Maintenance reserve

The maintenance reserve (officially called the “maintenance fund” since the 2020 WEG reform) is a financial reserve that a condominium owners’ association (WEG) sets aside each month to finance future maintenance and repair work on the common property. Each condominium owner contributes to the reserve as part of their monthly maintenance fee. A sufficient reserve is a sign of a well-managed WEG and facilitates the financing of major projects such as facade renovation, roof replacement, or elevator repairs-without the need to approve a special assessment each time.

Calculation and Amount of the Maintenance Reserve

The amount of the monthly contributions to the maintenance reserve is determined by the owners’ meeting in the budget plan. The II. Calculation Ordinance serves as a guideline, providing reference values based on the building’s age. In practice, the amount is based on more recent recommendations: For older buildings (built before 1980), 10-15 euros per square meter of living space per year is appropriate; for buildings of medium age (1980-2000), 8-10 euros/m²/year is standard; new buildings require 5-7 euros/m²/year in the initial phase.

A concrete example: For an 8-unit building with a total of 600 m² of living space and a reserve fund allocation of 10 euros/m²/year, 6,000 euros are saved annually. For a new roof, which is due after 30 years and costs 80,000 euros, a reserve fund of at least this amount would be necessary. In reality, the reserve fund in many German condominium associations (WEGs) is too low-which leads to special assessments in the medium term.

Importance When Buying a Condominium

When purchasing a condominium, the existing reserve fund balance is transferred to the buyer on a pro-rata basis-it is part of the WEG’s common property. At the same time, the buyer assumes the ongoing obligation to pay maintenance fees, including the reserve fund contribution. We recommend that prospective buyers review the following documents as part of their due diligence: the current reserve fund balance from the latest annual statement, the annual statements for the past three years (spending trends), any resolutions regarding planned special assessments, the budget for the current year, and any existing renovation reports.

A low reserve fund in an older building signals that a special assessment is likely in the medium term. This can amount to several thousand euros per unit for major projects such as facade renovation or elevator installation. A well-funded reserve fund, on the other hand, is a real plus for the buyer: they effectively contribute to it and thereby inherit a reserve set aside for future projects.

WEG Reform 2020: Changes to the Maintenance Reserve

The WEG Reform 2020 introduced important changes: The term was renamed from “maintenance provision” to “maintenance reserve” to clarify that the reserve can be used for all maintenance measures-that is, both routine maintenance and modernization. In addition, the options for investing the reserve have been expanded: It can now be invested in a joint account, a fixed-term deposit account, or in securities, provided the owners’ meeting so decides.

Following the reform, property managers also have the option to withdraw funds from the reserve in urgent cases without a resolution from the owners’ meeting-in the event of damage requiring immediate action. For owners, the reform also means that they can and should play a more active role in determining how the reserve fund is invested.

Practical Tip for Owners in Nuremberg and Franconia

In Nuremberg and the metropolitan region, there are a large number of older apartment buildings where maintenance reserves are often set too low. Especially in Wilhelminian-style buildings in downtown Nuremberg, the Südstadt, or Langwasser, there is often a lack of sufficient reserves for urgently needed energy-efficiency renovations. Anyone buying a condominium should ask to see the current reserve fund balance from the latest annual statement and check whether major projects (roof, facade, heating) have already been planned or approved.

At my-home.de, we analyze the condominium association documents for our clients and highlight potential cost risks. When purchasing a unit in a condominium association with low reserve funds, we work together to calculate what special assessments are realistic over the next 5 years-and whether the purchase price adequately accounts for this risk.

Frequently Asked Questions

Do I get the maintenance reserve fund back when I sell?

No. The reserve fund belongs to the WEG’s common property and is transferred to the buyer upon sale. It is therefore part of the purchase price; some buyers view a high reserve fund balance as a positive selling point that justifies the purchase price.

What happens if the maintenance reserve fund is insufficient?

If the reserve is insufficient, the owners’ meeting may decide on a special assessment. All owners are then obligated to pay an additional amount. Special assessments can amount to several thousand euros per unit and should be factored in as a risk when calculating the purchase price. Anyone who cannot or will not pay a special assessment risks late fees and, in extreme cases, forced collection.

How large should the reserve fund be for a new building?

For new buildings, the need is low in the first few years. A starting contribution of 5-8 euros/m²/year is standard. As the building ages, the contribution should be gradually increased to be prepared for major renovation cycles later on (starting around 20-30 years). First-time buyers in a new building who wish to resell the unit 20 years later benefit from a well-established reserve fund.

Can the reserve fund be used for modernizations?

Yes, following the 2020 WEG reform, the maintenance reserve fund may explicitly be used for modernization measures, provided the owners’ meeting approves this. This includes, for example, energy-efficient renovation of the facade or the installation of a new central heating system. Previously, the reserve fund was formally limited to maintenance measures.

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