Changing managers
Your property manager has been sold: does the association have a special right to terminate?
Short answer
There is no special termination right – and you don’t need one. Since 2020, owners can dismiss their manager at any time; the contract then ends within six months. In a merger or conversion, appointment and contract pass to the new company. The takeover alone is not an important reason, but the bar for one is low.
Switching pack for your owners’ meeting Request the pack
A letter with a new logo
This is how it usually starts: a circular announces that your property manager is becoming “part of a strong group”. Nothing will change for you. A few months later comes a new logo, a new phone number, a new contact person – and sometimes a new price.
Takeovers are common in the property management industry right now. Many owners are retiring, and larger groups are buying up portfolios. That doesn’t have to be bad. But you should know what rights your owners’ association has.
How the sale happened makes the difference
Share sale. The shareholders sell their shares in the management company (GmbH). Your contractual partner remains the same company; it just has new owners. Legally, nothing changes for the association – neither the appointment nor the contract.
Merger or conversion. The previous manager is merged into another company or hived down from a sole proprietorship into a GmbH. Here, the Federal Court of Justice has ruled that the appointment and the management contract pass to the new legal entity (BGH, judgment of 21 February 2014, V ZR 164/13; for a hive-down, BGH, judgment of 2 July 2021, V ZR 201/20). You don’t need to agree to the takeover for it to take effect.
Sale of client portfolios. The old manager “transfers” its buildings by contract to another company, without any conversion under corporate law. The role of manager cannot simply be handed to a third party by contract, though. In this case, the association must pass a resolution appointing the new company. Without that resolution, the new company is working for your building without an appointment.
If in doubt, ask in writing which scenario applies. The answer determines who your contractual partner is.
Is there a special right to terminate?
German law has no express special termination right for a sale. But you don’t need one. Since December 2020, the association can dismiss its manager at any time, without giving reasons (§ 26(3) WEG). The contract then ends no later than six months afterwards.
So the only interesting question is: does the contract end immediately, or does the fee keep running for up to six months? Termination without notice requires an important reason (§ 626 BGB). According to the Federal Court of Justice, the sale alone isn’t one. However, the bar for circumstances that make continued cooperation unreasonable is low – the court said so expressly.
In practice, this means that if something noticeably gets worse after the takeover, your chances are good. For example, if
your previous contact person leaves and nobody knows your building,
requests are answered much more slowly or not at all,
support is moved to a distant head office,
prices or extra fees are raised unilaterally,
accounts, logins or records are changed without consultation.
Document such changes with dates. More on termination without notice and the resolution process is in our article on dismissing your property manager.
Questions to ask the new owner
Before thinking about a change, an open conversation is worthwhile. Some takeovers really do bring better software, more staff and more cover during holidays. Ask specifically:
Who is our contact person from now on, and who covers for them?
Does our association’s account stay unchanged, and who holds the power of attorney?
Will the fee or extra fees change – now or at the next renewal?
Where will our records and the owners’ data be stored in future?
When will the next annual statement arrive, and who will prepare it?
If prices are set to rise, our article Property manager fees increased – is that allowed? helps you assess it.
The easiest exit: don’t reappoint
Managers are only ever appointed for a fixed term, at most five years. If your appointment expires in the coming months anyway, the simplest route is often just not to reappoint the manager and to elect a new one in good time. There is no run-off fee and no need to justify an important reason. When the right moment is, is explained in our article on the term of the management contract.
At Ravenica, you talk to people who know your building – and that is how it should stay. If your previous manager has been taken over and it no longer feels right, you’ll find an overview of the process on our page about changing your property manager.
Frequently asked questions
Does our management contract pass automatically to the buyer?
It depends on how the sale happened. If only the shares in the management company are sold, your contractual partner remains the same company – legally, nothing changes. In a merger or hive-down, the Federal Court of Justice holds that the appointment and contract pass to the new legal entity. A mere sale of client portfolios without your consent is not enough.
Is the takeover an important reason for termination without notice?
Not on its own. But the Federal Court of Justice has ruled that the bar for circumstances making continued management unreasonable is low (judgment of 21 February 2014, V ZR 164/13). If, for example, your familiar contact leaves, service gets noticeably worse or prices rise, that may be enough.
What does it cost us to change after the sale?
Without an important reason, the contract ends no later than six months after the dismissal; until then, the fee may continue, minus what the manager saves. With an important reason, it ends immediately. If your appointment expires soon anyway, the cheapest route is often simply not to reappoint.
About the author
Julius Launhardt
Founder, owner & managing director of Ravenica · Dipl.-Ing. (TUM)
Graduate engineer (Dipl.-Ing.) and M.Sc. in Management from the Technical University of Munich, IHK-certified property manager, TÜV-certified sustainability manager and long-standing member of the volunteer fire brigade. As founder and managing director of Ravenica in Nuremberg, he is responsible for day-to-day business, processes and long-term strategy. Knows building services, refurbishments, energy and inheritance cases first-hand, and owns several properties himself.
More about Julius Launhardt