The discharge of the property manager is an important part of the annual owners' meeting and a key instrument in condominium law. As a property management company, we would like to inform you about the essential aspects of this complex topic and explain the legal basis and practical consequences.
What does it mean to relieve administrators?Link to this section
The discharge of property management companies is a formal decision of the Homeowners association , by which the owners confirm to the administrators that they have performed their duties properly. This discharge resolution refers to a specific period, usually the previous fiscal year, and is usually passed together with the approval of the annual financial statements.
The legal basis for the discharge is found in the German Condominium Act (WEG) and the respective community regulations. The resolution is passed at the owners' meeting and requires proper notice and sufficient information about the management activities.
Good to know: This Deadline for convening the WEG owners' meeting there is.
Legal significance and consequences of the dischargeLink to this section
The discharge can have different legal effects depending on how it is formulated and understood:
Positive admission of guilt: The community of owners acknowledges that the administrator has properly performed his/her dutiesNegative admission of guilt: The community of owners waives any already known claims against the administrator
Case law clearly distinguishes between these two variants, as they have different consequences for possible claims for damages.
An important aspect of the discharge is the potential waiver of claims against the administrator. If the owners grant the discharge, they can generally no longer assert claims for damages for actions that were already known at the time of the discharge.
Impact on future claims
The granting of discharge has far-reaching consequences for potential future claims against the property management company. As a rule, after a valid discharge, no further claims for damages can be asserted for the period in question, unless the defects were fraudulently concealed.
Prerequisites for effective relief of property managementLink to this section
For a discharge to be legally effective, several conditions must be met:
Proper decision-making
Legal invitation of the apartment owners to the owners' meetingInclusion of the agenda item "Discharge" in the invitationAchieving the required majority according to WEG lawMinutes of the resolution
Complete information basis
The owners must be informed about all important administrative processes:
Submission of the annual statementExplanation of additional contributions and adjustment amountsDescription of essential administrative actionsDisclosure of problems or difficulties
In the case of serious violations such as embezzlement or gross errors in management, an administrator's discharge may be ineffective or lose its legal effect.
The right to discharge the administratorLink to this section
In principle, every property management company is entitled to relief if it has carried out its activities properly. This entitlement arises from the Management contract and the general provisions of condominium law.
Refusal of discharge
The owners’ association may refuse to discharge the WEG administrator if:
Errors in billing or administrationThe property management has not properly fulfilled its obligationsClaims for damages against the administrator existThe administrative documents are incomplete
The role of the Administrative BoardLink to this section
The Administrative Board plays an important role in relieving the administrator of his duties:
Examination of administrative documentsAdvising owners on decision-makingDetecting problems or errorsRecommendation for or against discharge
Special situations and exceptions to the relief of the property managementLink to this section
In certain cases, partial relief is also possible, in which only certain areas of administrative activity are covered by the relief. This can be useful if there is still a need for clarification in certain areas. Relief already granted can be subsequently revoked under certain conditions:
In case of fraudulent deception by the property managementIf essential information has been withheldIn the event of serious breaches of duty that subsequently become known
Recommendations for practiceLink to this section
As an experienced property management company, we recommend the following approach to homeowners associations:
Before the owners’ meeting:
Early provision of all relevant documents: Request all important documents from the property manager at least two weeks before the homeowners' meeting, including the detailed annual financial statements, receipts for major expenses, minutes of the management committee, and an overview of all completed measures and repairs. These documents should be complete and clearly presented so that all owners have sufficient time to review them.Thorough review of the annual financial statements: Take sufficient time to review the financial statements item by item. In particular, check the plausibility of the cost items, the distribution of levies according to co-ownership shares, the legitimacy of additional contributions and adjustments, and proper bookkeeping. If you notice any ambiguities or anomalies, you should request them in writing from the administrator before the meeting.Clarification of open questions with the administratorTake advantage of the opportunity to have direct discussions with the administrator or submit written inquiries before the meeting. This applies to questions about accounting as well as specific administrative actions, decisions, or problems that arose during the reporting year. Open communication before the meeting can significantly shorten subsequent discussions.
During the meeting:
Detailed discussion of contentious points: As a condominium association, don't allow yourself to be put under time pressure and discuss all problematic aspects of the management's activities openly and objectively. All owners should have the opportunity to express their concerns or questions. It is important that the property management company addresses all points of criticism and provides plausible explanations.Documentation of all essential aspects in the protocol: Ensure that all important discussion points, explanations from the property management and the decision-making basis for the discharge are detailed in the Minutes of the owners' meeting This not only serves to facilitate later traceability, but is also legally important should questions arise later regarding the discharge of the administrator's duties.Clear wording of the discharge resolution: Ensure that the discharge resolution is precisely worded and clearly defines the period and areas of activity for which the discharge is granted. Avoid vague wording that could lead to legal uncertainty later. In the case of reservations or partial discharges, these should be explicitly stated and justified.
After the discharge:
Archiving all relevant documents: Ensure that all discharge documents, including the Annual statement , the meeting minutes, and all supporting documents, must be properly archived. These documents should be accessible to all owners and kept for at least the legally required retention period of ten years.Determination of improvement measures for the future: Use the insights from the discharge discussion to agree on concrete improvements for future administration. These could include more regular reports, improved communication channels, more precise accounting, or more intensive oversight of specific areas. Record these agreements in writing and regularly review their implementation.
Do you already know Ralph?
Relieving the administrator of his duties is a complex issue with numerous legal consequences. A careful review of the management activities and a well-considered decision are therefore essential for you as a homeowners' association. If you have any uncertainties or complex issues, don't hesitate to seek expert advice. We are happy to answer any further questions you may have about this topic or other matters related to homeowners' association management.
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