Condominium Act (WEG)

Condominium Act (WEG) - The Condominium Act provides the legal framework for the establishment, structure, and management of condominium ownership in Germany. It governs coexistence and decision-making within condominium owners’ associations and was most recently fundamentally modernized by the 2020 reform.

Structure and Content of the WEG

The Condominium Act first came into force in 1951 and was intended to facilitate the creation of private home ownership in multi-unit buildings after the war. It defines the two cornerstones of condominium ownership: the separate ownership of a specific unit and the inseparably linked co-ownership share in the common property (land, load-bearing structures, facade, roof, stairwells, and utility lines).

The Act is divided into several sections. The first part deals with the establishment of condominium ownership-either through a declaration of division by the sole owner or through a division agreement between co-owners. The second part regulates the community of condominium owners as a legal entity capable of acting independently in legal transactions. Further sections are devoted to administration, the property manager, the administrative advisory board, and judicial proceedings in the event of disputes.

The central bodies of a homeowners’ association are the owners’ meeting as the supreme decision-making body, the property manager as the executive body, and the administrative advisory board as the supervisory body. The owners’ meeting decides on the budget, the annual financial statement, maintenance measures, and structural alterations. Resolutions are generally passed by a simple majority of the owners present or represented, unless the law or the association’s bylaws require a qualified majority.

The property manager is obligated to implement the resolutions of the owners’ meeting, organize ongoing maintenance, manage the association’s finances, and prepare a proper annual financial statement. The administrative advisory board-consisting of a chairperson and up to two other owners-assists the property manager and reviews the financial statement.

The 2020 Condominium Act Reform and Its Impact

With the reform that took effect on December 1, 2020, the Condominium Act was comprehensively modernized. The most significant changes affect several areas: The condominium owners’ association was strengthened as a fully legal entity and is now explicitly responsible for administration. Since then, structural changes to the common property can be decided by a simple majority-previously, unanimity was often required. However, in principle, only the consenting owners bear the costs, unless the measure pays for itself within a reasonable period or is decided by more than two-thirds of the votes and half of the co-ownership shares.

Online participation in owners’ meetings has been made possible and can be introduced by resolution. In addition, a certification requirement for property managers has been introduced: As of December 1, 2023, homeowners’ associations may require a certified property manager. Every individual owner has the right to demand that the association appoint such a manager.

Practical Tip for Owners in Nuremberg and Franconia

There are thousands of condominium associations in the Nuremberg metropolitan region-ranging from small three-family homes in Erlangen to large residential complexes in Nuremberg-Langwasser or Fürth. The quality of management varies considerably, and particularly in older associations, declarations of division are often outdated and not adapted to the current legal situation.

We recommend that owners in Nuremberg and Franconia actively take advantage of the opportunities offered by the Condominium Act reform: The simplified decision-making process for structural changes, for example, makes energy-efficient renovations or the retrofitting of electric vehicle charging stations considerably easier. Our team will be happy to advise you on your rights within the homeowners’ association and assist you in preparing for homeowners’ meetings.

Frequently Asked Questions

What exactly does the Condominium Act regulate?

The WEG governs the establishment of condominium ownership (through a declaration of division or a division agreement), the rights and obligations of owners toward one another, the management of common property by property managers and owners’ meetings, as well as legal proceedings in the event of disputes. It defines what constitutes individual ownership and what constitutes common ownership, and establishes the rules for decision-making and cost allocation.

What has changed as a result of the 2020 WEG reform?

The reform has simplified structural changes (simple majority instead of unanimity), enabled online participation in owners’ meetings, and introduced a certification requirement for property managers. In addition, the association of condominium owners was strengthened as a fully legal entity, and each owner was granted an individual right to inspect the administrative records. Overall, the decision-making process became more flexible, and the rights of individual owners were strengthened.

Does every homeowners’ association need a property manager?

Legally, appointing a property manager is not mandatory, but the WEG provides for it as the standard practice. Every individual owner has the right to request that a property manager be appointed. In practice, professional management is strongly recommended for communities with three or more units, as the requirements for financial accounting, maintenance planning, and documentation of resolutions are difficult to manage without specialized knowledge.

How are resolutions passed at the owners’ meeting?

The WEG distinguishes between several majority requirements. Simple resolutions-such as those regarding the annual financial statement, the budget, or ongoing administrative measures-are passed by a majority of the votes cast. Structural changes that go beyond ordinary maintenance also require only a simple majority under the 2020 reform; however, the costs are generally borne only by the approving portion of the community. If a measure is approved by more than two-thirds of the votes cast and at least half of the co-ownership shares, all owners bear the costs jointly. Some resolutions-such as changing the cost allocation or dissolving the co-ownership-require an agreement, meaning the consent of all owners and an entry in the land register.

Maintenance Reserve and Financial Planning

Sound management of a condominium association requires forward-looking financial planning. The WEG requires the association to establish an adequate maintenance reserve (Section 19(2)(4) WEG). The guideline for the annual allocation is 0.8 to 1.5% of the building’s replacement value. For a typical residential complex in Nuremberg with a building value of 2 million euros, this would amount to between 16,000 and 30,000 euros in annual reserves for the entire association. Owners wishing to purchase a unit should check the amount of the existing reserve in the WEG’s annual financial statements: an insufficient reserve means that special assessments for necessary renovation measures are likely in the foreseeable future.

The annual budget estimates the community’s expected income and expenses for the coming fiscal year and sets the monthly maintenance fees. In addition to reserve fund contributions, it covers ongoing operating costs such as the building manager, insurance, cleaning, and common area electricity. The annual statement verifies whether actual expenses match the budgeted amounts and determines any additional payments or refunds owed to each owner.

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