Ownership, costs and the monthly service charge: what the flat costs and why

In early 2025 a doctor buys a two-room flat in a block of 18 units for €285,000, intending to let it. The management company quotes a monthly service charge, the Hausgeld, of just under €400, and she plans to demand the whole amount from her tenant as advance payments on running costs. In June 2026 the annual statement arrives with a mid three-digit balance to pay. Both only make sense once you read the Condominium Act.

Separate ownership and common property

Buying a condominium flat does not simply mean buying four walls. Under § 1(2) WEG, flat ownership is separate ownership of a flat combined with a co-ownership share in the common property. The two parts belong together inseparably. You cannot sell the flat without its share, nor the share without the flat.

What is common is defined by § 1(5) WEG through exclusion: the land and the building, insofar as they are neither separately owned nor owned by a third party. The statute therefore works with a residual category. Everything not expressly assigned to one owner belongs to all of them, from the roof and the staircase to the garden.

Which rooms are separately owned is laid down in the declaration of division, together with the division plan. That plan is a construction drawing sealed by the building authority, marking every unit with the same number throughout (§ 7(4) WEG). Anyone examining a flat should obtain both documents from the land register before signing the purchase contract.

Not everything inside your own rooms is separate property either. § 5(1) WEG covers only components that can be altered or removed without affecting the common property or other owners' rights beyond the unavoidable degree. A second condition applies too: the external appearance of the building must not change as a result.

§ 5(2) WEG is even clearer. Parts of the building needed for its structural integrity or safety can never be separate property, even if they lie in the middle of a flat. The same applies to installations and facilities serving the owners' common use. A load-bearing wall or the heating riser therefore remains everyone's business.

The distinction is no formality; it decides who pays. Each owner may deal with separate property as they please, living in it, letting it or using it otherwise, unless the law says otherwise (§ 13(1) WEG). Upkeep of the common property, by contrast, is decided jointly and paid for from the common funds.

The community as a legal person

Since the reform that took effect on 1 December 2020, the community's role is clearly defined. Under § 9a(1) WEG the community of flat owners can acquire rights, incur obligations, sue and be sued. It comes into being once the flat land-register sheets are created and carries the name of the property with a description of the plot.

In practice this means contracts with the caretaker, the utility or the roofer are concluded by the community, not by an individual owner. It also owns the community assets, meaning the bank accounts holding the advance payments and the reserve. Administration of the common property is its task as well, as § 18(1) WEG states.

Towards third parties the community is represented by the property manager (§ 9b(1) WEG). For buying land or taking out a loan, however, the manager needs a resolution of the owners. Without a manager, the owners act jointly. How the manager is appointed and what they may decide alone is covered in the second module.

An individual owner is not liable without limit for the community's debts. § 9a(4) WEG makes each owner answer to a creditor only in proportion to their co-ownership share, for liabilities that arose or fell due while they belonged to the community. Under subsection 5, no insolvency proceedings take place over the community's assets.

Each owner also has a right to information. Under § 18(4) WEG they may demand to inspect the administrative records, meaning contracts, invoices and bank statements. Anyone unable to follow a statement should use this right before voting on it at the meeting.

Who bears which costs: the allocation key

The basic rule is in § 16(2) sentence 1 WEG. Each owner bears the community's costs, in particular for administration and the common use of the property, in proportion to their share. What counts is the co-ownership share entered in the land register, not the floor area and not the number of people living in a flat.

Many declarations of division depart from this. Under § 10(1) sentence 2 WEG the owners may make agreements that deviate from the statute, such as heating by consumption or waste charges per unit. Such an agreement binds a later buyer, however, only if it is entered in the land register as part of the separate ownership (§ 10(3) WEG).

The reform also gave the owners power to decide by resolution. Under § 16(2) sentence 2 WEG they may resolve a different allocation for individual costs or particular types of costs, departing both from the statute and from an existing agreement. A simple majority of the votes cast, as provided in § 25(1) WEG, is enough.

This power has limits. The resolution must amount to proper administration, which § 18(2) WEG measures by the interest of all owners at reasonable discretion. An owner burdened one-sidedly by a new key may challenge the resolution. Conversely, anyone may demand that an agreement which has become unfair be adjusted (§ 10(2) WEG).

The business plan and advance payments

The monthly Hausgeld is not a statutory term but the everyday name for the advance payments the owners resolve under § 28(1) WEG. They cover two things: the ongoing costs and the contributions to the reserves. Their basis is the business plan, the Wirtschaftsplan, which the manager draws up for each calendar year.

The business plan contains the community's expected income and expenditure. Typical items are insurance, cleaning, water, heating, electricity for hallway and lift, maintenance contracts, the manager's fee and the planned contribution to the maintenance reserve. The total and the allocation key give the advance payment of each individual unit.

What matters in law is the resolution, not the figures. Only once the meeting has resolved the advance payments does the owner owe them. Under § 28(3) WEG the owners may also resolve when claims fall due and how they are to be paid, for instance monthly in advance by direct debit. That gives the common account predictability.

Fixing advance payments is expressly part of proper administration under § 19(2) no. 5 WEG. Every owner can therefore demand that they be resolved. If a necessary resolution is not passed, § 44(1) sentence 2 WEG allows an action for a substitute resolution, in which the court decides instead of the meeting.

Under § 29(2) WEG, the advisory board should check the business plan and add its opinion before the meeting votes. A newcomer should therefore ask not only for the current plan but also for the board's opinion and the plans of previous years. Jumps in individual items then show up early.

Annual statement, top-up payment and asset report

After the calendar year ends, the manager prepares the annual statement. § 28(2) WEG describes it as a settlement of the business plan that also contains the actual income and expenditure. It compares what each unit paid in advance with the share that actually falls on it under the applicable key.

The owners do not vote on the statement as a whole, but on its result. They decide on calling in top-up payments or adjusting the advance payments resolved earlier. If the advances fell short, a top-up payment becomes due. If too much was paid, the advances are adjusted and the unit receives a credit.

Alongside the statement, the manager owes an asset report under § 28(4) WEG. It shows the level of the reserves and a list of the community's main assets, such as account balances and outstanding claims. The report must be made available to every owner. The statute provides for no resolution on it.

For a prospective buyer this report is especially valuable. It shows whether the community has reserves or faces major works without a cushion. Together with the minutes of recent meetings and the collection of resolutions under § 24(7) WEG, it gives a realistic picture of future costs that no sales brochure can replace.

The maintenance reserve

The maintenance reserve, the Erhaltungsrücklage, is the community's savings account for repairs and renewals. § 19(2) no. 4 WEG counts building up an adequate reserve as part of proper administration. What maintenance means is stated in brackets in § 13(2) WEG: proper upkeep and repair.

The statute sets no fixed amount. Adequate is whatever the age, condition and equipment of the property require. A new building with a flat roof needs different reserves from an old one with a lift and oil heating. The owners resolve the yearly contribution with the business plan, and anyone can demand an adequate reserve as proper administration.

The money in the reserve belongs to the community, not to the individual owner. Someone selling their flat does not get their share paid out; the buyer joins the community and the reserve stays there. That is why a buyer should check its level in the asset report: a large reserve relieves the buyer when future works come.

If the reserve does not cover a project, the owners resolve a special levy, which is an additional advance payment under § 28(1) WEG. It too is split by the applicable key. A thin reserve thus merely pushes costs into the future, often onto owners who were not even present when low advances were voted.

Proper administration under § 19(2) no. 3 WEG also includes adequate insurance of the common property at replacement value and building owner's liability cover. These premiums also run through the Hausgeld. An owner facing imminent damage to the building may, under § 18(3) WEG, take the necessary emergency measures alone.

When an owner does not pay

When an owner fails to pay the Hausgeld, everyone else is short. The law therefore strengthens the community's position in a forced sale. Under § 10(1) no. 2 ZVG, claims for advance payments, top-up payments and reserve contributions under § 16(2) and § 28(1) and (2) WEG rank ahead of the banks' land charges.

This priority is limited twice. It covers current and overdue amounts from the year of attachment and the two preceding years. And, including all ancillary items, it is capped at 5 percent of the value fixed by the enforcement court under § 74a(5) ZVG. The community files the claim itself.

An owner who persistently and seriously breaches their duties risks even more. § 17 WEG lets the community demand that an owner sell their flat if the others can no longer be expected to continue with them. Repeated gross breaches despite a warning are enough, and this right cannot be excluded by agreement.

The let flat: what reaches the tenant

Hausgeld and a tenant's running costs are two different bills. The owner owes the Hausgeld to the community; the tenant owes operating costs to the landlord insofar as the lease provides for it. Only what the Operating Costs Ordinance recognises as operating costs can be passed on. The details are in the tenancy law course.

Two large Hausgeld items never reach the tenant. The manager's fee is an administrative cost, and the reserve contribution serves upkeep and repair; § 1(2) BetrKV expressly excludes both. Anyone who sets the Hausgeld unchecked as the tenant's advance payment therefore overestimates and risks having to refund money at the settlement.

For the split, the statute helps the letting owner. Under § 556a(3) BGB, absent another agreement, the key used between the owners applies, provided it does not contradict reasonable discretion. The community's annual statement thus becomes the basis for the tenant's operating-cost settlement.

Property tax usually does not appear in the Hausgeld. Under § 244(3) no. 3 BewG each unit of flat ownership counts as a plot of its own and is valued and taxed separately. The owner receives the assessment and may pass the tax on as an operating cost if the lease allows. Some states apply their own property tax acts.

This course leaves the tax treatment open. When Hausgeld, special levies and reserve contributions are deductible against letting income is explained in the letting-income course. Owner-occupiers should be careful too: § 35a EStG requires an invoice and payment into the provider's account, but says nothing express about expenses of the community.