Condominium owners should receive the annual accounts from their management by 30 June at the latest. The review should not be left solely to the administrative advisory board. Every owner is well advised to check at least their own individual statement carefully. Wohnen im Eigentum (WiE) has compiled the key points to look for during the review and explains what to do if discrepancies or errors arise.
Management companies are legally required to provide condominium owners each year with annual accounts, a budget and an asset report on the management of the jointly owned property. The annual accounts are intended to tell all owners in a condominium owners’ association how the money collected by the condominium owners’ association (WEG) has been used.
Unless the declaration governing the owners’ association or the WEG management agreement provides otherwise, the management must generally submit the annual accounts by 30.06. of the following year at the latest, according to the relevant case law.
Before the annual accounts are discussed at the owners’ meeting, however, the WEG’s administrative advisory board should first review the annual accounts and asset report. This duty is prescribed by the German Condominium Act. “But the individual condominium owners themselves should also take action and check their own statements,” recommends Dr Sandra von Möller, a board member of the Wohnen im Eigentum (WiE) consumer protection association.
Review of the annual accounts by the advisory board: supporting documents, invoices, bank statements and reserves
The administrative advisory board should prepare a written audit report and, if possible, provide it to the condominium owners before the owners’ meeting. The report should contain not only the findings of the review, but also a recommendation on how the condominium owners’ association should proceed and what resolution it should adopt.
The following points are particularly important when the administrative advisory board carries out its review:
- Supporting documents: a fundamental accounting rule is that every payment must be supported by a document.
- Originals: invoices, bank statements and other documents should always be available in their original form and presented as such to the administrative advisory board for its review.
- Bank balances: a quick test of whether the income and expenditure listed in the overall accounts actually correspond to the real account balance at the end of the year is easy to carry out. Add all income to the total opening balances of the bank accounts on 1.1., then deduct all expenditure. If the result matches the total bank balances at the end of the year, the calculation is correct. If it does not balance, the management must explain why.
- Reserves: the administrative advisory board should always check the level of the WEG’s reserves, particularly the maintenance reserve for modernisation and refurbishment, and how they are invested. This information must be included in the asset report required by law. The report should also show how the maintenance reserve has developed.
- Service charge arrears: the advisory board should pay particular attention to whether any service charge arrears are listed in the asset report, including default interest.
Condominium owners: check the cost allocation formula and heating costs in particular
The individual statements allocate the costs and income for the financial year among the individual flats. Each owner must check their own individual statement, for example to ensure that the correct cost allocation formula has been applied and that the requirements for accounting for heating costs have been implemented correctly.
Owners are nevertheless advised to examine the overall accounts as well, because errors in the overall accounts generally also affect the individual statements.
Have errors corrected before the owners’ meeting wherever possible
If owners identify errors in the annual accounts, they should try to have them corrected before a resolution is passed at the owners’ meeting, thereby avoiding a legal challenge to the resolution.
It is advisable first to clarify errors with the administrative advisory board, then notify the management as early as possible before the owners’ meeting and request a correction. This gives the management an opportunity to prepare and distribute corrected statements before the meeting so that the resolution can be based on them.
Resolution at the owners’ meeting on the settlement balance
Since the 2020 reform of the German Condominium Act, condominium owners no longer pass a resolution on the annual accounts as a whole, but only on the condominium owners’ association’s settlement balance, meaning the total of the settlement balances for the individual flats. Each is the difference between the advance service charge payments under the budget and the costs actually incurred during the financial period, resulting in either an additional payment or a refund.
Challenging the resolution
Since the WEG reform, only the resolution on the settlement balance can be challenged, rather than the annual accounts as a whole. The Federal Court of Justice recently clarified that parts of the annual accounts can also be challenged (judgment of 11.4.2025, case no, V ZR 96/24).