Forced modernization of real estate

"Fit for 55"

Stephan Hendel, LL.M.

Lawyer

Initial legal advice

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With the EU Commission's draft directive on the overall energy efficiency of buildings ("Fit for 55" package), the EU wants to achieve its climate target and reduce net greenhouse gas emissions by at least 2030% by 55. After that, the EU wants to become climate-neutral by 2050. The following article explains what this means for property owners.

Forced modernization of real estate - What does the new EU directive mean?

The EU Commission had already decided in 2018 to revise the Energy Efficiency Directive in order to reduce energy consumption in the European Union. The new regulation aims to make buildings more climate-friendly in the long term and thus make a contribution to climate protection.

Important: the project has not yet been converted into German law! In this respect, it is currently hardly possible to take legal action against this at the current status.

What does this mean for property owners?

Property owners will have to reckon with stricter regulations in the future. For example, certain residential buildings must reach the standard of a KfW 2030 house by 55. In the future, new minimum requirements for energy efficiency will also apply to non-residential buildings.

In addition, owners of real estate are to be obliged to regularly record the energy consumption of their buildings and to implement appropriate measures to improve efficiency. Violations of these regulations can result in high penalties.

It has not yet been clarified how Germany will deal with the EU project “Fit for 55” in detail. Because it first needs to be transposed into national law. Numerous variants are conceivable as to how the German legislature could implement the EU's goal.

One possibility would be to create incentives to modernize real estate. For example, tax breaks could be created for property owners who reduce the energy consumption of their property. Furthermore, subsidy programs for the energetic refurbishment of buildings could also be launched in order to accelerate the modernization process. This would be the most convenient option for property owners.

In addition to incentives, the legislature could also introduce penalties if the obligation to rehabilitate is not complied with. For example, fines could also be imposed if the property does not achieve a certain energy efficiency class (initially probably “D”).

A more drastic measure would be the ban on using the property. However, this would amount to expropriation without compensation. It remains to be seen whether the legislature would really go that far in its climate madness.

How do I defend myself against a (possible) forced modernization?

The most important thing is that you do not allow administrative acts (such as notifications, etc.) to become final. You can usually solve this yourself and very effectively. According to Section 37 (6) VwVfG, a written or electronic administrative act must be provided with a so-called instruction on legal remedies:

"(6) A written or electronic administrative act that is subject to challenge shall be accompanied by a declaration by which the party concerned about the legal remedy that is available against the administrative act, via the authority or the court where the legal remedy is to be lodged, has its registered office and is instructed about the deadline to be observed (instruction on legal remedies). The instruction on legal remedies must also be attached to the written or electronic confirmation of an administrative act and the certificate pursuant to Section 42a (3)."

You should take this legal remedy – mostly in the form of an objection – to prevent the reorganization measure against you from becoming final. If you have lodged an objection, in most cases a court will (have to) decide on this. However, there are some deadlines to be observed, which may vary in individual cases. This means that you should deal with such matters immediately, i.e. upon delivery of the post, or hand them over to your lawyer.

It doesn't matter how the legislature designs the "Fit for 55" project - there is no way around the constitution and constitutional defense measures!

Costs of an administrative procedure and how to protect yourself

A refurbishment obligation can quickly become an expensive administrative procedure for real estate owners - and owners. But it's worth checking in advance. Legal protection insurance can help to avoid high costs for court proceedings.

Legal fees are not the only consideration in such legal proceedings. Another cost factor can be experts who are often called upon by the courts to appraise the affected property. Depending on their scope and complexity, these reports can quickly cost 10.000 euros or more.

It is therefore particularly important that legal protection insurance also covers such costs. Otherwise, the financial burden of the renovation obligation can quickly become unbearable. In addition, you should find out about the conditions of the insurance in advance to ensure that you are optimally protected in the event of a legal dispute. You should also ask your insurance broker whether and, if so, how long the waiting period is. This describes the period during which the insurance was taken out, but no benefits can be accessed. You should also note that legal protection insurance almost never applies if the benefit event (here, for example, a decision by a municipality for renovation) has already occurred.

Anyone who does not secure themselves in good time can quickly find themselves in a financial emergency. In this case, legal protection insurance can be a sensible investment to protect yourself against high costs and to ensure professional representation in court in an emergency.

Conclusion

As Mark Twain said, "In my life I have suffered an unimaginable number of catastrophes - most of which fortunately never happened".

This quote also applies here: Don't let yourself be fooled. From my point of view, it is not very likely that the rehabilitation obligation will be enforced with all severity - certainly not with forced expropriations. But even if green ideology were to hit the hardest, you have effective ways to fight back. But make provisions in good time and protect yourself financially against any legal disputes. Only then are you really free in your decisions and can you rationally consider whether a legal dispute is preferable to modernization.