OGH: Rights of Austrian Owners’ Associations

Sept 8, 2023 Benn-Ibler Rechtsanwälte

The Austrian Supreme Court (Oberster Gerichtshof, hereinafter OGH) has clarified: For the active legitimacy of a condominium owners’ association with regard to an assignment of claims, only the effective assignment is relevant. Internal decisions by the association to enforce claims are not relevant.

The facts of the case: Two brothers are co-owners of a property. However, their shares are encumbered with a right of usufruct. A GmbH real estate company, also a co-owner and condominium owner, undertook to carry out extensive work on general parts of the property and to repair any damage caused by construction work in the course of converting the attic and building a garage. The defendant purchased the shares of the company, thereby also taking over its contractual obligations. The construction work was carried out in a defective manner and a large number of damages to the house were not repaired.

The owners’ association decided to take legal action against the defendant for recourse and damages. The brothers participated in the decision, but the beneficiary did not. In addition, the brothers assigned their claims as condominium owners to the plaintiff condominium owners’ association. The owners’ association accepted these assignments by majority.

The defendant objected to the lack of active legitimacy of the owners’ association.

The court of appeal held that the person entitled to the usufruct should have been included in the resolution accepting the assignments (instead of the condominium owners) and that, in this respect, there was no valid assignment.

The OGH ruled as follows:

The plaintiff condominium owners’ association’s right of action depends crucially on the existence of an effective assignment pursuant to Section 18(2) of the Austrian Residential Property Act (Wohnungseigentumsgesetz, WEG).

The effective acceptance of the assignment by the administrator of the owners' association will already result in the active legitimation of the owners' association in external relations. The internal decision of the owners' association to enforce the assigned claims is not subject to review. Therefore, it is irrelevant whether the person entitled to the usufruct must be involved in the decision. The common interest of the condominium owners in having the damage repaired is a sufficient ground for accepting the assignment.

OGH 2 Ob 78/23v (27 June 2023)