OLG Frankfurt: Unclear commencement of term renders guidance on right of withdrawal ineffective
If the guidance on the right of withdrawal in a loan agreement includes the words “die Widerrufsfrist beginnt frühestens mit Erhalt dieser Belehrung” (the withdrawal period shall commence at the earliest upon receipt of this guidance), withdrawal is likely to be an option.
GRP Rainer Lawyers and Tax Advisors in Cologne, Berlin, Bonn, Düsseldorf, Frankfurt, Hamburg, Munich, Stuttgart and London conclude: The OLG Frankfurt am Main (Higher Regional Court of Frankfurt am Main) has ruled in line with various other higher regional courts that the words “die Frist beginnt frühestens mit Erhalt dieser Belehrung” do not clearly indicate when the withdrawal period actually commences in the case of loan agreements, with the result that the withdrawal period does not commence and it remains possible even years after a loan has been taken out to withdraw from it. In its judgment of January 27, 2016, the OLG Frankfurt went on to say that the fact that a loan has already been prematurely paid off by means of an early repayment penalty does not exclude this possibility (Az.: 17 U 16/15).
In the present case, a consumer had taken out two loan agreements in 2007 for real estate financing purposes. Following the sale of the property, he prematurely paid off the loan agreements in 2014 by paying early repayment penalties. Around two months later, he withdrew from the loan agreements and brought a legal action for recovery of the early repayment fees. The OLG Frankfurt granted the claim, stating that the wording “die Frist beginnt frühestens mit Erhalt dieser Belehrung” was unclear. Consequently, the guidance on the right of withdrawal was flawed and the withdrawal had been effective.
The Court held that the bank could not invoke the protection of legitimate expectations, as this kind of protection would essentially only have been relevant if the bank had made use of guidance concerning the right of withdrawal that was completely consistent both in terms of content and presentation with the respective standard guidance. It ruled that two months after the loan’s repayment and payment of the early repayment penalty, the right of withdrawal had neither been forfeited nor exercised improperly. The OLG concluded that since the right of withdrawal can be exercised without explanation, it could not be said that the right had been exercised improperly just because the consumer wanted to obtain an economic advantage from doing so.
Consumers are still able to withdraw from real estate loans concluded between 2002 and 2010 if they received flawed guidance pertaining to their withdrawal options. Having said that, this so-called “ewiges Widerrufsrecht” (perpetual right of withdrawal) is set to come to an end on June 21, 2016. It will no longer be possible to withdraw from legacy contracts after this date. A lawyer who is competent in the field of banking law can examine whether the conditions for withdrawal have been met.