GER: Condo Owners’ Revamp Costs Only for Beneficiaries?

Apr 12, 2024 Benn-Ibler Rechtsanwälte

Under what conditions can any costs for renovation work done on a common property be charged only to the individual owners who benefit from the renovation work? This has been the subject of a recent ruling by the German Federal Court of Justice (Bundesgerichtshof, hereinafter BGH), which had to decide in two similar cases.

The first case concerned a defective lifting system for double garages in a condominium. The second case concerned a defective roof window that was part of the common property. In both cases, the owners of the condominiums decided to change the way the costs were split. They decided that the renovation costs should only be paid by those condominium owners who also used that part of the common building. In both cases, the owners against whom claims were made challenged the decisions by way of actions for annulment. However, they were not successful in the lower courts. The BGH also rejected their appeals, stating that the owners’ decisions were neither appealable nor invalid.

In principle, reserves for the maintenance and upkeep of common property are built up by condominium owners on a pro rata basis. The recently reformed German Condominium Ownership Act now makes it possible to decide on individualised cost allocations for specific measures.

Section 16 (2) sentence 2 of the German Condominium Act (Wohnungseigentumsgesetz, WEG) establishes this competence. According to the BGH, this regulation should also apply if the group of those liable for costs is changed in such a way that condominium owners are completely exempted from bearing costs or, conversely, are charged with costs for the first time. This broader interpretation compared to the previous legal situation follows from the wording of the law and is in line with the legislative objective of the regulation.

The BGH said the owners’ decisions also conformed to good administrative practice. Due to the owners’ right to self-organisation, they have leeway in adapting the distribution key.

When allocating costs, any standard may be chosen that is appropriate to the interests of the community and the individual unit owners and that does not result in unjustified disadvantages for any individual owner. This applies in any case where the agreed allocation of costs takes into account the use or possibility of being used.

BGH, V ZR 81/23 (22 March 2024)