Housing Law Update - International Law Office

Summary
Tenancy Act
Recommendation
Condominium Act
Conclusion

Summary

After the 1994 Third Housing Law Amendment Act, the 1997 Amendment to the Tenancy Act and the Condominium Act, the Austrian parliament passed the 1999 Housing Law Amendment (Wohnrechtsnovelle 1999), which was published in the Federal Law Gazette No. 147/1999, dated August 13 1999. The 1999 Housing Law Amendment has changed provisions in the Charitable Building Associations Act (Wohnungsgemeinnützigkeitsgesetz), the Tenancy Act, the Condominium Act and other acts related thereto. Some of the changes should be taken care of when drafting lease agreements and/or condominium purchase contracts for business and office premises.

Tenancy Act

This act is applicable in its full scope to all lease agreements for residential and business premises in so called old buildings. Especially in Vienna there is still a large number of such buildings that are used for office and business purposes, which fall entirely under the ambit of the Tenancy Act.

Until now the act had mandatory provisions, that the service charge had to be distributed among the respective tenants of the same building according to their share of the rented areas. The service charge includes:

• the fee for the provision of water for the entire building;
  
  
• the chimney sweep and sewerage cleaning fee;
  
  
• the costs for pest control;
  
  
• the costs for electricity of the general parts of the building;
  
  
• the reasonable costs of fire and general liability insurance or an insurance against water damages including corrosion damages;
  
  
• the costs for the administration and facility management of the building.

Due to the amendment of the act, which will enter into force on January 1 2000, all consumption dependent costs like water and energy can either be calculated based on the rented area, or based on the actual consumption of the respective tenant. The condition for the change of the calculation method is, that adequate meters are provided - for reasonable economic costs - for every flat and that the landlord and a majority of at least 2/3 of the tenants (calculated according to the total amount of the rented area) has agreed to the consumption based calculation method.

Recommendation

The calculation of the service charge is a constant source of conflict, not only amongst the tenants, but also between the landlord and the tenant. During the renovation and upgrading of old buildings and the following rental of flats, it is recommended to include the consumption based calculation of energy and water in the construction and lease agreements with the future tenants in order to prevent disputes. The service charge for buildings, which do not fall under the scope of the Tenancy Act (so called 'new buildings'), is freely negotiable.

Condominium Act

The creation of condominium property is not solely possible with residential premises, but, of course, also with business and office premises. In the past legal disputes repeatedly arose between the owners of condominiums on the one hand and the manager of the property on the other hand, who is the majority owner of the property.

Since matters in the course of the ordinary management are decided by simple majority vote of the respective condominium owners, minority condominium owners can easily be outvoted by the majority owner of the property and can this way be excluded from the ordinary management of the building.

With the recent amendment to the Condominium Act an outvoted condominium owner has the right to seek court protection within a limited time against measures taken in the course of the ordinary management, provided that the outvoted owner is unreasonably affected by measures of the majority owner.

Another new provision provides that the association of all condominium owners of a property (the so-called 'owners association') can terminate lease agreements for parking lots which are not held under condominium ownership. This can be done without having regard to existing contracts as soon as the need of another condominium owner arises. A lease agreement over a parking lot with a condominium owner can only be terminated, if the respective owner has rented more than one parking space and the need of another condominium owner (who does not have a parking lot) is more justified.

Conclusion

The amendment of the Condominium Act strengthens the position of the minority condominium owner with respect to unreasonable actions of the majority owner.

For further information on this topic please contact Dr. Egon Engin-Deniz at CMS Strommer Reich-Rohrwig Karasek Hainz by telephone (+43 1 404 43 0) or by fax (+43 1 405 92 00) or by e-mail (Egon.Engin-Deniz@cmslegal.at).
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