Double success at Vienna Higher Regional Court | Defective general refurbishment - liability trap for property management companies

The developer assured the buyers that a Wilhelminian-style house would be brought up to the state of the art. However, the promised refurbishment did not take place,   because the developer hardly refurbished the general parts of the property in particular.

In the proceedings, which lasted several years, the developer was ultimately ordered by the Vienna Higher Regional Court (GZ 5 R 169/23v of 29.12.2023) to carry out the renovation of the general parts of the property.

In such cases, property developers often instruct property management companies not to enter a reserve. This is despite the fact that some buyers have already acquired co-ownership and the buyers have also been noted in the land register in accordance with Section 40 (2) WEG. In this way, property developers want to avoid having to bear any management costs during the sale of the apartments. In such cases, a significant liability trap opens up for property management companies.

In addition to the proceedings against the property developer, a lawsuit was also filed against the property management company because it had not collected any or too little reserves over several years.

In a recent decision, the Vienna Higher Regional Court (GZ 5 R 138/24m of 30.12.2024) followed our reasoning and found the property management company guilty of paying the entire reserve that was not collected or collected too little, plus interest and costs, to the community of owners.

The property management argued above all that the developer was ordered to make up for the refurbishment anyway due to the successful proceedings. Here too, the Vienna Higher Regional Court followed our argument and ruled that the reserve had a different purpose. Even in the case of a renovated Wilhelminian-style house, it is necessary to set aside a certain minimum amount as the reserve also serves a precautionary purpose. Incidentally, it has already become apparent in the course of the supposed refurbishment of the general parts that the refurbishment is not being carried out properly.

For the buyers, this is of course pleasing in two respects: on the one hand, the property developer has to catch up on the outstanding renovation work. On the other hand, the former property management company has to make a significant one-off payment into the reserve.

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