot, in principle, be contested if costs have already been incurred as a result of renovation measures that must be paid.
The role of the distribution key of the joint propertyLink to this section
The distribution key is an essential component of any special levy. In principle, the statutory or agreed distribution key, also known as Co-ownership share (MEA), is applied. This means that the costs are usually distributed according to the co-ownership shares, but they can also be allocated by resolution of the Apartment owners /-innen may be determined differently.
This exception applies if a different distribution key has been approved for a specific measure in accordance with Section 16, Paragraph 4 of the German Condominium Act (WEG). Please note, however, that the requirements for such a different distribution key are very strict according to current case law of the Federal Court of Justice (BGH).
A decision on a different Cost distribution , and thus also a corresponding special levy resolution, requires a double qualified majority of the owners. This means that not only must three-quarters of all owners agree, but more than half of the co-ownership shares must also be in favor.
Special levy and change of ownership: Who bears the costs?Link to this section
In the event of a change of ownership, the decisive factor is who is registered as the owner(s) at the time of registration in the land register. The new owner(s) is responsible for all payment claims from that point on.
That means:
Purchase contract signed, condominium not yet handed over:The seller pays the special levy.Entry in the land register takes place before the levy is due:The new owner is obligated to pay.Entry in the land register takes place after the levy is due:The old owner is obliged to pay.
Example: Special levy for roof renovationLink to this section
You are a co-owner in a homeowners association. At the annual owners' meeting, it was decided that the roof of the property needs to be renovated. Since the roof is joint property belongs, all owners bear the costs jointly.
The bill
Existing maintenance reserves: 30,000 €Costs of roof renovation: 80,000 €Required special levy: €50,000 (€80,000 - €30,000)
In this case, the owners must raise a special levy of at least €50,000 to finance the roof renovation. The special levy is often set higher to avoid completely depleting maintenance reserves.
The distribution of costs
Assuming your homeowners association consists of six co-owners, each with equal co-ownership shares (MEA), the special levy of €50,000 is divided equally among the six owners:
Costs per owner: €8,333.33 (€50,000 / 6)
Each member of the homeowners association would therefore have to contribute €8,333.33 to the special levy.
Important tips for paying the special levy
The actual amount of the special levy may vary, as it depends on various factors (e.g., the condition of the roof, quotes from tradesmen, decisions of the owners).The distribution of costs is usually based on co-ownership shares, but can also be regulated differently (see Declaration of division ).As a property owner, it is advisable to inform yourself early on about the upcoming special levy and, if necessary, to set aside reserves.
Is the special levy tax deductible?Link to this section
Whether you can deduct the special levy from your taxes depends on whether you use your condominium yourself or rent it out.
Self-use:Owners who use their condominium themselves cannot deduct the levy from their taxes. However, they may be able to claim the costs of tradesmen's services provided under the special levy as household expenses in their tax return.Rental:Owners who rent out their condominiums can deduct the special levy as a business expense from their rental income. However, this only applies if the levy is used for measures related to the rental (e.g., repairs, maintenance).
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