Which running costs the buyer of a condominium takes over after the award and how the priority lien, the reserve and the assumption under section 27(3) WEG are treated.
BRANDAUER Rechtsanwälte
Salzburg law firm for real estate, corporate law and civil proceedings
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Anyone who acquires a condominium unit in an Austrian judicial auction joins the owners association and takes on a multi-layered cost position. Outstanding contributions of the association may under certain conditions be satisfied on a preferred basis from the highest bid. Whatever remains uncovered in the distribution can still fall on the buyer.
Bidders, managers and existing co-owners therefore need to separate three levels. First, the conditions of the statutory priority lien under section 27 WEG, especially the time-limited action and the annotation of the action. Second, the ranking in the distribution proceeding under section 216 EO. Third, the assumption of uncovered amounts by the buyer under section 27(3) WEG and the ongoing running costs after the award.
Answer for the specific unit. The result separates arrears, ongoing running costs and special levies.
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Section 27(2) WEG requires action within six months of becoming due and annotation of the action in the land register for the statutory priority lien. Without those steps this priority lien does not exist, and an assumption under section 27(3) WEG cannot be based on that security.
Ask the manager for a written statement of outstanding contributions and special levies. Check in parallel the six-month time-limit from due date and the requirements of the annotation. If either is missed, the priority is lost.
Agree with the manager the cut-off date, ongoing charges and the treatment of uncovered residual amounts. If the highest bid is insufficient for the priority claim, the buyer assumes the balance without credit against the highest bid under section 27(3) WEG.
Request a statement up to the award date and a statement from the award date. Clarify the specific basis of ongoing charges and open special levies under section 32 WEG.
Match the filing with action, annotation of the action and the section 27 WEG evidence. The ranking under section 216(1)(3) EO covers claims from the last five years before the award; anything beyond may fall into a later class or remain uncovered.
Complete the schedule of outstanding contributions and provide the action, annotation and accounting basis. Without these foundations the priority lien does not exist; the claim and the liable debtor must then be examined under the general rules.
Section 27(1) WEG grants the owners association a statutory priority lien on the minimum share and condominium ownership for claims arising from contributions. Section 27(2) WEG makes the lien conditional on bringing the claim by action within six months from the due date and on applying for annotation of the action in the land register.
Anyone seeking to rely on the ranking under section 216(1)(3) EO must therefore file the action and the annotation in good time. Section 216(1)(3) EO covers claims under section 27(1) WEG from the last five years before the award; only within that framework is preferred satisfaction from the highest bid available.
The Austrian Supreme Court has confirmed in the case law reflected in legal principle RS0115386 that the annotation of the action may also take effect against the successful buyer if it is obtained at the right time. It therefore serves both securing the position in the distribution proceeding and against the new condominium owner.
Section 27(3) WEG provides that association claims under section 27(1) WEG which are not fully satisfied in the distribution of the highest bid are assumed by the buyer without credit against the highest bid. Economically this creates an additional burden alongside the bid amount.
This assumption is not a mere continuation of ongoing contributions but the takeover of the unpaid balance of a preferred claim. It applies regardless of whether the buyer caused the underlying costs.
For the bidding decision a claim secured in this way can touch two positions: the preferred deduction from the highest bid and the additional assumption of the uncovered balance. That assumption follows directly from section 27(3) WEG; section 207 EO separately assigns the ongoing burdens attached to the property from the award.
The overview allocates typical cost items to the previous owner, the distribution or the buyer.
| Item | Period before the award | Period from the award |
|---|---|---|
| Ongoing costs under section 32 WEG | Contribution duty of the previous owner based on the actual charge | Contribution duty of the buyer based on charges arising from the award |
| Arrears within the scope of section 27 WEG | Preferred satisfaction from the highest bid within the limits of section 216(1)(3) EO | Assumption of the uncovered balance by the buyer under section 27(3) WEG |
| Special levy from a resolution | Due date and basis of the claim to be examined | A due date after the award binds the buyer as new owner insofar as the claim is directed at the buyer |
| Maintenance reserve | Common property of the owners association under section 31 WEG | Remains common property; no individual reserve share is paid out or transferred with the unit |
| Claims older than the ranking under section 216(1)(3) EO | Lose the ranking and cannot be satisfied in that class from the highest bid | May still fall on the buyer as assumption under section 27(3) WEG where the lien exists |
The precise allocation follows the distribution order, the manager’s accounts and the review of section 27 WEG requirements.
Section 31 WEG treats the maintenance reserve as common property of the owners association. It is not an individual share of a specific condominium owner and is not paid out on change of ownership.
The buyer benefits like any condominium owner from the existing reserve but has not acquired a distributable personal reserve share. For the bid calculation the reserve is a structural factor of the association rather than a separately transferable asset of the unit.
Managers should promptly provide the buyer with the latest annual statement and the reserve balance of the association. That gives the buyer clarity over the financial starting position of the association and enables sensible reading of charges.
For satisfaction from the highest bid, filing in the distribution proceeding is necessary. Section 210 EO governs deadline and content; section 209 EO provides the procedural framework of the distribution hearing. Section 216 EO orders the classes and the ranking.
For an association claim, additional evidence that the section 27 WEG requirements are met is needed. Without timely action and annotation the priority lien does not exist; the claim can then rely neither on the preferred rank nor on the linked assumption under section 27(3) WEG.
For the buyer the filing is economically important. If the arrears are correctly categorised and fully satisfied from the highest bid, the unit is economically free; if only partly satisfied, section 27(3) WEG applies to the remainder.
After the award the manager should prepare a statement up to the award date and a statement from the award date. Both statements form the basis for further charges, which are allocated under section 32 WEG.
Whether a charge for a specific period falls on the previous owner or the buyer depends on the basis of the claim, the due date and the accounting basis. A mere reference to the award date does not replace this review; amounts invoiced after the award can still relate substantively to a period before the award and have their basis there.
For unclear items a written query to the manager referring to the basis of the claim and the reference period is helpful. That prevents the previous owner’s balance and the buyer’s balance from being mixed unnoticed.
The buyer takes on the future contribution duty as new condominium owner. In addition the buyer can bear open priority arrears under section 27(3) WEG that were not covered by the highest bid.
Whether a personal claim against the previous owner remains alongside must be examined separately by reference to the claim, the distribution order and the legal basis of the assumption. The bid calculation must not assume that recourse against the previous owner will offset the amount assumed by the buyer.
From the award, the buyer also becomes a member of the association and bears the ongoing running costs pro rata. At the same time the buyer benefits from any existing reserve as common property.
The sequence separates review tasks, filing and ongoing administration.
Arrears, actions, annotations and reserve balance are requested from the manager in writing.
Preferred deduction and possible assumption under section 27(3) WEG are reflected in the bid budget.
The award date and transfer moment are aligned with manager and association.
Action, annotation and evidence support filing in the distribution proceeding.
The distribution order allocates preferred claims from the highest bid and indicates uncovered balances.
Charges from the award are compared with the statement and section 32 WEG allocation.
Filing, ranking and objection in the distribution proceeding.
Value, fixtures and valuation date before bidding.
Process, roles and documents from the bidder perspective.
Combine court file, property records, financing and transfer.
Financing, transaction costs and reserve in one plan.
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