Common Property versus Separate Property: Which Parts Belong to Whom?

Since this article was first published, German condominium law has undergone a fundamental reform. The German Condominium Modernisation Act, which came into force on 1 December 2020, has clarified, in particular, the distinction between and management of separate property and common property.

The previous statement that there are no precise statutory provisions governing what may be classified as separate property must therefore be viewed in a more nuanced way today. Section 5 of the German Condominium Act expressly defines which parts of a building may constitute separate property. Structural elements that are necessary for the existence or safety of the building, as well as facilities used jointly, must remain common property.

Another new development is that, under certain conditions, separate property may also extend to areas of land located outside the building. These may include terraces, garden areas or parking spaces, provided that they are clearly defined in the declaration of division and the partition plan. Under the law, outdoor parking spaces are treated in the same way as enclosed spaces and may therefore be designated as separate property.

There is also greater flexibility regarding the allocation of costs. The condominium owners’ association may adopt different allocation formulas for individual costs or categories of costs. The former “maintenance reserve” is now referred to in the legislation as the “reserve for preservation” and continues to be used to finance future measures relating to the common property. Buyers should therefore carefully review not only the declaration of division but also the community rules, the collection of resolutions, the financial plan and the amount held in the reserve for preservation.

In every property with multiple owners, a distinction is made between common property and separate property. While the parts of the building and areas used jointly must be clearly defined, the term separate property refers to those areas used exclusively by an individual owner, such as an apartment occupied solely by that owner.

In the case of common property, the responsibilities of the individual parties must be clearly defined in order to avoid potential disputes. This applies in particular to questions regarding the payment of costs, repairs and maintenance.

For every property divided among multiple owners, there is therefore a declaration of division, community rules and a partition plan. These documents specify for the land registry office which parts of the property are considered separate property and which are considered common property. The declaration of division initially states that a property is to be divided into several ownership shares. This allows each unit to be sold and encumbered separately. The partition plan is a floor-plan drawing of the property in which the individual residential units are identified. It shows the location and size of the respective separate and common property. Each separate property unit is entered individually in the land register.

There are no precise statutory provisions stipulating what must be classified as separate property. Nevertheless, separate property is defined in the declaration of division. Anything that is not legally required to be classified as common property may therefore be designated as separate property.

In general, all structural components of the building, including structural elements forming part of the building’s external appearance and the land itself, constitute common property. For premises to qualify as separate property, they must also be physically separated from the remainder of the property.

Retail units, office premises or garage parking spaces that meet this requirement but are not used for residential purposes are referred to as non-residential separate property. Ultimately, where these areas are assigned to an individual owner, they may be regarded as that owner’s separate property.

When purchasing an apartment, the buyer therefore acquires not only the separate property itself but also a share of the common property. Buyers should consequently find out in advance how much money is held in the property’s maintenance reserve. Every owner is required to contribute to this reserve, which is used to cover costs relating to the common property. Depending on the property’s renovation requirements and the applicable contributions, the amount payable may vary considerably.

To ensure that they are properly protected before signing a contract, foreign buyers who do not have sufficient knowledge of German should always use the services of an interpreter. The interpreter may also attend the notarisation appointment and assist the buyers with any legal questions that may arise.

Another option is to authorise a trusted person to sign the contract on the buyer’s behalf. This can help to prevent misunderstandings at an early stage.