Estate Agents’ Obligation to Provide Information
> February 2015

The complaining buyer signed a brokerage agreement regarding brokerage of a property. The real estate agent stated the following both on the internet and in the exposé: “.., the whole building has a full basement …” However, in reality, 24 m² (under the living room) did not have a basement. Even though she was aware of this, the real estate agent did not point out this fact. The buyer purchased the property and only later found out that it did not have a full basement. With its action the buyer requests the construction of a full basement on grounds of a violation of the obligation to provide information under the brokerage agreement.

The buyer did not succeed with its action at Munich Higher Regional Court (ruling of 19th November 2014 – 20 U 2215/14). With regard to this, Munich Higher Regional Court explained that even though the real estate agent had violated her obligation to provide information under the brokerage agreement the buyer cannot request her to create a full basement. The established case-law of the German Federal Court of Justice showed that the buyer cannot request compensation for non-performance, i.e. the construction of the full basement. The buyer shall only be compensated for the breach of faith, in this present case as a result of missing part of the basement, through refunding of the real estate agent’s fee, land transfer tax, land registry costs, interest damage and the reduction in value.

The buyer cannot request performance or compensation for damage on grounds of non-performance from the real estate agent in case of a violation of obligations to provide information. The buyer could only request this from the seller - who cannot be charged with a violation of the obligation to provide information in this case. The real estate agent is not treated as a seller as a result of this tort. This also applies if the buyer has a right to compensation from the broker as a result of pre-contractual or contractual ancillary obligations.

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