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Real estate ownership: Obligation to renovate for co-owners of junk properties

In a ruling dated October 15, 2021 (V ZR 255/20), the German Federal Court of Justice (BGH) supported co-owners of poorly maintained properties who are willing to renovate their property and decided that the community of owners has a duty to renovate the property even if the costs exceed the market value of the property.

The subject of the ruling was an aging parking garage in Augsburg's city center, which had been largely out of use for years due to its considerable need for renovation - with the exception of three floors owned by the later plaintiff, who rented them out to an adjacent hotel. After the authorities complained about non-compliance with minimum fire protection requirements, the co-owners' association decided to impose a comprehensive ban on the use of the parking garage, invoking Section 22 of the German Condominium Act (WEG). According to this, the reconstruction of a building cannot be demanded if it has been "destroyed to more than half of its value". The plaintiff, who was outvoted in this decision, defended itself against this decision.

With success: The BGH shared her opinion that the legislator had not regulated this case. This is because a backlog of renovation work for which the community is responsible is not the same as a one-off event, which is what is meant by "destruction". Unlike in the case of destruction, there is no possibility of comparing the value of the property "before/after" in the case of creeping maintenance deficits.

Conclusion: The postponement of necessary building repairs can relieve the individual co-owners in the short term. In the long term, however, this can take its toll if only one co-owner pushes ahead with the renovation. The hopes of those co-owners who believed that the refurbishment obligation could be "sat out" simply by overbearingly over-aging the property have in any case been disappointed by the ruling. It remains to be seen whether a wave of redevelopment will now start rolling as a result of this ruling.

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