Federal Court of Justice - BGH on Apartment Owners Dispute: Costs borne by all
Homeowners frequently take their housing community associations to court over their decisions. If they are successful, the community is often ordered to pay the costs of the lawsuit. The Federal Court of Justice (BGH) in Karlsruhe has now ruled that these lawsuit costs can also be assigned proportionally to the successful homeowners. (Case Az. V ZR 139/23)
In this specific case, three women had successfully challenged a decision of a housing community association at the Rostock District Court in 2021, of which they were members - each owning one of the eight housing units. The losing community then passed on these costs through a special levy on all members - including the three successful plaintiffs. Approximately 800 Euro per housing unit was to be paid.
Process costs as administrative costs
The women contested this levy with another lawsuit. The Rostock District Court dismissed the appeal at first instance, but the Rostock Appellate Court granted it on the appeal of one of the plaintiffs. However, the Federal Court of Justice did not succeed for the women. The Senate declared the appeal to be finally rejected.
The process costs would be considered administrative costs of the community, decided the senate responsible for such cases. They could, unless otherwise agreed, be allocated among the members of the community according to the general cost distribution principle - also to the successful homeowners.
Since the reform of the Apartment Ownership Act in December 2020, lawsuits against decisions of the community are no longer directed against the other apartment owners, but against the community itself. "Thus, costs that the community has been ordered to pay in a lawsuit against a resolution are administrative costs of the community, which all apartment owners, regardless of their position in the proceedings, are required to contribute to," so the Federal Court of Justice.
The association recommends careful resolutions
Although this cost allocation rule may deter potential plaintiffs from a lawsuit in small communities where the costs affect only a few parties, the presiding judge, Bettina Bruckner, pointed out during the judgment that another interpretation of the law would raise additional questions, such as whether members of the community who voted against the contested resolution but did not file a lawsuit themselves, should also be exempted from the process costs.
It cannot be assumed that the legislator overlooked the fact that the new regulation, due to the position of the community of apartment owners in lawsuit proceedings, also covers the costs of the successful plaintiff, so the Senate. The community is free to distribute the costs differently, said Judge Bruckner. But this must be decided by a majority in the community. Since this was not the case in the present legal dispute, the costs had to be distributed as provided.
"This decision was in fact to be expected after the reform of the apartment ownership law on 1 December 2020," said the President of the Owners' Association Haus und Grund, Kai Warnecke. The judgment once again shows that resolutions in a housing community should be prepared and discussed carefully so that they are accepted by all apartment owners. This would prevent many lawsuits.
- Despite their victory in the Rostock District Court, the three women were required to pay a portion of the lawsuit costs due to the Federal Court of Justice's ruling in Karlsruhe.
- The District Court in Mecklenburg-Vorpommern's Rostock decided that process costs can be allocated among community members, including successful plaintiffs.
- Following the Apartment Ownership Act reform in December 2020, lawsuits against housing community decisions are now directed against the community itself, making successful plaintiffs part of its administrative costs.
- In this particular case, the Federal Court of Justice in Germany upheld the Rostock Appellate Court's decision, but dismissed the women's appeal to allocate the lawsuit costs based on their success in the initial trial.
- The successful plaintiffs, who were members of the housing community and owned individual units, were subsequently made liable for a special levy, amounting to approximately 800 Euro per housing unit.
- The Federal Court of Justice declared that the community is free to distribute the lawsuit costs differently, requiring a majority decision in the community to alter the standard cost distribution principle.
