Service charge, special levy and maintenance reserve when selling a flat

Service charge: what it is and who owes it

The service charge is the monthly advance that every flat owner pays to the association. The Residential Property Act (WEG) sets out the basis: every flat owner bears the costs of the association in proportion to their share (Section 16 para. 2 WEG). The owners resolve on the amount of the advances and of the payments into the reserve; for this the property manager draws up a budget for each calendar year (Section 28 para. 1 WEG). The owners can also resolve when the amounts become due (Section 28 para. 3 WEG).

The creditor is the association of flat owners itself. It can acquire rights, sue and be sued (Section 9a para. 1 WEG). Towards it, what matters is who is a member at the relevant time, i.e. who is registered as owner in the land register.

Two key dates: handover and land register

When a flat is sold, two dates almost always fall apart.

• Handover (transfer of possession): The buyer receives the keys, usually shortly after the purchase price has been paid. From handover, the buyer is entitled to the benefits and bears the charges of the property (Section 446 BGB). Purchase agreements therefore link the service charge, property tax and insurance between seller and buyer to this day.
• Transfer of ownership: The buyer only becomes the owner on entry in the land register (Section 873 BGB). This can be several weeks or months after handover.

For the association, the second date is what counts in principle. Until the transfer, the property manager therefore usually continues to claim the service charge from the seller, even though the buyer is already living in the flat. What the seller pays for this period is reimbursed by the buyer if the agreement shifts the charges to the buyer from handover. How handover and transfer work at the notary is described in our article Notary appointment and land register.

Special levy resolved but not yet due

A special levy is a one-off payment with which the association finances a larger expense, such as a new roof or heating system. There is often a long period between the resolution and the payment. That is exactly what makes it tricky in a sale.

In its judgment of 15 December 2017 (V ZR 257/16), the Federal Court of Justice made two statements on this. First, the buyer of a flat is liable for a special levy that becomes due after the change of ownership, even if it was resolved before the change of ownership. Second, shares of a special levy only become due when the property manager calls them in, not already with the resolution, unless the resolution expressly provides otherwise. By contrast, according to the same case law the buyer is not liable for amounts that were already resolved and due before the purchase. The judgment was still based on the version of the WEG before the reform by the Residential Property Modernisation Act.

In the judgment itself, the Federal Court of Justice points out that the buyer can protect against this risk through the purchase agreement. For you as the seller this means: disclose every resolved special levy, even if not a single euro has been called in yet, and have the agreement state who bears it. Our guide Purchase costs in Berlin also points this out from the buyer's perspective.

Back payment from the annual statement

After the end of the calendar year, the property manager draws up the annual statement. The owners then resolve on calling in additional contributions or adjusting the advances resolved (Section 28 para. 2 WEG). So the vote is no longer on the whole statement, but on the amount to be paid in addition or refunded. In practice this amount is called the settlement balance.

Because the statement for one year is only resolved in the following year, in a sale it often affects both sides: the seller lived there for part of the year, the buyer for the rest. The Federal Court of Justice ruled earlier that the buyer pays additional claims from statements for previous years if the resolution on them was only passed after the buyer acquired ownership (as summarised in judgment V ZR 257/16). Towards the association, the buyer therefore often pays. Whether the buyer can recover part of it from the seller is decided by the purchase agreement. The agreement distributes a credit from the statement by the same logic.

The maintenance reserve stays with the building

Proper management includes building up an appropriate maintenance reserve (Section 19 para. 2 no. 4 WEG). It used to be called the repair reserve. The property manager reports its balance every year in the asset report, together with a list of the association's main assets (Section 28 para. 4 WEG).

The reserve is the property of the association, not of the individual owner. A seller therefore does not receive their notional share. The buyer joins the association as a new member and benefits from what has been saved. The Federal Fiscal Court expressly confirmed this for real estate transfer tax: when buying partial ownership, the agreed purchase price is not to be reduced by the proportionate maintenance reserve (judgment of 16 September 2020, II R 49/17). The reserve, the court said, is part of the association's administrative assets, which the individual owners cannot dispose of.

A well-funded reserve is still a selling point. It shows that the next repair will not immediately trigger a special levy. Conversely, buyers ask pointed questions about a thin reserve and a building with a repair backlog.

Worked example with assumptions

All figures and dates are assumed and serve illustration only. The split between seller and buyer follows an assumed contract clause; no law prescribes it this way.

• Service charge (assumption): 380 euros a month, due on the first of each month
• Handover to the buyer (assumption): 1 August 2026; transfer in the land register (assumption): 15 October 2026
• Special levy for the roof (assumption): 48,000 euros for the whole building, resolved in June 2026, called in by the property manager on 1 December 2026; co-ownership share of the flat (assumption): 25/1,000
• Back payment from the annual statement 2026 (assumption): 240 euros, resolved in April 2027
• Maintenance reserve of the building (assumption): 120,000 euros
• Contract clause (assumption): charges pass to the buyer on handover, special levies resolved before the agreement remain with the seller, the result of the statement is split by months

Service charge: For August, September and October the seller is still registered in the land register and pays the association: 3 × 380 euros = 1,140 euros. The buyer reimburses this amount because the buyer bears the charges from handover. From November the buyer pays directly.

Special levy: Share of the flat 48,000 euros × 25/1,000 = 1,200 euros. It is only called in after the transfer, so towards the association the buyer owes it. Under the contract clause, the seller reimburses the buyer the 1,200 euros.

Annual statement: The association claims the 240 euros from the buyer in April 2027. January to July fall to the seller: 240 euros × 7/12 = 140 euros. The buyer's share is 240 euros × 5/12 = 100 euros. The seller reimburses 140 euros.

Result between the parties: The seller reimburses 1,200 euros + 140 euros = 1,340 euros, the buyer reimburses 1,140 euros. On balance the seller pays 200 euros to the buyer. Without a contract clause on the special levy, the buyer would be left with 1,200 euros.

Reserve: Notionally, 120,000 euros × 25/1,000 = 3,000 euros relate to the flat. This amount stays with the association and neither flows back to the seller nor reduces the buyer's real estate transfer tax.

Documents for buyers

Buyers and lending banks scrutinise the state of the association closely today. As an owner you can demand access to the management documents from the association (Section 18 para. 4 WEG). Request the following from the property manager in good time:

• Minutes of the owners' meetings of recent years, so that resolved measures and disputes are visible.
• Collection of resolutions: The property manager must keep it (Section 24 paras. 7 and 8 WEG). It contains the wording of the resolutions and court decisions, numbered consecutively, and notes challenges and revocations.
• Budget for the current year with the current service charge (Section 28 para. 1 WEG).
• Annual statements of recent years (Section 28 para. 2 WEG).
• Asset report showing the balance of the maintenance reserve (Section 28 para. 4 WEG).
• Declaration of division with community rules, which set out the cost allocation and any requirement for consent to a sale.
• Confirmation from the property manager that there are no service charge arrears, and a list of resolved special levies not yet called in.

If the declaration of division states that the sale requires the consent of other owners or a third party, usually the property manager, this counts as an agreed restriction on disposal (Section 12 para. 1 WEG). Consent may only be refused for good cause (Section 12 para. 2 WEG). The notary obtains it; allow some time for this. Further documents for selling a flat are listed in our guide Selling property in Berlin, and for let flats in the article Selling a let flat in Berlin.

What belongs in the purchase agreement

• Key date for charges: from when the buyer bears the service charge, property tax and insurance, usually from handover, and that amounts paid until the transfer are reimbursed.
• Special levies: which levies have already been resolved, with amount and call-in date, and who bears them. A rule is also needed for resolutions between signing and transfer.
• Annual statement: how back payments and credits for the year of sale and the previous year are distributed.
• Arrears: the seller's assurance that all service charges due have been paid up to handover.
• Reserve: the balance according to the latest asset report, for information. According to the Federal Fiscal Court judgment, a separate part of the purchase price for the reserve does not lower the real estate transfer tax.

The purchase agreement obliges the seller to hand over the flat and to transfer ownership free from material defects and defects of title, and the buyer to pay the purchase price (Section 433 BGB). Everything else, including the allocation of the association's costs, the parties must agree themselves. A notary drafts the clauses; the figures come from the property manager's documents.

Sources

• Section 9a Residential Property Act (WEG), association of flat owners, joint assets
• Section 12 WEG, restriction on disposal
• Section 16 WEG, benefits and costs
• Section 18 WEG, management and use, right of inspection (para. 4)
• Section 19 WEG, proper management, maintenance reserve (para. 2 no. 4)
• Section 24 WEG, collection of resolutions (paras. 7 and 8)
• Section 28 WEG, budget, annual statement, asset report
• Section 433 BGB, obligations under the purchase agreement
• Section 446 BGB, passing of risk and charges on handover
• Section 873 BGB, agreement and registration
• Federal Court of Justice, judgment of 15 December 2017, V ZR 257/16, buyer's liability for a special levy
• Federal Fiscal Court, judgment of 16 September 2020, II R 49/17, maintenance reserve and real estate transfer tax