Homeowners’ association at a glance

A condominium owners’ association (WEG) is an association of owners of apartments in a common building.

The community of owners can be described like this:

Community of all owners of a property.

As the owner of your apartment, you are a member of the WEG and have joint responsibility with the other owners for managing the common property, e.g. the staircase, the roof, the facade and the common utilities.

You also decide jointly on maintenance and repairs and on the financing of these measures. It is important to note that every decision in the WEG is made jointly and that you, as a member of the WEG, are also obliged to participate in the decisions and bear the costs.

The WEG at a glance:

• Each owner can represent his right to vote at the meeting of owners
• Each owner has a certain co-ownership share in the common property
• Each member of a WEG must bear costs for the common property
• Each owner is responsible for his or her own special property
• Each owner has to fulfill certain rights and obligations
• Each COA must have certain documents that set out rules and boundaries

The legal basis for a WEG is provided by the Condominium Act. It provides the owners with guidelines and regulations for the proper administration of the WEG. Let’s take a closer look at the Condominium Act (WEG for short).

Condominium Act (WEG)

The German Condominium Act (Wohnungseigentumsgesetz ) is of great importance to all condominium owners in Germany, as it lays down the legal foundations for the organization and management of condominium associations.

The WEG regulates, among other things, the distribution of rights and obligations between the individual owners and the community as well as the management and maintenance of the common property.

There are clear specifications for holding owners’ meetings, passing resolutions and managing funds. The establishment and duties of the management advisory board and the administrator are also regulated in the WEG.

The WEG regulates:

• The distribution of rights and obligations
• The management and maintenance of the common property
• The conduct of the meeting of owners
• The decision making
• The management of funds

The owners’ meeting is guided by the laws of the WEG:

In a WEG, every member is involved and must fulfill certain rights and obligations. In the next section, we will explain what you have to do as an owner.

Rights and obligations of the owners

As an owner in a homeowners’ association, you have certain rights and obligations. You have the right to use and manage your apartment, but you must also consider the common interests. This means that you must abide by jointly agreed rules and regulations that apply to the building and its residents.

Furthermore, as an owner in the homeowners’ association, you are obligated to participate in the management and maintenance of the common areas and facilities.

Rights of use to one’s own home

As the owner of your apartment in a homeowners’ association, you have the right to use and manage your apartment. It is up to you whether you live in the apartment yourself or rent it out. For example, you can renovate your apartment or buy new furniture, as long as you do not interfere with other owners.

The own apartment may be managed and designed by the owner, as long as the common property is not affected.

However, you must also consider the interests of the other owners and the community when using your apartment. For example, you may not make any structural changes to your apartment that could affect the appearance of the building or cause problems with other apartments.

Rights of use to common property

As an owner in a homeowners’ association, you are responsible for managing and maintaining the common areas and facilities together with the other owners. This includes, for example, the staircase, the elevator, the roof, the facade, the outdoor facilities and, if necessary, the heating system.

These rights and obligations accrue to owners on the common property:

• Management and maintenance of common areas

How these costs are financed and distributed is explained in the next section.

Financing common costs

As an owner in a homeowners’ association, you are obliged to contribute to the common costs of the association. This includes, for example, the costs for the management and maintenance of the common areas and facilities, but also the costs for the operation of the elevator, the waste disposal or the water supply.

The costs are usually calculated according to the ratio of your share in the common property. For this purpose, the declaration of division specifies which share you have in the homeowners’ association. This distribution of costs is also called the cost distribution key.

In addition to the running costs, larger maintenance or renovation measures may also be required, which are associated with a higher financial outlay. For this purpose, a reserve is usually formed, which is regularly replenished by the owners with a certain amount. This reserve is used to finance larger repairs and maintenance measures without the need for additional funds to be raised by the owners.

These costs are incurred in a WEG:

• Costs for the management and maintenance of common areas
• Costs for the operation of the elevator, waste disposal or water supply
• Maintenance reserves

The costs incurred are discussed at the owners’ meeting:

Organization of a homeowners association

The organization of a homeowners’ association is an important part of living together. There are various committees and bodies that are responsible for managing the community.

The most important body is the owners’ meeting. Here, all owners meet once a year to make important decisions and to discuss the concerns of the community.

Another important body is the management advisory board. This is elected by the owners’ meeting and supports the administrator in the management of the community.

The administrator is the executive body of the condominium owners’ association. He or she takes care of the administration of the community and ensures that all necessary work is carried out.

The most important instances of the WEG at a glance:

• WEG administrator
• Management Advisory Board
• Owners’ meeting

Now let’s take a closer look at the individual instances.

Administrator of the WEG

The administrator is the executive body of a condominium owners’ association and is responsible for the administration of the community. This includes, among other things, the organization and monitoring of maintenance measures, the preparation of accounts and communication with the owners and the various committees of the community.

The duties of the administrator include:

• Organization and monitoring of maintenance measures
• Preparation of accounts
• Communication with the owners and the various committees

The choice of a suitable administrator is therefore of great importance. As a rule, a professional management company is commissioned that has the necessary knowledge and experience. However, voluntary management by an owner is also possible.

Management Advisory Board

In addition to the administrator, there is also the management advisory board. The management advisory board consists of at least three owners. This body is elected by the owners’ meeting and has the task of supporting and monitoring the manager. However, the management advisory board has no decision-making authority and can only make recommendations.

The Management Advisory Board at a glance:

• Composed of at least three owners
• Elected by the owners’ meeting
• Supports and controls the administrator

Owners’ meeting

The owners’ meeting is the highest decision-making body and meets at least once a year. Its task is to discuss and decide on important matters concerning the community.

The owners’ meeting is convened by the administrator or by an owner. Certain deadlines and formal requirements must be observed. As a rule, invitations must be issued in writing at least two weeks before the meeting. The invitation must state the items on the agenda as well as the place, date and time of the meeting.

The typical topics of an owners’ meeting include the adoption of the business plan, the election of the manager, the vote on maintenance measures or the definition of house rules. The owners’ meeting also decides on the amount of the monthly house fees.

The community of owners at a glance:

• Meets at least once a year
• Advises on important matters of the community
• Convening takes place through the administrator

The inheritance – will, inheritance tax and the compulsory portion

Without a will, the estate is distributed according to the rules of intestate succession. However, this is not always in the best interests of the testator. If a will exists, the assets can be distributed in a different way than the law provides for and persons not related by blood can also inherit. The creation of a will is therefore not only important to regulate the last will exactly, but also to avoid disputes in the family. Find out everything about wills and inheritance from the experts at IHV.

Bequeathing correctly during your lifetime – wills and the legal consequences

Without a will, the estate is distributed according to the rules of intestate succession. However, this is not always in the best interests of the testator. If a will exists, the assets can be distributed in a different way than the law provides for and persons not related by blood can also inherit. The creation of a will is therefore not only important to regulate the last will exactly, but also to avoid disputes in the family.

A will overrides intestate succession and can thus establish a new succession. Who is to inherit is determined by the testator. If more than one person is named, the assets are usually divided according to quotas. Writing a will also gives the testator the option of leaving individual things to certain people, for example a car, jewellery or property. However, these are not legally considered an inheritance, but a legacy. In order to avoid disputes about the estate, the estate can be distributed in a will in such a way that no disputes can arise.

If there is no will and a property is part of the estate, it becomes the property of the heirs. In most cases, a community of heirs is formed in which no one can dispose of the inheritance alone. When selling such a property, all heirs must agree. This fact can often lead to disputes within the community of heirs. In addition, the costs incurred for a notarial will are usually only half as low as the costs for a certificate of inheritance procedure that the heirs face if no will exists. In the will, the last will over the property can be regulated exactly and disputes and superfluous costs are saved for all involved.

Pre-heir and post-heir – tasks, duties and rights

The testator is free to determine the heirs and can therefore transfer his property to several persons in a temporal displacement. Accordingly, the subsequent heir receives his inheritance only after another person, in this case the previous heir, has inherited. The testator can, for example, choose an occasion or a time for the succession to occur, such as coming of age or passing the master’s examination.
The previous and subsequent heirs are both legal successors of the deceased, but do not form a community of heirs in which they would inherit at the same time, but rather inherit at staggered times due to the deceased’s instigation. The subsequent heir has an expectant right to the succession, and therefore, when the succession occurs, the inheritance of the previous heir is forfeited, the latter ceases to be an heir, and the inheritance accrues to the subsequent heir. In the event that the subsequent heir is already deceased at the time of the succession, the testator should take precautions and name further subsequent heirs.

The pre-heirs are also referred to as ‘temporary heirs’. Depending on the interpretation of the will, the pre-heirs only have certain powers of disposal over the estate and are therefore quite limited in what they can do. In addition, inheritance tax always falls on the pre-heirs at the beginning, as only they are legally named as heirs and thus bear the tax consequences.

Inheritance allowances – Inheritance taxes and gifts

In order to protect the heirs from a large financial burden, different tax rates and allowances apply depending on the degree of relationship. These allowances include various things that do not have to be taxed, so that the heirs do not have to pay the most as taxes, especially in the case of a large estate.
Pension allowances are payable if the partner or children were dependent on the financial support of the deceased. For spouses, the pension allowance is €256,000 provided the surviving spouse does not have a widow’s pension or occupational pension that is not subject to inheritance tax. For children, pension allowances apply which are staggered according to the age of the child at the time of death. Infants up to the age of 5 are entitled to a pension allowance of 52,000 euros. Starting from this point, the pension allowance decreases by approximately 10,000 euros every five years. Children aged 20 to 27 can therefore claim a pension allowance of 10,300 euros, but these allowances are only relevant if the children do not have their own pension payments, such as an orphan’s pension.

The other allowances, in addition to the pension allowances, are regulated according to the degree of relationship and are independent of existing survivors’ pensions or own assets. Accordingly, spouses and registered partners inherit an allowance of 500,000 euros. Children of the deceased or grandchildren of the deceased, if their parents die before the inheritance, can claim an allowance of 400,000 euros. Grandchildren whose parents are still alive can claim an allowance of 200,000 euros. Great-grandchildren or the deceased’s own parents are entitled to an allowance of 100,000 euros. All other heirs can claim tax allowances of 20,000 euros. To ensure that as little tax as possible has to be paid on inheritance, the testator can make important decisions long before death and specify them in the will.

Inheritance tax and gifts – all important information

Inheritance tax and gift tax are closely linked. Almost the same allowances apply as in the case of inheritance, however, the gift allowances may only be left tax-free once in ten years. Testators who wish to reduce the inheritance tax for their heirs must therefore start gifting their assets ten years before their death. In the case of patchwork families, this rule means that it can make sense to adopt the spouse’s children in order to bring the tax-free amounts into line with those of the biological children. The adoption does not affect the succession to the other biological parent.

In addition to tax-free allowances, there are also goods that are tax-free. For close relatives in tax class I, movable assets such as household effects or similar objects of daily use are tax-exempt if they do not exceed a value of 42,000 euros. For all other heirs, a value of 12,000 euros applies here. If works of art, archives or libraries are part of the estate, they are generally exempt from tax at a rate of 60 percent. If the estate includes a building in which one of the heirs lives, this can also be exempt from tax.

The compulsory part of the inheritance – disinheritance, will and inheritance contract

In principle, everyone is free to decide whom to appoint as heir and whom to disinherit. The testator does not have to justify in his will why he excludes a relative from the succession. However, an exclusion does not mean that the heir receives nothing, because every heir has a claim to a compulsory portion. This claim must be requested by the heir himself, because the certificate of inheritance does not record these compulsory portion claims. If a testator designates a person as sole heir, this means on the one hand that this person alone inherits the entire estate, but also that no one else should inherit who would actually be entitled to inherit.

Married couples can jointly disinherit close relatives in an inheritance contract or a Berlin will. In a classic form of the Berlin will, the spouses stipulate that the longer-living partner will be the sole heir and that the children will only inherit when both spouses have died. Thus, the parents disinherit their children until both are deceased. If someone is disinherited, the part of the inheritance that would have gone to this heir goes to the person who would have become the heir if the disinherited person had already died at the time of the inheritance.

Settling the inheritance – communities of heirs and intestate succession

Ideally, the heirs of a community of heirs would pay any debts swiftly from the estate and then dissolve the community of heirs by distributing the surplus according to shares. However, this is often not the reality. Disputes within the community of heirs often ensure that they remain unresolved for years after the inheritance. Each member of such a community of heirs has the right to demand dissolution at any time, even without good cause.
In order for a community of heirs to be dissolved without disputes, it is advisable to follow certain steps. From the correct valuation of the estate to inheritance taxes, there are important formalities to observe.

• Determine the estate

  Until the estate has been determined, a community of heirs cannot be divided. The heirs receive most of the information from the bank where the deceased had the accounts or deposits. In order to gain access to these, a certificate of inheritance or a will with a court opening protocol is required. However, debts are also part of the estate. In order to determine the estate completely, the debts and the assets should be compared and reconciled.

• Pay the debts of the estate

  The debts of the estate can be paid by the heirs of the community of heirs from the estate. It is not uncommon for items belonging to the estate to have to be sold for this purpose, such as real estate or land.

• The gifts and donations take into account

  If an heir has received gifts or donations from the deceased during his or her lifetime, these may be subject to equalisation. The gifts that are subject to equalisation increase the estate arithmetically and are deducted from the inheritance quota of the donee. Each heir can request information from the others about such gifts so that they are correctly taken into account.

• Sell the indivisible items

  If a true division is not possible for certain items, such as a property in the community of heirs, the heirs may have to sell this item or have it foreclosed. In order to do this, a realistic sales price must first be determined. If no agreement can be reached here, a partition auction can be initiated by one of the heirs.

• Distribute the divisible objects

  The inheritance is to be divided in the first place in nature by the heirs. Each heir can therefore take items for himself from the estate in agreement with the other heirs. Money and securities can be divided by the community of heirs according to their respective shares.

• The care services take into account

  If a child has cared for the deceased parent without consideration during his or her lifetime, compensation may be claimed for this. This must be appropriate to the duration, scope and value of the estate.

• The notary helps

  If an agreement cannot be reached, a notary can be called in by the community of heirs. This mediates between the heirs in order to reach an agreement as quickly as possible. However, it should be borne in mind that such assistance is associated with some costs.

• Consider the tax office

  Inheritance tax is always payable on an inheritance. However, some things from the estate can be deducted from the tax, such as the costs of the funeral or fees for the opening of the will.

The legal succession – this is how you inherit according to law

Legal succession regulates both the order of heirs and the individual amounts that are inherited. First the closest relatives, such as children and grandchildren, inherit and then the more distant relatives, such as nephews and nieces. Closer relatives generally exclude the more distant relatives from inheritance. The proportion to which the individual heirs inherit is documented in the certificate of inheritance. The legal succession is based on the Parantel – or order system. It divides the relatives into different orders. Accordingly, children and grandchildren of the deceased belong to the first order. Parents, siblings, nieces and nephews of the testator are assigned to the second order. The third order includes grandparents, uncles and aunts as well as cousins of the deceased. Spouses and registered partners are not considered relatives, but have the right of inheritance as spouses. This gives them a special status and limits the right of relatives to inherit. Relatives of the preceding order always exclude relatives of a subsequent order from the succession.

Learn more about intestate succession!

The partition auction in communities of heirs – the costs and the procedure

Objects such as real estate or land often give rise to disputes in communities of heirs. The ideas of how to proceed with the common property are too different and the participants cannot agree. Every heir has the right to demand a partition of the community of heirs at any time and thus to force its dissolution. In such a case, a partition auction can be the last resort to settle the disputes and dissolve the community of heirs.

Heirs without a will – depending on the degree of relationship

Although the spouse or registered partner is not considered a relative in the legal succession, he or she has a special position. If the deceased leaves both a spouse and children, the spouse inherits half of the estate and the children the other half. However, if there are more than three children, the spouse receives only one-fourth and the children divide the remainder among themselves. If there are only second-order relatives or grandparents, the spouse receives half of the estate and the second- and third-order relatives share the other half. If there are no relatives of the first, second or third order, the spouse inherits everything.

Heirs of the first order – children and grandchildren

The first order includes the children and grandchildren of the deceased. Non-marital children born after 1 July 1949 are also entitled to inherit. If a child of the deceased and the spouse are living at the time of death, both inherit half. If several children are living, the inheritance is divided between them and the spouse. If children of the deceased are already deceased, the grandchildren inherit.
Explained by example: If the deceased leaves his mother, his spouse, 2 children with two grandchildren each and a deceased child with one grandchild, the following succession results. The mother is not entitled to inherit because she belongs to the second order and there are heirs of the first order. The spouse and the two living children inherit in equal shares. The grandchild of the deceased child takes the place of the parent in the succession and thus inherits in equal shares with the two living children and the spouse. The grandchildren of the living children also do not inherit.

Heirs of the second order – parents and siblings

If there are no children or grandchildren, the heirs of the second order. The second order includes parents, siblings, nephews and nieces. If both parents of the deceased are alive at the time of death, the estate is divided in half. However, if one parent is already deceased, the descendants of this parent, i.e. siblings or nieces and nephews of the deceased, take their place.
Explained by example: The testator leaves his mother, a sister with two children, a nephew of the deceased brother and a half-sister from the father’s second marriage. The inheritance is therefore distributed as follows: One half of the estate goes to the mother’s line and the other to the father’s line. Since the mother is still alive, she receives half of the inheritance. Since the father is already deceased, his inheritance falls to his children. In this case, to the sister, the deceased brother and thus to the nephew of the deceased and to the half-sister from the second marriage. These three divide the other half of the inheritance. The children of the still living sister do not inherit.

Heirs third order – grandparents and aunts / uncles

If the deceased leaves only heirs of the third order, the inheritance is divided as follows. The inheritance of the deceased falls to the grandparents and their descendants. If a grandparent has already died, the inheritance also falls to the aunts, uncles, cousins of the deceased.
Explained by example: If the testator leaves only his grandmother and an aunt with two children, they inherit as follows. The grandmother receives half of the estate. Since the grandfather is already deceased, his descendants inherit his share. In this case, therefore, the aunt inherits the other half of the estate. However, the two children do not inherit.

Inherit debts – form and deadlines

To disclaim the inheritance requires some rules. Simply notifying the family or simply having no reaction to the inheritance is not enough. The form is very crucial. The heir must make a disclaimer to the probate court either in the form of a transcript or in a publicly notarized form. However, a simple letter is not sufficient. A personal appearance before the probate court is also possible. There, the heir explains his or her request and a judicial officer records it in writing. The local court in whose district the deceased had his or her last residence is responsible in each case. However, not only the form is very decisive for the success of the disclaimer, but also the content and the deadline of the declaration. This must clearly state why the inheritance does not want to be accepted. The reasons should be clearly listed. These may include, for example, that the estate consists mainly of debts.

The declaration is subject to a so-called six-week period. If the inheritance does not wish to be accepted, the relevant declaration must be submitted to the competent probate court within six weeks, otherwise the inheritance is deemed to have been accepted.
Generally speaking, the probate court does not have a duty to bring. The heirs are only notified of the inheritance if there is a will or if they succeed to the inheritance because, for example, someone else has already disclaimed the inheritance. In all other cases, the heirs are assumed to know whether or not they inherit anything from a deceased family member.

More on inheriting debt!

The inheritance – the deadlines, costs and most important information

The inheritance does not always hold only good things in store for the descendants. Even if many dream of riches and expensive jewellery, debts or dilapidated real estate can also be part of the estate. In such cases, it is possible to disclaim the inheritance within a certain period of time and in accordance with certain criteria.

To disclaim the inheritance requires some rules. Simply notifying the family or simply having no reaction to the inheritance is not enough. The form is very crucial. The heir must make a disclaimer to the probate court either in the form of a transcript or in a publicly notarized form. However, a simple letter is not sufficient. A personal appearance before the probate court is also possible. There, the heir explains his or her request and a judicial officer records it in writing. The local court in whose district the deceased had his or her last residence is responsible. If the deceased is German, but had his residence abroad, the Berlin-Schöneberg Local Court is responsible. In Baden-Württemberg there is a special regulation. In this federal state, the state notary’s office is your contact.

However, not only the form is very decisive for the success of the disclaimer, but also the content and the deadline of the declaration. This must have clearly listed why the inheritance does not want to be accepted. The reasons should be clearly listed. These may include, for example, that the estate consists mainly of debts. The declaration is subject to a so-called six-week period. If the heir does not wish to accept the inheritance, the relevant declaration must be submitted to the competent probate court within six weeks, otherwise the inheritance is deemed to have been accepted. The cut-off date is assumed to be the day on which you learned of the inheritance, which usually coincides with the day of death. The deadline is only extended in certain exceptional cases. For example, if the deceased or the heir himself is abroad at the time of death, the six-week deadline can be postponed.