Buying a condominium: correctly assessing service charge, reserve fund and the owners' association's hidden liabilities

Two apartments in the same building, same floor plan, same floor – and yet one is noticeably more valuable than the other. The difference does not lie in the four walls, but in the figures behind them: in the size of the reserve fund, the condition of the common property, and what the owners' assembly has decided in recent years.

Anyone who wants to buy a condominium is actually acquiring two things: the exclusive ownership of the apartment and a share in a community with its own treasury, its own history and often its own backlog of renovation work. This article shows what is important regarding the service charge, reserve fund and owners' association – and how a market value appraisal before purchase prevents you from paying for others' shortcomings.

Buying a condominium: you acquire the owners' association too

A condominium consists of two parts. The separate ownership is the apartment itself – walls, floors, bathrooms, everything behind the apartment door. The Common property refers to everything that is jointly owned: roof, façade, stairwell, underground garage, elevator, load-bearing structural elements, and often the central heating system.

By purchasing the property, you acquire a co-ownership share in this common property – and with it, the proportional obligation to maintain it. A water damage in your apartment is your problem; a damp roof, a faulty elevator, or a garage in need of renovation is the problem of all owners, financed from the reserve fund and monthly service charges. It is precisely here that costs arise which are not disclosed in the property brochure.

What is the apartment worth according to the ImmoWertV?

The market value of a condominium is derived in accordance with the German Ordinance on the Determination of Real Estate Values (ImmoWertV) – for owner-occupied apartments, typically via the sales comparison approach, and for rental investment properties, via the income approach.

The valuation incorporates far more than just location, floor level, and fittings:

• Co-ownership share and exclusive use rights: What exactly is included with the apartment – parking space, cellar, garden share? These rights are stipulated in the declaration of division (Teilungserklärung) and carry their own value.
• Condition of the common property: A backlog of maintenance work on the roof, façade, or underground garage reduces the value of every individual apartment – even those that have been freshly renovated.
• Size of the reserve fund: A well-funded reserve account represents proportional assets that you acquire with the purchase; an empty reserve account in an older building constitutes a built-in special assessment.
• Approved liabilities: Already approved renovations and special assessments act as particular property-specific characteristics that reduce the value.

Here too, the division of roles applies: whether the concrete in the underground garage is attacked or the roof structure is absorbing moisture is clarified by a building expert. As a real estate valuer, I determine the market value according to ImmoWertV and incorporate the condition of the common property, the reserve fund, and approved liabilities as value-relevant factors – the figure with which you negotiate and finance.

Service charge: what it really includes

The service charge is the monthly advance payment to the community of owners. It is not a quality seal: a low service charge often only means that too little is being saved for the reserve fund – the bill will come later as a special assessment. A high service charge, on the other hand, can indicate good provision. What matters is what it actually covers.

For investors, the separation is crucial: Only the allocable portion of the house rent is reimbursed by the tenant via the utility charges. The property manager's remuneration and the contributions to the reserve fund are borne by the owner themselves – they reduce the return and must be included in every income statement.

The reserve fund: a cushion or an illusion?

The Maintenance Reserve Fund – officially since the WEG Reform 2020 Maintenance Reserve Fund – is the community's savings account for major repairs. As a rough rule of thumb, the following applies 7 to 12 EUR per square meter per year in contributions; the older and the worse the condition, the higher the amount.

Looking at the account balance alone is not enough. A reserve fund of 50,000 EUR sounds substantial, but is insufficient for a 40-unit building facing a roof renovation. A reserve fund that is too low is a boomerang: When a major measure is due, a special assessment becomes payable – and the new owner pays for the past oversights.

Chloride damage in the underground garage – costly and invisible

Few building components are as treacherous as the underground garage. In winter, cars bring in meltwater containing road salt; chloride penetrates the concrete and migrates to the steel reinforcement. There, it destroys the protective layer around the steel, causing the reinforcement to begin corroding – often as pitting corrosion, in which the steel dissolves internally without any visible cracks or rust stains on the surface.

Especially in southern Germany, with its long, salt-intensive winters, chloride-induced concrete corrosion is a widespread and underestimated problem. Remediation is complex: depending on the damage pattern, costs range between 70 and 500 EUR per square meter of concrete surface. And because the underground garage is common property, each apartment bears its share – typically via a special assessment.

The stack of documents that decides the purchase

Regarding a condominium, three types of documents reveal more than any viewing. Request them in full before purchasing:

• Declaration of Division and Community Regulations – Division into exclusive and common property, co-ownership shares, exclusive usage rights, and cost distribution.
• Minutes of the owners' meetings for the past three years – complete, including voting results and attachments. These contain disputes, renovation plans, and approved special assessments.
• Financial plan, annual statements, and the current status of the reserve fund – the financial position of the community in figures.

GEG and energy-efficient renovation: a matter for the owners' association

Central heating, roof, and façade are common property – decisions on their energy-efficient renovation are not made by individual owners but by the community via resolution. Costs are distributed according to co-ownership shares and are often financed through special assessments. The Building Modernisation Act, effective from 29 July 2026, has relaxed heating regulations and abolished the 65% requirement for new heating systems. Details and deadlines are provided in the article Buying an older house: value, renovation costs and GEG obligations.

For the apartment buyer, the decisive factor is the overall energy condition of the building – as this determines operating costs and future assessments.

How an appraisal report protects you before purchase

A market value appraisal prior to signing answers the valuation question on a solid basis. Specifically, it provides:

• the market value according to ImmoWertV an objective anchor for price negotiations;
• an assessment of reserves and deferred maintenance of the common property into the value;
• the value-reducing effect of resolved encumbrances such as special assessments or pending measures;
• a solid foundation for financing, equity planning, and negotiations.

For the pure purchase decision, a short-form appraisal; the prices for this are transparently listed under Condensed appraisal report: costs, whereas a full market value appraisal is recommended when the valuation must hold up before a bank, tax office, or court. The page on local property valuation, and specifically for private buyers, the page Real Estate Valuation for Private Individuals the appropriate framework.

Checklist before the purchase decision

Before you submit a binding offer, these points should be clarified:

Those who can honestly answer these six points are buying with open eyes rather than on hope. And if you are unsure about the last point, you should clarify it before the notary appointment – not after.