Liability of the Administrator

The liability of the property manager refers to the legal responsibility of a condominium manager or rental property manager for damages resulting from breaches of duty in the performance of their management duties. This liability is based on the management contract, as well as the German Condominium Act (WEG) (for condominium associations) or general contract law. The property manager is liable to the homeowners’ association or the individual homeowner in the event of a culpable breach of his duties-both for financial losses and property damage.

Scope of Duties of the WEG Administrator

Since the 2020 WEG reform, the administrator is responsible under § 27 WEG for the day-to-day management of the common property and must safeguard the interests of the owners’ association. His core duties include: arranging for maintenance and repairs, implementing resolutions of the owners’ meeting, correctly managing reserves, preparing annual statements, and sending them out on time. A breach of these duties may give rise to claims for damages.

Typical Liability Cases in Practice

Common cases in which property managers are held liable:

• Delayed or failed repairs: If damage to the common property is not repaired and consequential damage results (e.g., water damage from a leaky roof), the property manager is liable for failing to arrange for repairs.
• Incorrect annual statement of accounts: Calculation errors or incorrect allocation of costs can lead to claims for damages against affected owners.
• Missed deadlines: If the property manager misses statutory or contractual deadlines (e.g., the deadline for sending invitations to the owners’ meeting), resolutions may become contestable and the community may suffer damages.
• Misuse of community funds: In cases of embezzlement or misappropriation, the property manager is personally liable under criminal and civil law.

Protection through financial loss liability insurance

Reputable property managers take out financial loss liability insurance that covers claims for damages by the owners’ association. Since the 2020 WEG reform, legal literature has recommended requiring proof of adequate insurance when appointing a property manager. The coverage amount should be at least €1 million per claim; for larger complexes with many units, higher coverage amounts are advisable.

Practical Tip for Owners in Nuremberg and Franconia

We recommend that condominium owners in Nuremberg and the surrounding region routinely require proof of financial loss liability insurance when appointing a new property manager. Additionally, the property management contract should contain clear provisions regarding liability limits, accountability obligations, and oversight rights. In the event of a claim, swift action is crucial: claims for damages against the property manager may be subject to the standard three-year statute of limitations under Section 195 of the German Civil Code (BGB)-if the damage is known, the period begins at the end of the year in which the damage occurred.

Frequently Asked Questions

Can a property manager exclude liability in the management contract?

A complete disclaimer of liability is invalid. Limitations of liability to gross negligence or intent are also generally invalid in standard terms and conditions. The property manager is therefore liable at least for any culpable breach of duty.

Who sues the property manager-an individual owner or the association?

Since the 2020 WEG reform, the condominium owners’ association itself has legal capacity. Claims for damages against the property manager generally belong to the association and are asserted through a resolution of the owners’ meeting. Individual owners may only sue to the extent that they (not the association) have personally suffered damage.

Is the property manager also liable for mistakes made by contractors?

Generally not directly, provided they have carefully selected and supervised the contractors. However, they are liable for poor selection (negligence in selection) or for failure to supervise if a recognizable risk existed.

Property Managers in Nuremberg - What Matters When Choosing One

The quality of the property manager is the most important factor for a well-functioning condominium association. A good property manager prevents liability claims by acting proactively: They regularly inspect the common property, respond quickly to reports of defects, and maintain the maintenance reserve at an appropriate level. A poor property manager reacts too slowly, makes errors in billing, and thereby risks both claims for damages and actions to invalidate resolutions.

Anyone who owns a condominium in Nuremberg or the metropolitan area and is dissatisfied with their current property manager has the option to terminate the management contract. Since the 2020 condominium reform, owners can terminate the contract at any time with three months’ notice-even without cause. A simple majority resolution at the owners’ meeting is sufficient to appoint a new property manager. We recommend reputable property managers in the region and provide support during a change of management.

Liability for Failure to Maintain - A Real-Life Example

A typical liability case: The property manager of a condominium association in Nuremberg is notified by an owner about a damp basement. He fails to act, does not commission a specialist firm to assess the damage, and does not initiate repairs. After another winter, the water damage has spread to several basement rooms; the total damage amounts to 25,000 euros. In this case, the homeowners’ association can sue the property manager for damages because he ignored a reported defect.

It is therefore important for owners to always submit damage reports to the property manager in writing and with a deadline. An email with a read receipt or a certified letter documents when the property manager became aware of the issue. This documentation is crucial if claims for damages are to be asserted later.

Liability of the Rental Property Manager

Not only WEG property managers, but also rental property managers can be held liable. Anyone who manages the rental of a residential building on behalf of a private owner and fails to meet deadlines, prepares incorrect operating cost statements, or fails to properly screen tenants is liable to the owner for the resulting damage. The basis here is the agency agreement under Section 675 of the German Civil Code (BGB); the duties of care correspond to those of a prudent businessman.

Here, too, financial loss liability insurance provides protection-both for the property manager themselves and for the owner, who can more easily assert their rights if the manager is insured. When entering into a property management contract, owners should always request a copy of the current insurance policy and ensure that the coverage amount is reasonably proportionate to the value of the managed property.

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