The Condominium Modernisation Act

With the introduction of the German Condominium Modernisation Act (Wohnungseigentumsmodernisierungsgesetz – WEMoG) on 1 December 2020, the regulations concerning condominium ownership will be amended. The following is a summary of the main changes and their effects on the practice of condominium owners’ associations and their management.

• Separate ownership of open spaces

Up to now, it has not been possible to establish separate ownership of outdoor parking spaces and other open spaces (e.g. terraces, garden areas). In this respect, legal practice has made use of the establishment of rights of exclusive use or rental solutions. The Condominium Modernisation Act now introduces the separate ownership of such areas. This has the advantage that, for example, outdoor parking spaces and garden areas of which separate ownership is established can be sold and encumbered separately. This increases legal certainty and flexibility in legal structuring. 

• Facilitation of building measures

Until now, structural changes to common ownership have required the consent of all affected condominium owners. The law intends to privilege building measures for the installation of charging facilities for electrically powered vehicles, barrier reduction, burglary protection and fibre-optic connections by granting each condominium owner a legal right to these measures. The condominium owners’ association has a say in how the measure is implemented. The costs are to be borne by the beneficiary condominium owner.
In addition, structural measures can now be decided by a simple majority of votes, provided that no fundamental reorganisation takes place and the individual condominium owner is not unreasonably disadvantaged by the building measure. 

• Clear powers of representation and extended tasks of the property manager

It is expressly regulated that the condominium owners’ association is represented in and out of court by the administrator. However, when concluding a property purchase or loan agreement, the administrator requires a resolution of the condominium owners. If the condominium owners’ association does not have an administrator, it is represented jointly by the condominium owners. The power of representation cannot be limited vis-à-vis third parties.

Up to now, administrators often required a resolution of the condominium owners for measures, which from an objective point of view did not require a decision by the condominium owners, unless the administration agreement granted more extensive powers. The Condominium Modernisation Act clarifies that the administrator is entitled and obliged to take measures of proper management, which (i) are of minor importance and do not lead to substantial obligations or (ii) are necessary to meet a deadline or to avert a disadvantage.

• Simplification of accounts, introduction of an asset report

The legal requirements for business plans and annual accounts are simplified. The figures on which these are based are only to be prepared by the administrator in advance, but are not the subject of a resolution. This is intended to prevent legal disputes over figures that do not affect the payment obligations of the respective condominium owner.
A new feature is the right of condominium owners to receive an annual property report to be drawn up by the administrator. The property report must include the main assets of the condominium owners’ association (receivables, liabilities, other assets).
The Condominium Modernisation Act simplifies tenant management to the extent that the operating costs can now also be apportioned to tenants according to the settlement standard applicable between the condominium owners. This saves the need for time-consuming and error-prone conversions when preparing an operating cost statement for rented condominiums. 

• Feed for digitisation

Of particular importance during the ongoing corona pandemic is that the law allows online participation in meetings of condominium owners. The condominium owners can resolve to do so, whereby text form (i.e. also by e-mail) will be sufficient for circular resolutions in the future