Latest updates

Liability of party without power of attorney for wasted contract costs
  • Germany
  • 21 June 2013

Land purchase contracts are often concluded by representatives without a power of attorney acting for one or even both parties. However, this is inadvisable. The standard land purchase contract normally includes a provision on who must pay costs. A recent decision shows that ideally, an explicit agreement about the liability for the costs of the notary should be made outside the notarised contract in case approval is refused.

Land defective if contaminated water flows through residential plot
  • Germany
  • 14 June 2013

The Federal Court of Justice recently ruled that a plot of land used for residential purposes has a material defect if underground water contaminated with toxic substances flows through it. The court stated that the land was defective because it was adjacent to a contaminated plot, which emitted pollutants via underground water. It considered that the toxic substances involved dangers which a purchaser would not normally accept.

Revision of landlord and tenant law: content and progress
  • Germany
  • 22 March 2013

Parliament recently voted to adopt the draft of the Tenancy Law Amendment Act. The proposed changes will apply immediately to all rental contracts as soon as they come into force. Measures for energy-efficient modernisation have been defined for the first time and are set to be integrated into other laws. Current court proceedings and enforcements should be reviewed to see how these revisions can be used to good effect.

Can an online advertisement act as a binding offer to conclude an agency contract?
  • Germany
  • 04 January 2013

The Federal Court of Justice recently decided that an online advertisement by an estate agent constituted a binding and sufficiently defined offer for the conclusion of an agency contract. This decision is particularly surprising as, until now, the court had not regarded an internet advertisement as a binding offer and the court placed far lower demands on the clarity of commission compared with its previous case law.

Vendor must be informed of property defect before accepting offer
  • Germany
  • 26 October 2012

In a recent decision the Federal Court of Justice decided that if the offer by the purchaser and acceptance by the vendor are notarised separately in a property purchase contract, the time when the purchaser is assumed to be aware of a defect is not the time of acceptance, but rather the time of notarisation of the offer.

Balancing photovoltaic installations and owner easements
  • Germany
  • 17 August 2012

The Munich Higher Regional Court recently had to decide whether, and in what circumstances, a landowner which wishes to erect a photovoltaic installation on its own land and not on third-party land is entitled to approve and register an owner easement to ensure that it can continue to operate the installation even after the sale of the land.

Floor area deviation in commercial lease agreements
  • Germany
  • 06 July 2012

The Dusseldorf Higher Regional Court has followed Federal Court of Justice case law on residential rental law and decided that it is also a defect in commercial lease agreements if the declared floor area differs from the actual area by more than 10%. The court explained that applying the case law to lease agreements for commercial premises is justified because the economic aspect plays an important role in such agreements.

Restaurant heating failure was valid reason for termination
  • Germany
  • 09 March 2012

In a recent ruling, the Dusseldorf Higher Regional Court interpreted the concept of defects and the possibility of termination considerably more strictly than in previous case law. The court ruled that a notice of termination given by a restaurant because a temperature of 20 degrees Celsius (which is considered necessary in shops) was not guaranteed during August and September was valid.

Restrictions for landlords when adjusting pre-payments of operating costs
  • Germany
  • 20 January 2012

According to Section 560(4) of the Civil Code, both tenants and landlords can unilaterally demand a reasonable level for the pre-payment of operating costs after an account settlement, so that the pre-payments by the tenant are as close as possible to the actual costs.

Entry of land purchase in Land Register by partnership under civil law
  • Germany
  • 14 October 2011

A partnership under civil law is a popular legal structure for companies that wish to purchase real estate because such entities are easy to establish without strict formal requirements, involve a relatively small amount of administrative work and offer tax advantages. The Federal Court of Justice recently found a practical solution to the controversy surrounding the legal capacity of a partnership under civil law.

Obligation to grant local community consent by way of substitution
  • Germany
  • 26 August 2011

The Federal Court of Justice has ruled that building permit authorities are obliged to grant local community consent in building permit proceedings if such consent has been refused unlawfully. The fact that the district administration offices are now obliged to provide unlawfully withheld consent by way of substitution is a welcome development, although it remains to be seen whether the ruling will have the desired effect in practice.

Priority rental rights in insolvency
  • Germany
  • 19 August 2011

Parties to rental contracts for commercial premises often agree priority rental rights. In practice, this concept is used to cover a whole series of legal structures. These range from fixed options for the tenant to a promise made by the landlord as a business policy that if any additional premises become available, they will be offered to the tenant. The Berlin Court of Appeal recently made a key ruling on priority rental rights in insolvency.

Federal Court of Justice rules on terrorism insurance
  • Germany
  • 15 April 2011

The Federal Court of Justice recently ruled that the costs of terrorism insurance can be allocated to tenants if the rental contract includes the appropriate provisions regarding auxiliary costs, there is a justified risk of terrorist attack for the relevant building and the cost/benefit ratio for the specific policy is reasonable.

Registration of a consortium in the Land Register
  • Germany
  • 25 February 2011

Once it was generally acknowledged that a partnership under civil law is capable of holding rights or incurring obligations, the issue of whether such partnerships were eligible for inclusion in the Land Register became a key question for debate. The outcome of the debate means that construction company consortiums can now secure outstanding claims for payment for work rendered by claim-securing mortgages.

Compulsory tender process for public sector property transactions
  • Germany
  • 03 September 2010

On the request of the Dusseldorf Higher Regional Court, the European Court of Justice (ECJ) has delivered an eagerly awaited decision on the obligation to carry out a tender process for public sector property transactions. An examination of the ruling refutes the notion that the ECJ has held, as many had assumed, that municipal property transactions are fundamentally not subject to EU public procurement law.

Federal Court of Justice rules on signatory requirements for rental contracts
  • Germany
  • 21 May 2010

In a recent ruling the Federal Court of Justice has made its requirements regarding written form in a rental contract even more stringent. This ruling will have major consequences for rental contracts to which a stock corporation is party. Existing rental contracts should be checked to ascertain whether a sufficient note on representation has been added to the signature.

Allocation of administrative costs in commercial lease agreements
  • Germany
  • 05 March 2010

The Federal Court of Justice has significantly simplified the allocation of property management costs to tenants by landlords. The court ruled that a provision in a commercial lease agreement stating that the costs of commercial and technical property management are to be assigned to the tenant as part of the auxiliary costs is valid even without a defined or maximum amount.

Changing the basis of price indices
  • Germany
  • 18 December 2009

The property industry regularly faces the question of how rent increases which are based on price index clauses should be calculated when there has been a change in the basis of the index since the last rent increase and this change has been published. In a recent case the Federal Court of Justice clarified how the transition between different indices can be dealt with if there are no applicable provisions in the relevant rental contract.

Court of Justice to Permit 'Cold Eviction' from Commercial Properties
  • Germany
  • 14 August 2009

In a surprising ruling the Federal Court of Justice has decided that, under certain circumstances, the landlord of a commercial lease agreement is not obliged to maintain the supply of heating and other utility services to the tenant following the expiry of the lease agreement. This means that, in strictly defined scenarios, the court will now permit the use of so-called 'cold eviction'.

Real Estate Restructuring: A Necessity in a Time of Crisis
  • Germany
  • 06 March 2009

It is predicted that 2009 will see emergency sales become a dominant feature of the transaction market due to the shortage of credit. Where there is a risk of a property or portfolio failing, all involved parties should prepare themselves by considering what action to take. The situation requires cooperation between all involved parties; emergency sales and execution proceedings can and must remain a last resort.