Advance Management Expenses: No Offsetting for Condominiums

Aug 1, 2025 Benn-Ibler Rechtsanwälte

In the case at hand, the principal owner of a property governed by Austrian condominium law attempted to set off his own claims against the owners’ association with advance payments made for management expenses. Both the court of first instance and the appellate court denied this set-off, citing the established jurisprudence of the Austrian Supreme Court (Oberster Gerichtshof, OGH), which recognises a waiver of set-off as an implicit element within the condominium ownership agreement.

The OGH stated that the waiver of set-off is based on the need for payments on account to support the ongoing financing of the residential property complex and to avoid liquidity gaps for joint expenses. According to the Court, residential property arrangements imply that individual owners do not set off their own claims against required payments on account.

This legal perspective is widely supported in the specialist literature. An exception is noted by E. M. Hausmann, who advocates for limiting the prohibition of set-off. Hausmann asserts that while set-off should be disallowed when based on claims arising from insufficiently detailed statements of account—since this could potentially create financial instability for the community of owners—a different approach applies to claims not connected to such statements. For instance, if an apartment owner has advanced property expenses or if a claim against the owners‘ association has already been judicially established, these scenarios differ. In such cases, Hausmann contends that the liquidity of the community is not impacted any more than it would be by any other payment obligation.

The OGH does not accept this argument. Permitting offsetting against an advance payment would require that the substantive validity of the counterclaim be examined during proceedings for the recovery of outstanding advance payments. This would add more procedural steps beyond determining whether the defendant apartment owner has paid the required advance payments. As a result, the collection of advance operating costs may be delayed, potentially causing liquidity issues.

OGH 5 Ob 11/25s (03.06.2025)