November 19, 2022, 6:37 am | Read time: 3 minutes
The Federal Court of Justice has clarified a fundamental question for homeowners’ associations. It concerns the possibility for condominium associations to take legal action over defects.
Despite the amendment to the Condominium Act, condominium associations can take legal action over defects. The Federal Court of Justice (BGH) has now clarified this with a ruling on a case from Munich (Case No. V ZR 213/21). According to Bettina Brückner, the presiding judge of the Fifth Civil Senate, the clarification was “extremely important” for practice. Julia Wagner from the Homeowners’ Association Haus & Grund called it the right outcome. It is good that this is now regulated.
Amendment to the Condominium Act 2020
The background to the question is that the version of the Condominium Act in effect until the end of November 2020 included a paragraph that allowed homeowners’ associations to adopt and enforce defect rights from individual purchase or work contracts of buyers through a resolution. However, this “communalization by resolution” provision was eliminated without replacement in a legislative reform. Experts have drawn different conclusions from this so far.
“If one were to take the law literally, there would now only be two possibilities,” said Judge Brückner. That only homeowners’ associations may take action against defects in communal property seems impractical, as it involves individually acquired rights. Conversely, a condominium owner who independently pursues defect rectification generally acts in the interest of all other condominium owners. The BGH has therefore rejected overly narrow interpretations, Brückner emphasized. Essentially, the previous flexible practice remains in place.
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In the specific case, a real estate company sold apartments in a building complex in Munich. During an investigation of the soil on a filled-in gravel pit, it was found that the property is contaminated with benzo(a)pyrene. The substance is considered toxic, environmentally hazardous, and carcinogenic. According to reports, the courtyard includes children’s play areas, among other things.
Owners want to assert claims collectively
The new condominium owners want the company to remediate the property. Furthermore, they want the contamination to be recognized as a defect. In owners’ meetings in 2014 and 2015, they decided by majority to assert the “claims of the condominium owners’ association” in court. Then came the legislative reform.
Most recently, the Munich Higher Regional Court ordered the company a year ago to remove the contamination–but only where the value of 0.5 milligrams of benzo(a)pyrene per kilogram of soil is exceeded. The BGH has now partially overturned this ruling and referred the case back for a new hearing. So far, only test values are known, which do not yet justify the assumption of a material defect, Brückner explained. A more detailed investigation is needed.
After the reform of the Condominium Act, the BGH decided in 2021 what happens with proceedings that individual condominium owners had initiated before the amendment: They may continue their proceedings–as long as the homeowners’ association does not actively intervene and notify the respective court in writing.
With material from dpa