Succumbing to the international political pressure an increasing number of countries agree to comply with the OECD standard for the exchange of information in tax matters. Lately, Germany and Switzerland came to an understanding on double taxation and thus on an exchange of information based on the OECD standard.

Click here to find the leaflet with all information.

05/08/2010

On July 15, 2010 the certified attorney for tenancy law and condominium law Mr. Burkhard Rüscher (41) and his colleague Hannes Dürr (34) joined our team at the Munich offices of S•N•P.

Please find the press release issued by S•N•P Munich here.

For quite some years now the public service has undergone downsizing, especially on the level of federal Lands, but also of municipalities. As everybody knows, Lands, urban and rural municipalities are low on funds. Many employees who can no longer be employed in their customary job are transferred to the so-called “overhang” or “job pool” and – if possible – relocated to other positions within the public administration. This is the case in the Land of Berlin, but also in the Land of Brandenburg, where retraining and professional development measures have been introduced in support. Especially the Land administrations are affected by the restructuring rather than the already strongly reduced municipal administrations. Public officials and employees are affected, but non-public employees are so in an even higher number. In several of its judgments the German Federal Administrative Court (Bundesverwaltungsgericht / BVerwG), however, considered the relocation of Berlin public officials to a “Central personnel overhang management (job pool)” without concurrent assignment of an official function as unlawful due to the fact that it would violate the “fundamentals of the customary principles of the civil service system” (see only BVerwG, judgment of September 18, 2008 - 2 C 8.07; judgment of September 18, 2008 - 2 C 3.07). There are no dismissals of non-public employees for operational reasons both in the Land of Berlin and in the Land of Brandenburg. That is what the parties to the collective agreement agreed upon. Public officials cannot be dismissed anyway.

Please read the entire article here.

07/06/2010

Within the last few years competition for public contract awards in the short range public transportation by rail (Schienenpersonennahverkehr / SPNV) and in the local public transportation (Personennahverkehr / ÖPNV) gradually developed towards a pure price competition. As the most parameters are identical for all competitors the labor costs have been attached increasing importance. The consequence is wage dumping when it comes to awarding the contracts. A bidder willing to pay fair wages and offer reasonable working conditions has no chance of being awarded the contract. The association mobifair e.V. steps up to give the good guys a chance. The lowest price must not be the only criterion. Mobifair wants public contracting entities also to consider essential social standards in their tenders. It will benefit the safety and the well-being of all persons involved – the employees, the transportation company, and the passengers too.

The SNP Public Procurement Law Team prepared guidelines for mobifair e.V. on how particularly public contracting entities can consider social aspects in the tendering procedure. In his preface, Helmut Diener, executive director of mobifair e.V., gives his thanks to the legal advisors of the SNP Public Procurement Law Team for their strong commitment and their accurate work.

The guideline is available for download here.

27/04/2010

The public debate on minimum wages in Germany held for the last 10 years is based on the fact that in many sectors of employment the low wages do not allow for a sufficient income to make a living. The reason for this is shrinking coverage of collective agreements for employees and employers and the low number of generally validated equal-payment-for-identical-jobs collective agreements (Entgelt-Tarifvertrag) (e.g. in the building sector, the painting and varnishing trade, the roofing trade) as well as the accumulation of low-wage collective agreements. While in Germany there is no statutory minimum wage, about 20 European neighbor countries have quite some experience with this, some of them for several decades: In France a minimum wage has been in place for 50 years (currently roughly 8 € per hour), for 40 years in the Netherlands (roughly 1,380 € per month), and in the United Kingdom it was introduced in 1999 (6.50 € per hour, converted amount). In the United Kingdom some 1.5 million employees earn minimum wages, while in France there are even 3.3 million employees or so. Even in the U.S.A. there are approximately 13 million employees earning a minimum wage which was introduced as early as in 1938 and which currently amounts to a converted rate of circa 5 € per hour. Accordingly, the minimum wage discussion should not be misunderstood as criticism of capitalism in view of the fact that minimum wages are paid in market-based national economies.

Please read the entire article here.

27/04/2010

Whoever wants to protect his/her privacy may object to the publication of pictures of his/her house in Google Streetview.

Google intends to display pictures of houses and street views in the internet. SNP recommends individuals to raise objection if they feel their privacy is being invaded. We hereby offer you a model letter of the BMELV (Bundesverbraucherschutzministerium / German Consumer Protection Ministry).

Objections against the publication of pictures of the own person, own automobiles and own-occupied or own-used buildings and real property may be lodged with Google informally at the following addresses:

• Via e-mail: streetview-deutschland@google.com
• Via letter mail: Google Germany GmbH, Betr. Street View, ABC-Straße 19, 20354 Hamburg

Models and further information:

• Model objection:

Model objection in RTF format for download

• Where Google plans to take pictures in Germany:

Google Street View - Planning

• What Google is willing to observe in doing so:

Promises of Google relating to the internet service Google Street View

•  Info leaflet of the BMELV and the BITKOM (Federal Association Information Business, Telecommunications and New Media)

Recommendations of the BMELV and the BITKOM with regard to data protection and security in the internet

For more details on this issue please read here.

VD 09/04/2010

Employers’ liability insurance associations constitute the statutory accident insurance entities for industrial enterprises as well as agricultural and forestry operations and their employees. In the Federal Republic of Germany there are 13 industrial and nine agricultural liability insurance associations with about 46 million insured persons. The responsibility of the statutory accident insurance – dating back to the “social reforms” of former Chancellor Bismarck and enacted at the times of the Kaiser in the year 1885 – currently consists in preventing industrial accidents, occupational diseases and hazards to health resulting from work. Effective on January 1, 2010 several employers’ insurance liability associations merged, such as the ones for the sectors of printing and paper processing or for the sectors of raw materials and the chemical industry. In the public sector the responsibility of the liability insurance associations is assumed by industrial accident insurance offices (e.g. community accident insurance associations, accident insurance funds on land and federal level). Honorary activities and school students are also insured there, e.g. the aids of the THW (Federal Agency for Technical Relief) and of the DRK (German Red Cross) as well as development aid workers are insured with the Federal Accident Insurance Fund.

Please read the entire article here.

As of spring 2010 our series of lectures "SNP – Labor and Employment Law Forum” begins.

The mentioned series of lectures is first and foremost aimed at entrepreneurs and staff managers, but also at other interested persons dealing with issues relating to staff affairs and – in combining labor and employment law issues with non-legal issues – offers all attendants the opportunity to think “outside the box”.

Please find more information on the lecture topics and dates of the event program 2010 here.

The term “compliance” appears in the business press almost on a daily basis, which occurs even more frequently in the meantime due to cases of corruption in Germany such as in the case of MAN as the most recent example.

The “Kommission für den Deutschen Governance Codex” (Commission for the German Governance Code) (since 2006) meets annually to discuss additional rules of conduct for managers and corporations.

A large number of consulting firms – not only the big auditing companies – knock at the doors of corporations asking whether or not they have implemented a risk management system thus complying with the Code and the legal regulations.

Please read the complete information letter on the compliance issue here.

Question: What is the significance remaining for the delimitation of special sector contracting entities pursuant to section 98 No. 1-3 and section 98 No. 4 of the GWB (German Act Against Restraints of Competition) taking into account the exception of application of section 100 para. 2 letter i) of the GWB in particular?

Please find the answer here.

Effective on August 18, 2009 the 6th revision of the HOAI came into force. This put an end for the time being to the discussion process initiated after the last revision of January 1, 1996 regarding the abolition and streamlining of the HOAI. At that time the fees in the schedules of fees had been increased by 5%. So, as a matter of fact, there has been no increase of fees since that date. This fact has not been compensated by building price increases and the associated increase of the allocable costs either.

Please find the entire article here.

The comments on the court judgments

I. Dismissal for long-term disease
II. Personnel deployment contract (nurses of the DRK/German Red Cross)

Please read here.

The comments on the court judgments

I. Framework conditions under collective agreements
II. Refusal to take part at staff meetings
III. Secession from the church by an elderly-care worker

Please read here.

Question: Which special sector entities pursuant to section 98 No. 4 of the GWB (German Act Against Restraints of Competition) and the appendix GWB are subject to the awarding of public contracts in the sector of electric power supply?

Please find the answer here.

Many employees of the industrial sector and the public administration made use of the option to have a flexible rather than an abrupt transition to old age retirement by cutting half of their weekly working hours. The German Act on Pre-retirement Part-time Work (Altersteilzeitgesetz / AltTZG) offers this option on a voluntary basis if a relevant agreement is made between employee and employer based on collective agreement, works agreement or individual contractual regulations. Collective agreements often provide a legal entitlement of the employee. The condition is that the employee has completed his/her 55th year of age and has been employed subject to social security for at least 1080 calendar days prior to the beginning of the pre-retirement part-time work, i.e. the wage amounted to more than 400 euros per month on a regular basis (sections 2, 3 of the AltTZG). In practice the available pre-retirement part-time work models are half-day work, work and time off in daily, weekly or monthly intervals, or the block model which is mainly preferred by the employees. In the work phase the employee works full-time while he/she needs not go to work at all during the time-off periods. The vacated post, however, must be filled with an employee who is registered unemployed, or by taking over a trainee after the completion of his/her training; since January 1, 2005 the job may also be filled by employing a person receiving ALG II (lower unem-ployment benefit in the last period of support) (s. 3 (1) no. 2 of the AltTZG).

Click here to read more.

The German Housing and Care Contract Act (Wohn- und Betreuungs- vertragsgesetz – WBVG) scheduled to take effect on October 1, 2009 (Federal Law Gazette (BGBl.) I No. 48, page 2319 et seq.) will buttress consumer protection for senior citizens as well as adults who are handicapped or otherwise in need of care when it comes to entering into home and care contracts. In 2006, the federalism reform brought the split-up of the nursing/care home law regulated in the German Nursing and Care Homes Act (Heimgesetz – HeimG): The regulative law governing the operation, the quality assurance and the supervision of the homes by the appropriate authorities is the responsibility of the Federal Lands, while the Nursing and Care Homes Act as federal legislation is still to be applied to home contract law. In the meantime, some of the Federal Lands, among them Brandenburg, North Rhine-Westphalia, Bavaria und Baden-Wuerttemberg, launched new home laws on Federal Land level which set the regulatory framework. As of October 2009, the WBVG comprising 17 sections will supersede the contractual regulations of the Nursing and Care Homes Act (s. 5 – s. 9 and parts of s. 14 of the HeimG) providing for a rather short adjustment period for existing home contracts until April 30, 2010. As of May 1, 2010 the legal conditions for nursing and care homes will be subject only to the WBVG.

Click here to read more.

The tenant in a residential house owned by the housing association GSW in Friedrichstrasse 17 and formerly owned by the federal Land wanted to prevent her home from being purchased by a Spanish investor. For this reason she simply bought the building with 14 apartments and four commercial units herself in the year 2005 – for 1.3 million euros.

Now the purchaser claims back part of the purchase price from the GSW. She argues that based on an expert opinion she obtained the market value of the property would have amounted to only 868,000.00 euros.

Rechtsanwalt René Buscher filed a relevant lawsuit at the Landgericht Berlin (Regional Court).

Here you can read the article in the newspaper Berliner Zeitung of August 5, 2009.

According to the appropriate legal concept, the standard-form submission to immediate enforcement in a land charge establishment deed is not an unreasonable prejudicial treatment of the borrower even if the bank assigns the claim to a third party.

To view the complete comment on the following judgment of the LG Hamburg of July 9, 2008:

"The standard-form submission to immediate enforcement in a land charge establishment deed in relation to the loan claim has to be qualified as unreasonable prejudicial treatment of the borrower as defined in section 307 I 1 of the BGB [German Civil Code] if the bank is free to assign the loan claim to any third party as it deems fit."
(Note: Headnote of the editors of the NJW [German New Juridical Weekly] on the judgment of the LG Ham-burg of July 9, 2008, NJW 2008, 2784 et seq.; judgment has not become final)

please click here.

SF/07/04/09

In its judgment of September 30, 2008 (Ref.: 12 U 65/08, DB 2008, 2479) the Karlsruhe Higher Regional Court (OLG/Oberlandesgericht) held that the proof of delivery of a fax transaction would be furnished by a transmission report with “OK” statement, which is in contrast to the previous dominant practice.

For the delivery to the recipient it would not be necessary that the recipient printed the entire fax message, while it would be rather sufficient for the delivery of a fax to the recipient that the sent technical signals have been completely received by the fax machine of the recipient (storage). In doing so, the Karlsruhe OLG relies on the principles applicable to the fax delivery of written pleadings to the court as defined by the Ger-man Superior Court (BGH) in the year 2006 (cf. BGHZ (Decisions of the Federal Supreme Court in Civil Matters) 167, 214, 219 et seq.).

To view the whole article please click here.

In the view of the Federal Government, Germany currently faces the probably most difficult economic phase since many decades. To counter this development, the Federal Government tied up the Economic Stimulus Package I already back in November 2008.

Now it puts another log on the fire with the Economic Stimulus Package II. With its defiant title “Stout Approach to Crisis, Strong for the Next Recovery” the following five measures are intended to counteract the crisis: municipal investment program, loan and guarantee program for the industry and trade; qualification initiative for employees; relief of private households and a reliable debt reduction.

To view the whole article please click here.

Please read edition 1-2009 of our newsletter RECHT KOMPAKT, concerning news out of jurisdiction and legislation around real estate, here.

The newsletter contains articles from René Buscher (S•N•P Berlin) and Jan Woelfert (S•N•P Munich).

After its promulgation in the German Federal Law Gazette on October 28, 2008, the Modernization of the Limited Liability Companies Law and Malpractice Control Act (MoMiG / Gesetz zur Modernisierung des GmbH-Rechts und zur Bekämpfung von Missbräuchen) came into force on November 1, 2008. In a circular letter to our clients, the core themes of the new regulation are presented. Please find our circular letter here.

A Financial Markets Stabilization Fund was set up under the German Financial Markets Stabilization Act (FMStG / Finanzmarktstabilisierungs- gesetz) ratified on October 17, 2008. Corporations in the financial sector resorting to stabilization measures of the Fund must take into account the consequences resulting from any drawdown from the Fund. Section 5 of the German Ordinance Concerning the Financial Markets Stabilization Fund (FMStFV / Finanzmarktstabilisierungsfonds-Verordnung) contains a catalog of conditions corporations in the financial sector should comply with if they resort to stabilization measures under the Fund. The law provides for different approaches for the compliance with such conditions. Accordingly, as an example, the Fund may require that specific risks are reduced or removed, or that payments and compensation to corporate members and general managers are limited to a reasonable amount. If the corporations should fail to meet these conditions, the consequence could be dismissals, damage claims and penalties. In addition, the influence of the Government should not be underestimated as the Fund may acquire interests in corporations in the financial sector, and collects guarantee premiums. Against this background the corporations must ask themselves whether or not they fall within the area of application of the public procurement law and will have to consider this fact in the event that they should exceed the relevant threshold value. This is due to the fact that pursuant to section 98 no. 2 of the GWB (German Act against Restraints on Competition), public-law or private-law legal entities may also be public contracting entities if they are predominantly funded or predominantly controlled by a governmental agency. As a worst case scenario, this could result in the situation that the corporations in the financial sector would have to award contracts to third parties in conformity to the public procurement law provisions.

You are welcome to request further information from us - especially relating to the criteria of public interest and non-commercial status. ( RA Wolfgang E. Trautner, SNP Frankfurt)

Together with the attorney at law Ms. Christine Schaller (S N P Munich), the attorney at law Dr. Christian Ostermaier (S N P Munich) gave a lecture at the Indonesia-German Chamber of Industry and Commerce in Jakarta on September 23, 2008 on the investment opportunities Indonesian companies have in Germany. The focus of the lecture was on the legal framework conditions relating to corporate and tax issues. In addition, the subjects of labor law and social security, subsidies, import and export, as well as general questions on the legal system in Germany were discussed. You can view the lecture documents here.

The forthcoming reform of the German Limited Liability Companies Act (“GmbH Act”) is the reason for informing you on important changes.

In May 2007 a government draft has been presented for a bill modifying the GmbH law and for the prevention of misuse (“MoMiG”) providing ample changes of the GmbH law as applicable until now.
We expect that the present draft will be enacted still within this year as law, probably with just some slight adjustments. You should therefore be informed about the following already at this point in time:
As a result of the reform four types of GmbHs are supposed to be possible in future:

• the classic GmbH with individual articles of association,
• the GmbH with standard articles of association dictated by the legislator,
• the mini GmbH or one-euro GmbH with individual articles of association, or
• the mini GmbH with standard articles of association dictated by the legislator.

Read more.

SL/29/05/2008

On February 21, 2008, the Deutscher Bundestag (German federal parliament) passed a bill on the clarification of paternity irrespective of the challenge procedure. The new regulation is to take effect on or before March 31, 2008.

In its judgment dated February 13, 2007, the German Federal Constitutional Court requested the legislator to create a simplified procedure for the clarification of parentage within the said period. The intention of the new law is to facilitate the clarification of paternity for all the persons involved – namely father, mother and child.

In future there will be two procedures:

• The procedure for clarifying the parentage (section 1598 a BGB n. F. / Civil Code new version)
  
• The procedure for challenging paternity (sections 1600 et seq. BGB n. F.)

So what is new is the claim for clarification of parentage. That means that the persons involved must give their consent to genetic parentage testing and accept that the required specimens are taken. If the other family members do not give their consent, such consent will be substituted by a family court decision in principle.

To take the child’s interests and prosperity into account in exceptional cases (special circumstances and development stages), however, the proceedings may be suspended.

More information at www.bmj.de/klaerung-vaterschaft

GC/29/03/2008

With his case law analysis, the attorney-at-law (Rechtsanwalt) Dr. H. Leitz of the law firm CLLB Munich criticized the relaxation of the requirements for the presumption of gross negligence in the area of application of section 199 para. 1 no. 2, alt. 2 of the BGB (Civil Code) by some higher courts. In his opinion, the said requirements should be aligned to historical rulings of the BGH (Federal Supreme Court) as to the concept of positive knowledge as defined in the regulation of section 852 of the BGB a. F. (a. F. = obsolete version). This, however, is not the case as shown below. By way of the revision of the regulations on the limitation of claims proper, this characteristic has been relaxed in legal terms by inserting alt. (alternative) 2 of section 199 para. 1 no. 2 of the BGB.

In modifying the regulations on the statute of limitations, by way of the Act to Modernize the Law of Obligation the legislator inserted the alternative of grossly negligent ignorance with section 199 para. 1 no. 2, alt. 2 of the BGB in addition to the positive knowledge of the circumstances constituting a claim fundamentally required for the commencement of the limitation of claims. According to the above, the regular limitations period pursuant to sections 195, 199 para. 1 of the BGB also starts running upon the end of the year – or on January 1, 2002 in the transitional cases of Art. 229 section 6 para. 1, 4 sentence 1 of the EGBGB (Introductory Law to the Civil Code) – if the creditor should gain knowledge of the circumstances constituting a claim in the absence of gross negligence, or in other words, if the creditor continues ignoring the facts due to gross negligence (cf. last affirmed by the BGH, judgment of November 9, 2007, ref: V ZR 25/07).

Read more.

NL/26/03/2008

Effective on January 1, 2008 several modifications of labour law have come into force. Considering the high number of modifications made to labour law in the years before, those enacted on January 1, 2008 are rather few.

1. Modifications of Labour Law
Effective on May 1, 2007 the option of setting a time limitation for employments with older employees had already been reorganized in conformity with the EU regulations.
Effective on January 1, 2008 a minimum wage was defined for mail service providers.

2. Social Security Law
Effective on January 1, 2008 there were major modifications provided by the Social Security Modification Act which is supposed to contribute to the simplification of many issues concerning the interaction among employers and the social security agencies.
Effective on January 1, 2008 as well the contribution assessment limits and the compulsory insurance limit have been adjusted.


3. Self-employed Artists' Social Security Fund
As far as the Self-employed Artists’ Social Security Fund is concerned, there are no substantial changes by the turn of the year with the exception that the contribution rate to the Artists’ Social Se-curity Fund is reduced from 5.1% to 4.9%.
Nevertheless, this article should also point out to the the fact that the liability to pay contribution has been increasingly scrutinized.

Read more.

CO/29/01/2008

After a long time, by way of this law the Federal Government intends to come up to the rulings of the ECJ passed in respect of the application of the law to companies incorporated in an EU Member State but con-ducting their business in another Member State.

In the Federal Republic of Germany (FRG) prior to the reunification, companies incorporated under the laws of another Member State and conducting their business within the FRG were subject to German law (known as place-of-business theory).

In several proceedings (Überseering, Inspire Art) the ECJ passed judgments relating to companies effec-tively incorporated under the laws of a Member State of the European Union but which performed or in-tended to perform their activities exclusively within another Member State. Taking the freedom of estab-lishment as a basis, the ECJ derived that a company effectively incorporated under the laws of a Member State is to be considered as having legal capacity and the capacity to sue and be sued also in the State of its actual place of business. Its establishment there must not be made contingent on certain additional pre-requisites. This is particularly applicable to regulations regarding the minimum capitalization and the liability of the managing directors. Otherwise there would be a violation of the freedom of establishment. Exceptions to this principle should only be applicable if in specific cases the company acts in a fraudulent or abusive manner.

The present draft bill is aimed at amending the Introductory Law of the Civil Code (Einführungsgesetz zum Bürgerlichen Gesetzbuch / EGBGB) by the regulations of the International Private Law of companies, asso-ciations and legal entities, and enshrining in German law the fundamental application of the incorporation law. The draft now enables companies to act with more flexibility and mobility on an international scale in the organization of their corporate law structures. This is particularly true for cross-border restructuring and the relocation of the place of business. Concurrently, the extent and the limits of the application of the in-corporation law are reliably defined for legal transactions. Read more

SL/23/01/2008

Under German law the statutory periods of notice for termination by the employer are extended in relation to length of service of an employee. In this connection, however, the law provides that periods prior to the completion of the employee’s 25th year of age will not be considered (section 622 para. 2 sentence 2 of the BGB (Civil Code)). This regulation has been disputed for a long time in view of a possible discrimination of younger employees. Meanwhile, the Berlin Higher Labour Court decided in a judgment of July 24, 2007 (7 Sa 561/07) that this regulation is not applicable due to infringement of the principle of equality under European law. “Section 622 para. 2 sentence 2 BGB infringes the principles of non-discrimination as they are also set forth in the Directive 2000/78/EC of the Council of November 27, 2000 establishing a general framework for equal treatment in employment and occupation (...).” In Article 2, the Directive prohibits the direct and indirect discrimination based on age, which also means discrimination for young age.

The importance of this judgment is likely to go beyond this specific issue as now the question is raised to what extent the differentiation of periods of notice based on age, and especially the exclusion of termination as of a certain age as it is often provided in collective agreements, can still be upheld.
Now we will have to wait and see how the Federal Labour Court will decide where an appeal has been lodged in the meantime. It may well be expected, however, that they will confirm the judgment.

CO/12/12/2007

By way of the complaint filed to the Giessen Administrative Court by the attorney-at-law Vera Gloeckner (S•N•P Frankfurt), the public procurement law team of S•N•P succeeded in achieving that the line service license awarded on a subsequently filed so-called commercial application was cancelled. According to the decision of the Giessen VG, the bus company represented by SNP is now to obtain the license instead. The represented company won the award in a tender for the license to operate a publicly funded bus service pursuant to the German Passenger Transportation Act (Personenbeförderungsgesetz) as the most cost-efficient bidder. Despite the said award, the presidency of the administrative district selected another company which had filed an application for commercial operation after the end of the tender procedure – and that was unlawful as the Giessen VG established recently in its judgment expected by the local public transport sector in eager anticipation. Attorney-at-law Vera Gloeckner is pleased that the Giessen VG confirmed her view of the law in the sense that a subsequently filed application for commercial operation is no longer to be given priority after the conclusion of a tender procedure for the provision of publicly funded bus transportation services.

Please refer to the press release of the Giessen VG for further details. The S•N•P public procurement law team is available to you for your questions:

Attorney-at-law Vera Gloeckner: phone +49 (0)69 - 96 87 37 11
vera.gloeckner@snp-online.de
Attorney-at-law Wolfgang Trautner: phone +49 (0)69 - 96 87 37 10
wolfgang.trautner@snp-online.de

VG/17/11/2007

Based on the Ordinance Concerning the Transfer of the Keeping of the Register of Companies and the Filing of Documents with the Operator of the “elektronischer Bundesanzeiger” (Electronic Official Gazette) dated December 15, 2006, business enterprises are under the obligation to file the annual financial statements with the Electronic Official Gazette

on or before December 31, 2007.

This applies to documents relating to the financial year starting after December 31, 2005.

Consequently, the disclosure of annual financial statements is required by law and subject to punishment by administrative fines from 2,500.00 euros to 25,000.00 euros. Read more.

SL/15/11/2007

Some owners deny payment of service fees or object to the manager’s request to pay amounts of a special assessment to the community. In court rulings it was decided already back in the year 2005 that the owner of the claims is the community of condominium owners which has partial legal capacity (i.e. may take legal action or be taken to court) being represented by the property manager. For this purpose, however, the manager needs a power of attorney which – as a rule – is delivered to him together with the management agreement. As far as the manager himself is concerned, he may as well claim cost reimbursement for the provision of copies to individual owners, and the question is up to which amount such costs may be claimed if there is no regulation in this respect in the management agreement.

Read more

BM/16/10/2007

If owners cannot attend a meeting of condominium owners, e.g. due to other appointments, the question comes up whether they may opt for being represented by proxy. It may also happen that owners feel they are not enough of an expert to act on their own in the meeting of owners when it comes to difficult legal or tax issues, and prefer securing the support of a lawyer or a tax adviser in order to avoid errors at the time of casting their vote. Representation by granting a proxy and the merely technical support by an expert in meetings of owners are interrelated sets of issues. In the condominium declaration, namely in the community rules, there are often provisions regulating that owners may grant proxy to their spouse, another owner, or the property manager in the event that they are prevented from attending. These are what is known as restricted representation clauses. In the absence of any regulation, the owner’s voting right may be assigned by way of proxy, in principle, where the WEG (German Condominium Ownership Act) applies – which is different under e.g. association law (cf. section 38 sentence 2 BGB / German Civil Code) – as it does not constitute the exercise of a right which cannot be transferred.

Read more

BM/12/10/2007

Complaints of owners have increased recently that some property managers are trying to take the easy way out on the new archive of resolutions which they are officially required to keep since July 1, 2007. Some think it would be sufficient to file the minutes of the meetings of owners in a separate folder and number them in serial order. That is certainly not the form the legislator meant when it assigned the task to the manager of a community of condominium owners to keep an archive of resolutions. Section 24 para. 8 sentence 1 of the Wohnungseigentumsgesetz (WEG n.F.) [Condominium Act, new version] sets forth the regulation that the property manager has to keep the archive of resolutions. Pursuant to section 26 para. 1 sentence 4 WEG n.F., there is good cause “on a regular basis” for the dismissal of a manager if the manager failed to keep the archive of resolutions in a proper manner.

Read more

BM/08/10/2007

When the financial means of the community of owners are insufficient to pay the due costs for water supply and sewerage, the question comes up whether or not the utility company may assert its claims against either of the solvent condominium owners. In a case in Berlin the water utility claimed payment of outstanding costs for several years in the past from an owner. The owner pointed out to the fact that according to the landmark decision of the Federal Supreme Court (BGH) of June 2, 2005 (V ZB 32/05) the community of owners has partial legal capacity (i.e. may take legal action or be taken to court) and would therefore be responsible for the costs of water supply and sewerage as well, implying that he would not be personally liable. This point of view, however, was not shared by the Berlin Court of Appeal and he was ordered to pay as a joint and several debtor. More

BM/24/09/2007

As a result of the reform of the Wohnungseigentumsgesetz (WEG / Condominium Act) effective as of July 1, 2007, majority resolutions against owners opposing to modifications have been made easier in principle. So, for instance, majority resolutions regarding the determination of service and management costs may be passed by the meeting of owners. A three-quarter majority of votes of the present or represented owners will be required, however, when decisions relating to structural modifications such as the choice of colours or the architectural design of the exterior facade (e.g. bossing) or the installation of balconies are to be made.

But what is the legal situation if common property is affected by structural projects on the one hand, but if on the other hand it is doubtful whether the rights of the other owners can actually be impaired in the first place, e.g. if adjacent apartments are supposed to be combined and thus expanded?
More

BM/17/09/2007

“Berlin is always worth a trip” the saying goes, and especially during the summer months tourism has actually been booming in Berlin in the last few years. The Berlin tourists, however, do not only stay at hotels and boarding-houses, but are increasingly using holiday apartments which is often an annoyance to the owners as it causes considerable disturbance, especially during night time. The safety of the building and its residents is also affected when e.g. access doors to the house are not closed properly. In a recently decided case the Berlin Court of Appeal recognized an inadmissible letting of residential property in connection with letting to tourists, and allowed the motion against the relevant owner to cease and desist brought by a property manager in his capacity as individual authorized to act for the community of owners with legally binding effect (judgment of May 31, 2007 – 24 W 276/06). More

BM/17/09/2007

During the last few years in many housing estates in Berlin the roof storeys have been converted to provide additional living accommodation. The “blank roof storeys” were purchased by co-owners who assigned a development company with the execution of the upgrade, or who carried out the upgrade themselves in order to divide and sell it eventually. In such cases there have been disputes once and again concerning the nature and amount of the claims in the event of defective execution and damage to the common property, but also as to the jurisdiction of the courts, which altogether contributes to delaying the claims settlement. For this reason the party suffering the damage should not accept any delaying tactics as it would just deteriorate its legal position, but in turn should make an effort to have the legal situation clarified as quickly as possible. More

BM/22/06/2007

Pursuant to the rulings of the German Federal Supreme Court (Bundesgerichtshof) the purchaser of a condominium will not be liable for operating cost arrears of the seller. Nonetheless, the purchaser of a condominium should obtain precise information on possible operating cost arrears and public charges prior to purchasing. More

GE/21/06/2007

* German limited liability company

On May 23, 2007 – almost exactly one year after the submission of the ministerial draft bill - the Federal Cabinet released the draft of the GmbH Modernization and Abuse Combating Act (“MoMiG”). This draft contains the most comprehensive reform of the German Limited Liability Companies Act (“GmbHG”) since 1980. Currently, the effective date of the reform is expected to be within the first half of the year 2008.

Click here to read more about the contents of the reform.

CO/19/06/2007

There are many managers in community of condominium owners who hold voting rights either because some residential or trade units have not been sold yet or because individual owners authorized the man-ager to cast their vote on their behalf in the owners’ meetings. In a recent case occurred in Berlin, the Schöneberg Local Court clearly and unambiguously restricted the manager’s options to majoritize the own-ers’ meeting with the votes pool under his control. In the case under consideration, at the end of the finan-cial year the manager applied for the approval of his actions in accordance with the agenda of the owners’ meeting, and proposed himself as the new manager for two years “at the same terms and conditions”, and finally imposed these resolution items by way of the proxies granted to him by co-owners. More

BM/19/06/2007

* Wohnungseigentumsgesetz: Condominium Act

When the new Condominium Act (WEG) will be enacted by the middle of this year, many owners will breathe a sigh of relief as the revision provides extended decision-making powers in owners’ meetings. However, the principle is still applicable that charges and the maintenance and repair of the common prop-erty will have to be borne by all the condominium owners in the proportion of their co-ownership shares (section 16 para. 2 WEG). Until now, this could be changed only by unanimous agreement (e.g. in the community rules). In future, however, the owners may pass majority resolutions in certain areas without individual co-owners being able to resist and simply frustrate necessary changes. That is particulary appli-cable to the determination of the operating costs for the common property or the special ownership (i.e. individual freehold ownership in a condominium apartment plus part ownership of non-habitable rooms) pursuant to the German Operating Costs Ordinance (cf. section 556 para. 1 of the BGB (German Civil Code)) which are settled directly with third parties, and the management costs which can be recorded based on consumption or causation or settled on any other basis, provided that this is in line with proper management. More

BM/18/06/2007

In its judgment of March 15, 2007 - 4 Sa 1152/06 - the Munich Higher Labour Court decided that the em-ployer must assume liability for the adequate cash value of a company pension funded exclusively by em-ployee contributions.
The decision was made based on the fact that an employee asserted damage claims against her former employer under a remuneration conversion agreement relating to a company pension funded exclusively by the employee. For a period of three years the employer withheld part of the salary based on an agreement made with the employee, and paid the relevant total amount of 6,230.00 euros via a pension fund into the account of a life insurance entity. At the date when the employee left the company, the cash value of the life insurance policy was just 639.00 euros. More

CHO/12/06/2007

Agents frequently advise prospective buyers of real property to enter into reservation agreements where a promise is made in return for a down payment that the property will not be sold to others. As a rule, such reservation agreements are invalid and without any binding effect upon the prospective buyer or the seller when it comes to decide otherwise. More

GE/07/06/2007

The management performance is often a thorn in the flesh of some condominium owners when it is not performed with the due diligence. So, for instance, in a case in Berlin-Schöneberg the owners complained about the manner in which the manager rendered accounts suspecting him of having issued fictitious ac-counts. In another case in Pankow some owners wanted to know whether they would have to wait 9 months for being sent the minutes of the meeting of owners. Moreover, the issue arises to the owners which degree of diligence the manager must employ when it comes to hiring caretakers whose job implies a position of trust. Is it possible in such a case for co-owners to require that the manager must obtain a police certificate of good conduct? More

BM/07/06/2007

In the past, especially the medium-sized companies were rather reluctant to comply with the legal regulations relating to the disclosure of financial statements. Until now, the German Commercial Code (Handelsgesetzbuch) provided for sanctions only if non-compliance with the obligation to disclose was notified by a third party and if thereupon disclosure was not made despite a relevant court request. Since January 1st, financial statements are no longer to be filed with the local registration courts, but with the Official Gazette for the Federal Republic of Germany (Bundesanzeiger). At the same time prosecution of infringements of the obligation to disclose is no longer depending on any third party petition. More

GE/06/06/2007

In condominium owners’ association it happens once and again that there is reason for irritation as a result of the arbitrary use of common property in condominiums by individual co-owners. So, for instance, the staircase may be jammed with buggies so that you can hardly make your way to the exit. That also implies the risk of injuries. In other cases, the staircase, which is in fact intended to provide access for visitors to different residents, or escape routes e.g. in the event of a fire, is used as a private coat rack by some own-ers, which may also give an untidy impression of the house. Parking deregistered cars on community spaces of the condominium may also annoy fellow residents. A particularly ticklish situation may arise when lengthy and frequent barbecue parties are held – mostly on weekends – behind the house on the lawn basi-cally intended for community use. That will be the point when domestic peace among the co-owners will finally be gone.
More

BM/05/06/2007

For very good incomes, the amount of the owed old age provision support is not limited to the amount resulting from the income limit for the assessment of contributions to the social security pension insurance (BGH (German Federal Supreme Court) XII. Division for Civil Matters, judgment of Oct 5, 2006 – XII ZR 141/04 (previous level Munich OLG (Hig-her Regional Court)), FamRZ 2007, p. 117). Mehr

GC/30/05/2007

Effective on July 1, 2007, the German Condominium Act (WEG / Wohnungseigentumsgesetz) is changed in substantial points, where especially the liability relationship of the condominium owners’ associations vis-à-vis third parties (e.g. contract partners) and the liability rate of the individual owners are regulated in a new way. We remember that the German Federal Supreme Court (BGH/Bundesgerichtshof) decided in its “landmark decision” of June 2, 2005 – V ZB 32/05 – that condominium owners’ associations have partial legal capacity (i.e. may take legal action or be taken to court). The legislator now reverts to this decision regulating the liability relationship of the condominium owners’ associations to a wide extent in three new, long paragraphs of section 10 paras. 6 through 8 of the WEG r.v. (revised version). More

BM/30/05/2007

In connection with small orders below the EU threshold values the disappointed tenderers frequently failed to do anything about the faulty procedure of awarding contracts as it was uncertain, among other things, whether or not the civil courts or the administrative courts have jurisdiction.

The civil courts have jurisdiction – that is what the Federal Administrative Court (BVerwG) decided recently (BVerwG 6 B 10.7, decision of May 2, 2007).

The entities may now go as far as to stop the contract awarding procedures by way of injunctions, even if the threshold values of EUR5.278M for construction works and EUR211,000 for other services are far from being met.

Click here to find the decision of the BVerwG.

WT/24/05/2007

Many tenants in Berlin are afraid that their apartments might be sold to investors sooner or later, be it because the owner receives no subsequent funding from the city government – a fact that has been confirmed by the superior court in the meantime – or because the municipal housing entity is close to bankruptcy. When foreign investors acquire residential units experience shows that in some cases there will be immediate rent increases in less than no time. More

BM/24/05/2007

Members of housing cooperatives have the right to be informed on the situation and the affairs of the enterprise. The board of directors is obligated to provide the members with a summarized report on the economic situation of the cooperative at least once a year on the occasion of the general meeting. If a member, however, wants to know e.g. what the individual directors’ pay is for a year, then the relevant information may be denied for privacy and data protection reasons. Based on the German Act of 2005 on the Disclosure of Senior Management Members’ Income, the obligation of disclosure is applicable only to stock corporations traded at the stock exchange, but not to cooperative societies. More

BM/23/05/2007

When growing old, many people try to stay living in their own homes for as long as they can using the offers of ambulatory care services, or may move to a housing estate providing “assisted living” at an early stage. Cooperative and municipal housing companies offer such forms of living as do private companies, ever more frequently in Berlin as well. The advantages are evident: It is cheaper and at same time reliable care adjusted to the specific needs is ensured. While the Heimgesetz (Homes* Act) regulates in detail the conditions for living in a nursing home in which the elderly are provided or offered care and board in addition to the provision of residence based on a home contract, the regulatory situation for “assisted living” is poorly supported by laws. The Homes Act will particularly not be applicable to this situation if the resident of an “assisted living” estate is merely offered the so-called basic service for which a flat-rate care fee must be paid not exceeding 20% of the rent including the service costs. More.

BM/10/05/2007

Crisp frost like in the past winter remembers tenants once again that saving energy and hot water not only saves the budget, but saves the environment, too, for the reduced emission of CO2. In addition to the individual savings of energy consumption, however, there are also other “intelligent” solutions to reduce energy consumption on a larger scale and save costs at the same time if, for instance, in connection with facility contracting the energy saving potential is ensured by a professional service provider (contractor) installing a more efficient heating plant. More.

BM/10/05/2007

The collective purchasing by public sector undertakings offers a large savings potential. Especially in times of sparse funds it is understandable that there is a desire to draw on this potential. Following the so-called FENIN judgment (Case C-205/03 P) of the European Court of Justice (ECJ) voices come up forecasting a very much larger sphere of action of the public sector for purchase cooperations in Germany, cf. FAZ (Frankfurter Allgemeine Zeitung / newspaper) of 24/01/07. There is, however, no reason for becoming euphoric. More.

UK/22/04/2007

*(Homes for the elderly or adults with disabilities or requiring care)

When senior citizens are no longer able to provide for their necessities and need care, then the time has come to move to a nursing home. In our days it happens that in many cases the relatives are unable to provide responsible care at home for professional reasons or due to long distances between their places of living. The provisions of residential space and of care and catering services are regulated in a home contract which must be in conformity with the requirements of the Heimgesetz (HeimG/Homes Act), particularly setting forth the rights and obligations of the resident as well as the specification of services of the home. More.

BM/22/04/2007

According to the articles of association of many housing cooperatives the periods of notice for members of a cooperative may be several years, and this makes many members wish to withdraw as quickly as possible when an enterprise gets into economic trouble. Such a right of termination for cause, however, is given only within very narrow conditions.

Pursuant to section 67 a in combination with section 16 para. 2 nos. 2 through 5, para. 3 of the Genossenschaftsgesetz (GenG / Cooperative Societies Act) there is an option for terminating for cause upon the implementation of certain alterations of the articles of association. The right of termination accrues, for example, when the increase of the equity interest is resolved, an obligation for additional contributions is implemented, or an extension of the period of notice to a period exceeding two years is established. More.

BM/20/04/2007

In its judgment of 20 March, 2007 - XI ZR 414/04 - the XIth Division for Civil Matters (banking law division) of the Bundesgerichtshof (BGH / Federal Supreme Court) made a new decision on the issue of consumer claims relating to what is known as the “junk properties” (Schrottimmobilien):

The appeal before the BGH was based on the fact that a home savings bank (building society) was claimed upon for damages due to the violation of the duty of providing pre-contractual information in connection with the purchase and the financing of a condominium. For the lack of own funds the plaintiff raised an advance loan on the land charge with a bank for the financing of the purchase price which was supposed to be re-deemed by way of two building loan contracts concluded with the defendant home savings bank. At the same time the plaintiff was supposed to join the rent collection pool established for the relevant property, and the plaintiff did so. The claim was substantiated by the circumstance that the lease pool concept pro-vided for excessive payouts from the outset in a fraudulent manner in order to be able to pretend a corre-sponding return. More

NL/31/03/2007

Housing cooperatives enter into so-called permanent lease contracts with their members granting them a permanent right of residence for life in principle. On the cooperatives’ side this right is expressed first of all in their articles of association rather than just in the contract. Only the members, however, will benefit thereof, unless the articles of association also allow non-member business with the result that residential space may also be let to non-members. As a rule, the permanent right of use is not found in normal rental contracts with communal or private housing companies. Nevertheless, the statutory landlord & tenant regulations are applicable to the permanent lease contracts to a large extent, and therefore the cooperative will notably have to comply with the tenant protection regulations relating to the termination of permanent lease contracts. More

BM/31/03/2007

When a housing cooperative gets into economic trouble owing to the fact that building projects swallowed more funds than initially planned, or that the overall critical situation of the enterprise awakes the fear of completely or partially losing the corporate assets, then the question arises who is to „blame“. In such a situation, the supervisory board as the body of supervision and control of the cooperative will typically be in the center of attention as it is its duty to advise and supervise the board of directors. Moreover, the legislator too provided more specific regulations on the duties of the supervisory board in the Control and Transparency within Organizations Act (Gesetz zur Kontrolle und Transparenz im Unternehmensbereich / KonTraG). More

BM/21/03/2007

As of 1 January, 2007, the compulsory details to be made in business letters pursuant to section 125a of the HGB (German Commercial Code), section 35a of the GmbHG (German Limited Liability Companies Act), and section 80 of the AktG (German Stock Corporation Act) are also required on business correspon-dence via electronic mail. Accordingly, business e-mails also have to show the required compulsory details starting from 1 January, 2007. More

TST/chs/21/02/2007

In the meantime, 15 years have passed since the German reunification, and litigations on unsettled real property matters are still going on. So it is no wonder that there are still legal issues remaining completely obscure until their Supreme Court settlement. Accordingly, in the opinion of legal experts, many thousands of former owners could be affected who were not returned their properties due to so-called investment priority sales, and who were only paid the purchase price share allocable to the real property by the entities authorized to dispose thereof, mostly the local authorities. The purchase price share allocable to the buildings which the investors had to pay to the local authorities was usually kept by the latter advocating that in the times of the German Democratic Republic (GDR) structural changes were carried out too, which would now have to be compensated for in the relevant amount. The Federal Supreme Court (Bundesgerichtshof / BGH) however, decided with final effect that the former owners do not have to content themselves with the share in the proceeds allocable to the real property, but they are entitled to being delivered the complete purchase price proceeds by the local authorities, including the share for buildings and exterior features. More

BM/chs/21/02/2007

* (“home” in the sense of care and nursing institutions)

In the meanwhile, elderly people may choose among many models of “assisted living”. Some senior citizens prefer a tenancy contract or a contract for permanent use supplemented by care elements, others are rather interested in a more extensive care program in order to ensure a reliable living environment for the old age. In view of this wide range of contract models offered in practical life the persons concerned or their relatives need to know how the relevant form of “assisted living” can be terminated if e.g. the resident has to move into a nursing home due to increasing dementia, or if the spouse dies and the surviving partner is no longer able to care for himself/herself and will therefore have to move out. For the issue of termination it is decisive whether the contract entered into is to be classified under landlord & tenant law or under homes law as-pects. However, there are forms in between as well, where the administration of justice asks for the point of main emphasis in the contractual relationship. More

BM/chs/06/02/2007

*(Homes for the elderly or adults with disabilities or requiring care.)

In everyday life you can find many forms of “assisted living”. If in addition to the letting of an apartment a wide range of basic and other services are offered such as the common use of community facilities, emergency service around the clock by own specialized personnel, first aid at any time at day and night, as well as temporary nursing services and further consulting and care services in a “board & lodging contract” or a “residence contract”, then the question arises whether such contract should be dealt with under landlord & tenant law or under homes law, which may be decisive when it comes to the options of terminating. More

BM/chs/25/01/2007

Several modifications in labour law have become effective as of January 1, 2007. This contribution provides information on the most important of them.

1. Employees’ codetermination in the event of amalgamation of corporations from different EU member states
Effective on January 1, 2007 the “Law concerning the Implementation of the Regulations relating to Codetermination of Employees in the Event of Amalgamation of Corporations from different EU Member States” came into force.

2. Hours of Employment Act
By the end of the year 2006 the transitional period provided in the Hours of Employment Act for old collective agreements came to an end.

3. Social Security Law
The contribution assessment limit and the compulsory insurance limits were readjusted effective by January 1, 2007. In addition, the contribution rate for the statutory annuity insurance was increased to 19.9% as of January 1, 2007.

More

CO/21/01/2007

Time and again the community of owners or the administrator is forced to battle with individual owners failing to make the legally fixed operating costs payments or denying additional payments, if any, upon the annual statement of accounts. If the contributions cannot be collected from the “black sheep” they have to be allocated to the other owners, as the power and heat suppliers in their turn have a full claim for payment. For this reason the question arises whether or not it will be possible at least to prevent the accrual of further claims by cutting off the supply when claim collection from the defaulting owner proves abortive for legal or factual causes, e.g. due to insolvency. In a recent judgment, the German Federal Supreme Court (Bundesgerichtshof / BGH) considered this to be possible in principle following a preceding judgment of the Berlin Regional Court. More

BM/21/01/2007

The management committee manages the housing cooperative, and the board of directors has the duty to advise the management committee, but particularly to supervise and control its actions. In practice there is generally no detailed control, unless the planned values for the financial year are not achieved. In case of, for instance, major construction projects, however, a more in-depth verification may be necessary, especially if the board of directors uncovers irregularities which it has to investigate with a view to own liability aspects. This is necessary as the directors too are liable for damages to the cooperative pursuant to secs. 41 and 34 of the Cooperative Societies Act (Genossenschaftsgesetz / GenG) if they fail to duly comply with their obligations of supervision with the result that the cooperative suffers a financial loss. More

BM/11/01/2007

Prior to notifying dismissal for operational reasons, the employer has to conduct social selection in which all the comparable employees of its business operation must be included.

In conducting social selection the length of service, the age, the maintenance obligations and severe disability, if applicable, of the employees must be taken into consideration. The approach of balancing the above aspects against each other may be regulated in what is known as selection guideline (Art. 95 BetrVG / Work Council Constitution Act) subject to the work council’s consent. Frequently, point systems are established in selection guidelines to evaluate the social factors.

If in conducting social selection a selection guideline with a point system is used, the question arises which consequences an error in determining the number of points will have if it results in refraining from dismissing an employee whose dismissal would have been justified had the number of points been determined correctly. More

TE/04/12/2006

Employees with key functions, especially those with direct customer contact, are on a regular basis subjected to post-contractual non-competition clauses. That way an employee can be prohibited for a period of up to two years, in the event of his or her resignation from the company, from enticing away his or her pre-vious employer’s customers either for himself/herself or for his/her new employer, or even be prohibited altogether from any competition within a specific area. In return, the employer is usually required to pay to his former key employee, for every year of validity of the afore-mentioned restriction, a so-called compensation for the time of competitive restriction, which must amount to at least 50% of the contractual compensation and benefits last received (Article 74 (2) HGB - German Commercial Code). More

MP/30/11/2006

True to the multidisciplinary consulting approach of our building law task force, S•N•P-partner Dr. Christoph Maier, in following an invitation extended by the German Welding Institute - Munich (SLV München - www.slv-muenchen.de ), delivered a lecture on the liability of welding inspectors versus injured parties and particularly versus employers. Mainly due to the strict definition of their duties and responsibilities in the European Standard DIN EN 719, welding inspectors are very unlikely, in the event of damages, to plead culpa minima, i.e. there usually remains a certain share of personal liability. In-depth discussions with building specialists from all practical walks of the trade have made it very clear that compliance with the standards presents a major problem, especially to smaller-sized companies not employing full-time welding inspectors. Especially employees performing welding inspections as an added duty should try to minimize their risk by ensuring adequate employer’s liability insurance and protective measures in their employment contracts. This applies all the more to external welding inspectors unable to invoke the liability-restricting principles of in-company damage compensation.

CM/ 24/11/2006

For further information please send an e-mail to christoph.maier@schlawien-naab.de

*(i.e. may take legal action or be taken to court)

In summer of 2005 the German Federal Supreme Court (Bundesgerichtshof / BGH) adopted a crucial decision for the community of owners under the Condominium Act (Wohnungseigentumsgesetz / WEG) the importance of which is not only of an academic interest, but has a rather practical impact. In its ruling of June 2, 2005 (Ref.: V ZB 32/05) the BGH decided that the community of owners has partial legal capacity. That was not the case until then. More