The advisory board represents the third body of the homeowners' association, alongside the assembly of homeowners and the property manager.

Unfortunately, the willingness of owners to take on the role of advisory board member is declining in many homeowners' associations. At Estate5, we value collaboration with advisory board members. Therefore, we outline the key responsibilities of a member of the advisory board below. We aim to support all owners who are willing to volunteer as a member of the advisory board for a homeowners' association.

Homeowners may (but are not required to) appoint an advisory board by majority vote. Homeowners can be elected to the advisory board.

However, there is no entitlement for an individual homeowner or a minority group to demand the appointment of an advisory board unless it is expressly required by an agreement. If a majority vote to appoint a board does not pass, the minority that loses the vote cannot demand that the appointment be made by a court, as can be requested in the case of appointing a property manager. The right to appoint an advisory board exists only if it is stipulated in the declaration of division or the community rules.

With the enactment of the Condominium Modernization Act (WEMoG) on December 1, 2020, the number of advisory board members is no longer fixed (§ 29 I WEMoG). The community can now adjust the size of the board to suit its needs. Additionally, a new requirement is to appoint a chairperson and a deputy (§ 29 I 2 WEMoG).

If nothing else is stipulated in the declaration of division/community rules or no specific term of appointment has been decided, the advisory board is appointed for an indefinite period. Unlike the appointment of a property manager, this term can exceed five years.

The homeowners' association can dismiss the advisory board at any time by majority vote without providing any reasons. The advisory board members can resign from their position at any time, but not at an inappropriate time.

The homeowners can decide to appoint an advisory board. The advisory board supports and supervises the property manager in carrying out their duties.

The advisory board is responsible for reviewing the financial plan and the annual statement. Invoices and cost estimates should only be reviewed to the extent that they are part of the accounting.

Since April 2020, Estate5 has offered a "digital document review" service. All transactions are linked to the corresponding documents and can be reviewed online. It is simple, convenient, independent of time and location, and—during the COVID-19 crisis—safe from home.

A good property manager works closely with the advisory board, for example, by conducting joint inspections of the property or coordinating the agenda for the homeowners' meeting together.

The advisory board works on a voluntary basis; however, they are reimbursed for their expenses (postage, mileage, printer cartridges, etc.). Many homeowners' associations decide on an annual expense allowance. For associations with up to 100 residential units, this allowance typically ranges from 20 to 100 euros per year per advisory board member.

The liability of the advisory board members who work without compensation is limited to intent and gross negligence (§ 29 III WEMoG). The expense allowance does not count as compensation.

During an audit, the board members fail to notice, due to insufficient review of documents, that the property manager has largely depleted the community's assets for personal use. The manager is granted discharge; shortly thereafter, they declare bankruptcy. The community does not recover its money and sues the board members for damages—with success, because the board members grossly neglected their duties during the audit (OLG Düsseldorf, September 24, 1997 – 3 Wx 221/97).

For board members and the community, taking out a financial loss liability insurance policy for the board members is the best option. The costs are manageable.