In its judgement of 17 July 2026, the Federal Court of Justice resolved a previously contentious issue in the law governing the ownership of flats: a so-called ‘reduction resolution’ may be challenged in isolation, that is, on its own merits. However, the legal interest in seeking redress ceases to exist as soon as the circular resolution based on it has become final (BGH, V ZR 190/25).
What is a resolution to reduce the value?
In principle, resolutions passed by circular resolution in a flat owners’ association must be supported by all owners, i.e. they require unanimity. This is laid down in Section 23(3), first sentence, of the WEG. However, since the 2020 reform of the WEG, there has been an exception: the owners may resolve at a meeting that, for a specific matter, a simple majority of the votes cast will suffice in the subsequent written ballot. This preliminary decision is known as a ‘resolution to lower the quorum’.
The dispute
In a flat owners’ association, the owners decided at a meeting to approve the replacement of the heating system by circular resolution with a simple majority. One owner considered this resolution to be invalid and brought legal proceedings. Whilst the proceedings were still ongoing, the other owners carried out the written resolution process, deciding to commission the replacement of the heating system and to arrange its financing. Both subsequent resolutions became final because no one challenged them in time.
The appeal against the decision to reduce the share price was unsuccessful at every level of the courts, and ultimately before the Federal Court of Justice as well.
An overview of the Federal Court of Justice’s ruling
The Federal Court of Justice (BGH) clarifies that resolutions to reduce the share of common expenses may, in principle, be challenged independently. It justifies this on the basis of the purpose of the one-month period for challenging such resolutions set out in Section 45 of the German Condominium Act (WEG): owners and property managers should be able to obtain legal certainty quickly as to whether a resolution is valid. If the possibility of challenging such a resolution in isolation were denied, errors in the resolution to reduce the share could still be raised in subsequent proceedings against the resolution adopted by circular resolution, which would contradict the principle of finality.
At the same time, the Federal Court of Justice (BGH) makes it clear that a flawed or missing resolution to reduce the contribution does not render the resolution passed by circular resolution null and void. A resolution passed by circular resolution on the basis of a flawed resolution to reduce the contribution is merely subject to challenge; it is not invalid from the outset.
This has an important practical consequence: once the circular resolution itself has become final – that is, once the time limit for challenging it without bringing legal proceedings has expired – any subsequent declaration of invalidity of the resolution to reduce the share capital can no longer alter this. The legal interest in bringing an action against the reduction resolution therefore ceases to exist.
What does this mean for flat owners?
Anyone who considers a resolution to reduce the share capital to be flawed must challenge it separately within the one-month time limit. If one waits too long or allows the subsequent circular resolution to stand unchallenged, one forfeits both rights of appeal. Anyone wishing to challenge both resolutions may do so in a single action or amend an action already brought accordingly.
- A resolution to reduce the share capital and a resolution passed by circular resolution may each be challenged separately.
- The period within which an objection may be lodged is one month from the date of the resolution.
- Errors in the resolution to reduce the share capital do not automatically render the resolution passed by circular resolution null and void, but merely render it open to challenge.
- Once the circular resolution has become final, there is no point in bringing legal proceedings against the resolution to reduce the contribution.
Owners in owners’ associations should, as a matter of principle, examine resolutions carefully and, if in doubt, seek legal advice promptly, as the deadlines are tight.
Source: Haufe: Property
This article was created with the help of AI and has been editorially reviewed.
