Heating costs and heat contracting in an apartment building: billing, commitment and buyer review

Heating costs in an Austrian apartment building typically sit on two separate tracks. One is the statutory allocation regime under the Austrian Heating and Cooling Cost Billing Act, the HeizKG. The other is the long-term heat supply or contracting agreement between the owner and an operator of the installation. Both tracks reach into service charge accounts, sale agreement and handover and cannot be overridden by a single sweeping clause.

Anyone selling or acquiring an apartment building must keep these tracks separate. Users have statutory rights under the HeizKG that follow the actual installation and the consumption-based split. A missed contracting commitment can constrain the purchase price, the reserve calculation and the future owner's freedom of action for many years. This article organises the questions that owners, sellers and buyers face.

HeizKG: scope, heat provider and heat user

Under section 3 HeizKG, the Austrian Heating and Cooling Cost Billing Act applies to buildings and economic entities with at least four units that share heat, hot water or cooling and have, or must have, devices for determining consumption shares. Section 2 distinguishes the provider from the users. With an owner-operated supply the landlord will usually be the provider; in a contracting model that role may lie with the commercial supplier.

A buyer must therefore establish who is the provider under the HeizKG. Billing and information duties follow that role. A single flat with its own boiler is outside this scope. A shared source alone is not enough either: the minimum number of units and the statutory metering set-up must also be present.

The roles must be allocated afresh at the change of ownership. With an owner-operated supply the buyer will usually assume the provider role for future periods. With contracting, the supply agreement, provider role and transition require separate review. A unit-by-unit schedule of supply arrangement, meters and current billing period supports the handover.

Allocation: consumption share and base cost share done correctly

Section 5 HeizKG makes consumption-based allocation conditional on technical measurement and on users being able to influence consumption predominantly. The percentage corridor is in section 10: for heating and hot water, at least 55 and no more than 85 per cent of energy costs are allocated by consumption, with the balance following the supplied usable floor area. Cooling has a consumption share of at least 80 per cent.

The allocation key should be documented for each period. Heating and hot-water costs must generally be separated under section 9 HeizKG. Non-consumption energy costs, other operating costs of the supply installation and any contractual base or metering price are allocated by supplied usable floor area under section 12. They must not be charged twice through MRG service charges or a contracting heat price.

Buyers should compare several periods. Sudden shifts in the base cost share, inconsistent treatment of vacancies or generalised estimates are indicators for further review. The topic page on handover and effective date places the handling of open periods in the wider context of service charges and deposits.

The heat provider's billing duty and the required format

The heat provider must produce a written account for each billing period. The HeizKG requires a breakdown of total cost, presentation of the allocation key, allocation of the consumption and base cost shares and a statement of prepayments. Only such an account allows the user to review the demand on its merits. A pure demand for payment without breakdown does not discharge the duty.

Mixed-use buildings need additional detail. Where hot water or cooling are included, they appear as separate positions. Where heat is purchased externally, the underlying heat price must be shown so that the user can identify which amount refers to which item. Consolidated collective figures create ambiguity and make it harder to defend the account against later claims.

In a sale, accounts for the current and a suitable stretch of past periods should be in the data room. The buyer should grasp the methodology without further enquiries and have a reliable base for the effective date reconciliation. The article on service charges and billing gaps covers the after-effects of incomplete accounts.

Inspection rights, corrections and everyday points of dispute

Section 19 HeizKG grants users access to the account and supporting documents. The provider must make them available at a suitable place for at least four weeks; copies or printouts are prepared on request at the user's cost. In practice this covers energy invoices, meter records, maintenance invoices and the calculations behind the allocation key. Digital access can supplement the statutory inspection period.

Errors in the account must be corrected. Overcharges must be refunded, undercharges may be recovered. For a buyer review it matters whether pending complaints, proceedings before the conciliation authority or open discussions with individual tenants are documented. A single refund request can aggregate in a large portfolio and warrants attention before signing.

The relationship with individual tenants also depends on process. Meter reading announcements, appointment coordination and the treatment of inaccessible flats should be recorded. Where a reading fails, substitute estimation procedures are permitted, but they must rest on a defensible basis. Arbitrary estimates are a common source of dispute.

Heat contracting: structure, price formulas and lasting commitment

Alongside the statutory billing layer sits a separate contractual layer between owner and contractor. In plant contracting, the contractor owns the heat generating installation and supplies heat to the landlord or directly to the users. In energy supply contracting, procurement and optimisation of the energy source lead. Both variants require rules on plant access, operator duties, maintenance and reversion after the contract ends.

The price usually combines a base or capacity component and a consumption-linked usage component. The formula follows an index that often refers to energy prices, wage costs and the consumer price index. Buyers care about origin, currency and transparency of the index clauses. Formulas that give the contractor a one-sided adjustment right without caps can shift the yield of the building and bind future owners for years.

The commitment usually outlasts a sale. Remaining terms of ten years or more are common. Ordinary termination is often excluded or subject to buyout mechanics that reflect the residual value of the installation. The page on old building renovation and maintenance places this in context, because an existing heat supply structure affects later renovation decisions such as retrofitting a heat pump or district heating.

Handover, sale agreement and the economic transition

A contracting agreement does not transfer automatically with the property. In practice, the contractual position is passed on by way of contract assumption or debt assumption, usually with the contractor's consent. Without consent, the seller may remain party to the contract after closing even though the economic benefit has moved. The sale agreement must therefore address the transition mechanism, including any consent process and an economic indemnity for the time before the effective substitution.

The effective date requires open items to be reconciled. This covers user prepayments, advance payments to the contractor, outstanding maintenance invoices and the pro rata allocation of the base and usage price components. For HeizKG billing, the parties should agree who closes the current period. A meter reading on the effective date reduces future dispute and provides the basis for a reliable reconciliation.

Where specific installations are involved, the operator structure, allocation of equipment and price formula should be reviewed together. Heat, antenna and advertising contracts may run in parallel and therefore belong together in the contract schedule and sale agreement.

Data room and buyer review: the concrete checklist

The data room should contain the contracting or heat supply agreement with all annexes. This includes the price formula with base values and history of adjustments, the plant register with location, year of construction and last maintenance, the service arrangement and any user-facing agreements beyond the MRG service charge regime. Without these building blocks neither price development nor remaining term can be assessed.

The file should include the most recent heating cost accounts with meter records, correspondence around complaints and a summary of open items with the contractor. Where subsidies shaped the plant model, the grant decisions, ongoing commitments and any repayment exposure must be documented too. The data room completeness check helps structure the review.

For a first classification of timing, documentary status and contractual risk, the apartment building risk check frames the topics for a first advisory conversation. In the price model, HeizKG items and contracting items should be assessed separately and referenced separately in the sale agreement.

A practical sequence and next steps with the firm

Begin with a survey of the installations, complemented by the current contracts and accounts. Then look at the HeizKG layer and the contracting layer separately. For the HeizKG layer this produces an overview of units, meters, allocation keys and open periods. For the contracting layer this produces a short assessment of remaining term, price formula, maintenance duties and reversion terms.

The next step translates these findings into the sale agreement, the data room and the handover concept. For a sale, contractor consent is prepared, user communication is planned and effective date meter readings are scheduled. For a purchase, a list of open questions is created that the seller should answer before price commitment.

BRANDAUER Rechtsanwälte supports owners, sellers and buyers on heating cost and contracting matters and connects the legal review with the commercial view. If there is already an offer deadline, a draft contract or a disputed account, the documents should be collected and reviewed together before a binding decision.