Special assessment

Special Assessment - A special assessment is an extraordinary financial contribution requested by the homeowners’ association (WEG) from its members, which is levied when the current maintenance reserve is insufficient to cover urgently needed or unplanned measures.

When and why is a special assessment levied?

Over the years, costs may arise in a residential complex that exceed what the regular budget and the accumulated maintenance reserve cover. Typical triggers include extensive roof renovations, the replacement of a defective heating system, facade insulation to comply with new energy regulations, or unforeseen damage such as water pipe bursts. If the existing reserve cannot fully finance these expenses, the association has no choice but to levy a special assessment.

The resolution regarding a special assessment is passed at the owners’ meeting by a simple majority. The resolution must clearly specify the total amount, the allocation formula, and the due date. As a rule, the allocation is based on co-ownership shares (MEA) as defined in the declaration of division. Each owner then receives an individual payment request corresponding to their share. Depending on the scope of the project, the amounts can range from a few hundred to several thousand euros per unit.

Payment in installments is possible if the owners’ meeting expressly approves it. In practice, many condominium associations offer installment plans spanning 6 to 24 months for larger special assessments to avoid overburdening owners with limited financial means. Nevertheless, the full debt remains; late payment interest may apply if agreed-upon installments are not paid on time.

Important to know: Even a new owner who purchases a unit after the resolution has been passed is obligated to pay, provided the special assessment has not yet been settled at the time of the change in ownership. Anyone buying a condominium should therefore be sure to check whether there are any outstanding or planned special assessments.

Pass-Through Eligibility and Distinction from Maintenance Fees

A common question concerns the ability to pass on the special assessment to tenants. The clear answer: A special assessment cannot be passed on to tenants. It is not considered an operating cost under the Operating Costs Ordinance (BetrKV), but rather constitutes a maintenance or repair measure that the owner must bear themselves. This distinguishes the special assessment from regular building maintenance fees, which include items that are partially passable on, such as garbage fees or insurance costs.

Owners should have the special assessment reviewed for tax purposes. For rented properties, the costs may be deductible as income-related expenses under certain conditions, such as when they involve maintenance expenses. However, if renovation costs exceed a certain threshold and significantly improve the building, the tax office may deny immediate deductibility and insist on spreading the costs over the building’s useful life (depreciation). For owner-occupied residential property, the tax benefit generally does not apply.

Practical Tip for Owners in Nuremberg and Franconia

Especially in Nuremberg and the Franconia metropolitan region, many residential complexes from the 1960s to the 1980s are facing extensive renovations-facades, heating systems, and elevators have reached the end of their technical useful life in many places. We recommend that prospective buyers review the minutes of recent homeowners’ association meetings and check the current status of the maintenance reserve fund before purchasing a condominium. A low reserve fund in older buildings often indicates that special assessments may be imminent.

Particular caution is advised for residential complexes that have carried out hardly any maintenance work in recent years-a significant backlog of renovations may have accumulated here, which could suddenly materialize at the next homeowners’ meeting in the form of a high special assessment. During our consultations in the region, we specifically point out such risks and help assess the total financial burden realistically.

Frequently Asked Questions About Special Assessments

Can I challenge a special assessment that has been approved?

Yes, an owner can challenge the resolution within one month of the owners’ meeting by filing a lawsuit to set it aside with the competent local court. Grounds for challenge may include procedural errors in the notice of the meeting, an incorrect allocation of costs, or a disproportionately high claim. However, until the matter is resolved in court, the resolution remains in effect and payment is due. Anyone who refuses to pay the special assessment risks legal enforcement by the WEG.

What happens if an owner does not pay the special assessment?

The community can seek the outstanding payment through the courts and have it enforced. In addition, since the 2007 reform, the WEG has had a statutory priority: outstanding maintenance fees and special assessment claims are given priority in a foreclosure sale. In extreme cases, the delinquent owner therefore risks losing their apartment. Furthermore, late payment interest and collection fees may accrue, significantly increasing the original claim.

What should I look out for regarding special assessments when buying an apartment?

We recommend reviewing the last three to five minutes of the owners’ meetings before purchasing, inquiring about the current status of the maintenance reserve fund, and asking about planned renovation measures. If a special assessment has already been approved, the purchase agreement should clearly stipulate who bears the costs-the seller or the buyer. As a rule of thumb: A reserve fund of less than 15 euros per square meter per year is significantly too low for older buildings and substantially increases the risk of a special assessment being imposed soon.

Can the special assessment be passed on to a tenant?

No, special assessments cannot be passed on to tenants as operating costs. The Operating Costs Ordinance (BetrKV) contains an exhaustive list of items that can be passed on-maintenance and repair costs are not included. A special assessment for a roof renovation or heating system replacement is therefore borne entirely by the owner. In commercial leases, the lease agreement may provide otherwise, allowing certain special costs to be passed on to the tenant-however, such a clause is invalid in residential lease agreements.

Special Assessments Following the 2020 WEG Reform

With the 2020 WEG reform, the decision-making powers of the owners’ meeting were significantly expanded. Since then, special assessments can be approved by a simple majority vote without requiring a qualified majority-provided that the measure for which the funds are being collected was itself lawfully approved. At the same time, the obligation to establish adequate maintenance reserves was enshrined in law (Section 19(2)(4) WEG). Managers who fail to build up sufficient reserves may be held liable for any resulting damages. It therefore makes sense for owners to push for long-term maintenance planning (maintenance schedule) at the owners’ meeting, which avoids special assessments as much as possible through forward-looking reserve accumulation.

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