Residential property law amendment from December 1st, 2020

On Tuesday, December 1st, 2020, a law to modernize residential property law came into force. Part of this law is a comprehensive restructuring of the previous organs of the community of apartment owners. The fundamental changes are summarized here.

Bodies of the community of homeowners

According to the new concept, the community of apartment owners is fully legal bearer of all community-related rights and obligations as well as those rights of the owners that require uniform prosecution. It has three different bodies, namely the apartment owners as the decisive decision-making body in the assembly of apartment owners, the administrator as the executive body and the advisory board with significantly increased monitoring tasks. This will bring the community of apartment owners much closer to the structure of a limited liability company in the future.

The community is still represented by the administrator. The issue of a community without administrators, which is inadequately regulated by the legislature, is problematic. Here, only joint representation by all apartment owners is provided, so that a certain community size must lead to the inability to act. The experts involved in the legislative process propose various auxiliary constructions for different reasons, all of which must first be checked by the jurisprudence.

Likewise, the legislature does not solve the problem of actions to avoid decisions against communities without administrators. According to the new conception of the law, actions to avoid resolutions are no longer to be directed against the other apartment owners, but only against the community of apartment owners. However, this means that a plaintiff, as the owner contesting the decision, would also be a representative on the defendant's side, since he has to represent the community of apartment owners due to the lack of an administrator. However, procedural law has not yet known such a constellation.

In future, the representation of the community of apartment owners vis-à-vis the administrator is expressly regulated by the chairman of the administrative advisory board or, if such a chair does not exist, an apartment owner authorized to do so by resolution. It was ordered that the Management Advisory Board not only support the administrator in the performance of his tasks, but also monitor it.

The scope and content of this new monitoring task are not even rudimentarily specified. If one now includes the equally new liability regulation, according to which the liability of the administrative advisory councils is only limited to intent and gross negligence in the case of unpaid work, it is to be feared that administrative advisory councils will appear much more frequently in the future.

Following the new conception of a legal person with acting bodies, the legally regulated obligations of the administrator have been significantly reduced. Here the law only orders the judicial and extrajudicial representation of the community by the administrator, with the conclusion of a property purchase or loan contract further restricted by the requirement of a separate resolution by the apartment owners.

In addition, the tasks and powers of the administrator only include the authorization and obligation vis-à-vis the community to take the measures of proper administration that

– are of secondary importance and do not lead to significant obligations or

– are necessary to meet a deadline or to avert a disadvantage.

The apartment owners can, however, restrict or expand their rights and obligations by resolution, which can also lead to the complete disempowerment of an administrator who, in the worst case, requires a separate resolution by the community for each measure.

Transitional provisions

So that the parties concerned have enough time to adjust and prepare for the changes, the new law also stipulates some transitional provisions that apply until the official deadlines expire:

Resolutions that are passed on the basis of an agreement must be entered in the land register in order to bind the special successor of an apartment owner. What is meant here are resolutions by the owners based on an opening clause in the declaration of division / community regulations. The transitional provision stipulates that the binding of the special successor remains under the old law if the special successor occurs by December 31, 2025. The legislature has thus created a corridor of approx. 5 years within which all resolutions of the community based on an opening clause are to be entered in the land register. Otherwise, special successors who take effect from January 2026 are not bound by such resolutions.

The new law introduces the certified administrator. In the future, only those who have proven through an examination before a chamber of industry and commerce that they have the legal, commercial and technical knowledge necessary for the activity as an administrator may be designated as such. The Federal Ministry of Justice and Consumer Protection is now authorized to issue more detailed provisions on the examination to become a certified administrator by means of an ordinance. In future, the appointment of a certified administrator will be a rule of proper administration and can be requested from every owner.

Since the certification process does not yet exist with more detailed regulations, the legislator is delaying the owner's right to appoint the certified administrator until December 1st, 2022. In addition, the law impersonates people who are already administrators of a community of apartment owners on December 1st, 2020, the status of certified administrator vis-à-vis the members of the community, but only until June 1st, 2024.

The law determines the applicability of the old procedural rules for judicial proceedings that became pending before December 1st, 2020. However, this only applies to the procedural provisions and not to substantive law. As a result, all legal proceedings in which the administrator himself is a party to the litigation become inadmissible, as the new law only recognizes the community of apartment owners as the bearer of community-related rights and obligations.

Finally, the legislature gives far-reaching priority to the new statutory provisions over deviating agreements between the owners that were concluded before December 1st, 2020. The primacy of the law only does not apply in those cases in which the agreement “results in a different will. As a rule, such a will cannot be assumed."

This means that pure repetitions of laws in the declaration of division or community regulations are no longer necessary if the new law stipulates otherwise. However, deviations from the law are also irrelevant where the deviation cannot at the same time indicate the objective will to want to make a different regulation in the event of future changes in the law. This means that pure repetitions of laws in the declaration of division or community regulations are no longer necessary if the new law stipulates otherwise. However, deviations from the law are also irrelevant where the deviation cannot at the same time indicate the objective will to want to make a different regulation in the event of future changes in the law.

Further changes

From December 1st, 2020, the legislature allows the extension of the private property to a part of the property outside the building. This means that in the future car parking spaces, gardens, terraces, etc. can be assigned directly to private property, it remains to be seen whether the institute of special usage rights will noticeably decrease. The only restriction stipulated by the legislature is that the apartment or partial ownership remain economically the main thing.

From the beginning of December 2020, the immediate recording of a record of the resolutions passed in the assembly will be required. Up until now it was disputed in which period of time the administrator has to submit and send the minutes of the meeting, a corridor of 3 to a maximum of 5 working days may have been determined by the current regulation.

Powers of attorney to represent an owner in the assembly only require text form. In the future, the administrator of the community of apartment owners can be recalled at any time. A management contract always ends no later than 6 months after its removal. This legal regulation is not mandatory.

In future, the owners will only decide on advances to bear the costs and reserves provided for by law or by resolution, for which the administrator has to draw up a business plan for each calendar year. In the future, the owners will only decide on the demand for additional payments or the adjustment of agreed advances, for which the administrator has to set up an accounting via the business plan (annual accounting = legal definition).

As a result, individual cost items can no longer be challenged in the future, but only the results of the cost burdens of the individual owner.