Regional Court Cologne, 26 August 2010, Ref.: 29 S 177/09
The rights and obligations of a property management company are governed by the Act on Residential Property and Permanent Residential Rights ("WEG"). These regulations are mandatory and may therefore not be restricted by the respective community of owners.
The specific authorisations and obligations of the administrator vis-à-vis the owners are regulated in Section 27 WEG.
Accordingly, the administrator may and must
* Implement resolutions of the condominium owners and ensure compliance with the house rules.
* ensure proper maintenance and repair of property.
* in urgent cases, take other measures necessary to maintain the common property.
* manage the common funds.
If the property manager culpably fails to fulfil these obligations intentionally or negligently or does so poorly, he/she is obliged to compensate for the damage incurred in accordance with Section 280 (1) BGB. If the property manager fulfils the duties too late or not as owed, he is liable for damages either in accordance with §§ 280 Para. 2, 286 BGB or § 281 Para. 1 BGB. The property manager is also responsible for the fault of third parties under Section 278 BGB.
In addition to contractual liability, tortious liability under Sections 823 et seq. BGB if the property manager is guilty of a breach of the duty to maintain road safety (e.g. if the property manager has not gritted the road in icy conditions).
The Cologne Regional Court now had to deal with a special case of the property manager's liability in the above-mentioned judgement.
Facts and initial situation
The plaintiff was the former administrator of the defendant, a homeowners' association. He had opened a bank account in his name, which was used exclusively for the defendant's payment transactions. The defendant decided to renovate the common property, whereby the financing was to come from the maintenance reserve. However, when the supplementary claims of a commissioned construction company quadrupled the renovation costs, the plaintiff informed the defendant about the insufficient reserves. In order to settle the bills, the plaintiff paid them from his own funds.
Action before the local court
As a result of these payments, the plaintiff sued the defendant before the Siegburg Local Court and demanded indemnification from the liabilities. The local court ruled in favour of the claim in its entirety. It found that the plaintiff was acting on behalf of the defendant and was therefore entitled to indemnification. The defendant was dissatisfied with this decision and lodged an appeal.
Decision of the Regional Court of Cologne
The Cologne Regional Court dealt with the defendant's appeal and rejected the district court's reasoning. The court based its decision on the fact that the plaintiff, as administrator, was not authorised to take out loans, especially not without a corresponding resolution. Although the loan taken out by him without a resolution could be subsequently authorised in accordance with Section 177 BGB, this had not been done in this case. The plaintiff was therefore liable to the defendant as an unauthorised representative.
Requirements for a claim for compensation
The Regional Court further stated that the plaintiff could only assert a claim for reimbursement of his expenses if the borrowing had complied with the requirements of proper administration in accordance with Sections 675 and 670 BGB. The court did not consider these requirements to be met in this case. Furthermore, the plaintiff could only assert recourse claims under certain conditions in accordance with Sections 677, 683 BGB. The claim was ultimately dismissed as the plaintiff was not acting within the scope of his contractual powers in this matter.
Source: Cologne Regional Court
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