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PROPERTY SALE: WHAT DOES THE BUDGET PLAN HAVE TO DO WITH IT?
When selling, owners of condominiums sometimes have to explain to prospective buyers not only why the location and features of the apartment justify the purchase price. Running costs are usually of interest too. They should therefore be prepared for questions about the budget plan. It defines the amount of the advance payments that are to cover the joint expenditure of a residential complex. Anyone selling a condominium should know their budget plan well.
THE BUDGET PLAN SHOWS INCOME AND EXPENDITURE
Every residential complex with condominiums has income and expenditure from running costs. The income consists of the so-called service charge (Wohngeld or Hausgeld) – usually monthly payments to cover the joint costs incurred.
In a property sale, the buyer takes over the seller's obligation to make these payments. Their amount is set out in the budget plan. Drawing up this budget plan every year is a duty of the property management. The basis of this duty is Section 28 of the German Condominium Act.
EVERY BUDGET PLAN CONTAINS AN INDIVIDUAL BUDGET PLAN
Expenditure for a residential complex with condominiums arises, for example, from running costs for energy, street cleaning and property management services. The budget plan compares them with the income and should, with its balance, ideally show that the complex is run economically.
The calculation of the future service charge in the budget plan also includes estimates of expected cost increases in the coming calendar year. The budget plan also always includes an individual budget plan, which a prospective buyer could also raise in a sale. In the individual budget plan that the owner receives for his apartment, the service charge for that condominium is calculated. The so-called cost allocation key is also important for this.
COST ALLOCATION: ANOTHER TOPIC IN A PROPERTY SALE
The cost allocation key results from the community regulations of the community of owners. They define the rules for living together in the residential complex. The community regulations, for example, set special rights of use by determining who may use the garden areas belonging to the complex, or they regulate keeping pets in the apartments. As the name suggests, the cost allocation key governs how joint costs are distributed. These costs are not necessarily divided equally among all owners. The shares can vary, for example, owing to different apartment sizes or consumption figures.
As a potential seller, you should therefore expect the prospective buyer to ask questions about the budget plan and individual budget plan, as well as about individual topics relevant to him, such as the allocation key. And there could be even more questions about the budget plan.
VARIOUS ASPECTS OF THE BUDGET PLAN CAN BECOME A TOPIC
In a conversation with a prospective buyer, very different aspects of the budget plan can come up. One prospective buyer may be particularly interested in energy costs, while another focuses on the costs of property management. Another topic could be the amount of the maintenance reserve, which also counts as a cost. It serves to finance possible renovations. A relatively high maintenance reserve can be an indication to potential buyers that more renovation work is expected in future. Anyone who wants to market a condominium optimally should be prepared for all kinds of questions from prospective buyers and think in advance about how to answer appropriately on the basis of the facts.
Honesty is important. Of course you can highlight the existing advantages of an apartment. But you must not conceal possible defects and must ultimately ensure that the prospective buyer can make a well-informed decision. To do this, you should be able to present documents such as the budget plan at every meeting with a prospective buyer.
FINALLY: A TIP FOR PROPERTY BUYERS!
The previous sections presented the budget plan mainly from the seller's point of view. But it naturally plays a role not only when selling but also when buying property. As a potential buyer, you should know exactly which recurring payments you will face before deciding to buy. This protects you from unpleasant surprises and ensures that you make a good decision.