BGH: No guidance on right of withdrawal means realtor not entitled to commission
According to a ruling of the Bundesgerichtshof (BGH) – Germany’s Federal Supreme Court – property buyers can potentially reclaim the commission they paid to the real estate agent if the latter fails to inform them about their right of withdrawal and provides no guidance on the issue.
In a judgment from November 26, 2020, the Bundesgerichtshof paved the way for many property buyers and sellers to rescind the brokerage agreement with their real estate agent (Az.: I ZR 169/19). We at the commercial law firm MTR Rechtsanwälte note that in order to exercise this right of withdrawal, the agreement must not have been concluded at the real estate agent’s business premises and they must not have handed over guidance to the client concerning the latter’s right of withdrawal. Assuming these conditions are met, it is possible to rescind the agreement within a period of 12 months and 14 days, with the result that the realtor is then no longer entitled to receive commission.
The defendants in the case before the BGH had concluded a contract for the sale of their house with a real estate agent at their residence. The sellers also signed a separate notice featuring guidance on their right of withdrawal, with this indicating that the enclosed sample withdrawal form could be used to rescind the agreement. However, no such form was provided by the realtor.
Following the sale of the property, the sellers refused to pay the brokerage fee and declared their withdrawal from the agreement. As was the case before the courts of lower instance, the lawsuit filed by the real estate agent was also unsuccessful before the BGH.
The court held that consumers have a right of withdrawal from agreements which are not concluded at the contractor’s business premises. The withdrawal period is 14 days, and the right of withdrawal expires no later than 12 months and 14 days after the agreement was concluded. However, the withdrawal period does not begin until the consumer has been informed about their right of withdrawal. In the case of agreements concluded away from business premises, the BGH stated that the contractor must make the relevant information available to the consumer on paper or – provided the consumer gives their consent – via another durable medium. Since this did not happen in the case in question, the withdrawal period had not begun.
According to the ruling delivered by the BGH, the information regarding the right of withdrawal in cases involving agreements concluded away from business premises must be made available to consumers in paper form or – provided the consumer gives their consent – via another durable medium, i.e., it must be physically presented to them. A mere acknowledgment is not enough. A real estate agent who fails to appropriately inform their clients about their right of withdrawal may lose their right to receive commission.
Contributing Advisors
