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Coronavirus - Information for communities of condominium owners and administrators of residential properties - Germany

  • Germany
  • Real estate

31-03-2020

SARS-CoV-2 ("Corona")

The SARS-CoV-2 virus, also referred to as "Corona", has reached Germany with significant effects across all industries. This article aims at answering the specific issues which communities of condominium owners and administrators of residential properties are currently dealing with.

1. Owners' meetings

In general, owners' meetings of condominium owners must be attended in person. Due to the general disposition which bans events and imposes business interruptions because of the Corona pandemic, events and gatherings are currently prohibited in Bavaria in the entire state. Similar regulations apply in all federal states across Germany, so that it can be assumed at this point that condominium owners will not be able to convene owners' meetings.

In addition, owners' meetings which are held online via chat systems or video calls can only be considered as an alternative if this option is expressly included in the condominium regulations. Otherwise, there might be a risk that not all owners would be equally capable to participate due to inadequate technical conditions.

2. Resolutions of the Community of Condominium Owners

As it is not possible for owners to meet, the question is how communities of condominium owners can pass resolutions in the current situation. Sec. 23 para. 3 of the German Condominium Act (Wohnungseigentumsgesetz, WEG) states that resolutions may also be passed in writing. However, as a written resolution requires the consent of all condominium owners, this method is rarely used in practice, especially in larger communities of condominium owners. Furthermore, it is likely that not many written resolutions will actually become effective as it will rarely be possible to achieve a unanimous vote from all eligible members (Allstimmigkeit).

3. Appointment of the Residential Property Administrator

Due to the aforementioned difficulties in achieving a resolution in the present situation, it is also currently more difficult to appoint an administrator. To address this problem, the recently passed Act regarding Measures under the Law of Corporations, Cooperatives, Associations, Foundations and Residential Property to Combat the Effects of the COVID-19 Pandemic states in Article 2 Sec. 6 para. 1 that the most recently appointed administrator shall remain in office until his/her removal or until a new administrator is appointed.

Therefore, should it be impossible to pass a resolution for the appointment of a new administrator at the moment, the community of condominium owners does lose its administrator but the current administrator remains in office beyond the statutory maximum appointment periods. Sec. 26 para. 1 sent. 2 WEG thus becomes temporarily ineffective.

Pursuant to the explanatory memorandum, this also covers cases in which the administrator's term of office had already expired before the Act came into force. It remains unclear how cases should be treated in which the condominium owners intentionally let the appointment period expire, e.g. because they did not want to appoint a new administrator, or where the administrator actively resigned. Should the most recent administrator nevertheless remain in office in such constellations?

4. Maintenance of the Commonly Owned Property

Communities of condominium owners remain functional, even though meetings of owners cannot take place and resolutions can only be passed under difficult conditions. Pursuant to Sec. 27 para. 1 no. 1 WEG, the administrator is entitled, in urgent cases, to take measures which are required to maintain the commonly owned property without a prior consultation with the condominium owners. Pursuant to the courts, an urgent case exists if a prior consultation with the owners during the meeting of condominium owners is not possible. If there is a risk of damage to the commonly owned property, the administrator is entitled and obliged to take all measures which cannot be postponed. A resolution regarding any additional measures can then be passed at a later point in time.

5. Business Plan and Annual Statement

In order to also safeguard the financing of the community of condominium owners in the current situation, the new Act states in Article 2 Sec. 6 para. 2 that the business plan most recently adopted by the condominium owners shall remain in effect until a new business plan is adopted. An entitlement to the residential home apportionment reserves is thereby guaranteed. The annual statement is then to be resolved in the next owners' meeting. However, if and insofar as the annual statement is required in advance by individual owners for tax purposes, the owners must be provided with the statement at an earlier date.

6. Summary

As the current situation is unique in recent history, case law is not available yet regarding the questions raised above. As academic opinions also differ, it is currently impossible to provide general practical guidance.

The new Act regarding Measures under the Law of Corporations, Cooperatives, Associations, Foundations and Residential Property to Combat the Effects of the COVID-19 Pandemic has been in effect since 27 March 2020 and its provisions regarding business plans and property administrators provide a basis for a practicable interim solution. Nevertheless, it is necessary to consult the condominium regulations in each individual case and to find a tailored solution for the respective community of condominium owners.

Irrespective of the COVID-19 pandemic, the federal government introduced a draft bill to modernise the legislation relating to condominiums (Wohnungseigentumsmodernisierungsgesetz, WEMoG) almost at the same time, which is intended, inter alia, to bring down obstacles with respect to quorum and to provide condominium owners with the possibility to utilise digitalisation also in the context of owners' meetings.

Although the act has not been passed yet, the improvements considered in the draft in order to facilitate the administration of communities of condominium owners appear more than welcome, especially during times such as the current COVID-19 pandemic.