1 Introduction
The ruling of the Federal Court of Justice (BGH) of September 15, 2023 (V ZR 77/22) sheds light on the seller’s obligation to provide information in real estate transactions.
The case revolves around the question of whether access to a virtual data room with documents about the property is sufficient to fulfill the seller’s obligation to provide information, or whether he had to provide explicit information to the buyer in addition to providing documents.
2. The facts to be assessed by the BGH
A buyer purchased commercial units for 1.525 million euros. The seller provided her with a virtual data room, which also contained minutes of an owners’ meeting. This protocol indicated potential costs of up to 50 million euros for remediation measures. The buyer felt deceived and sued.
3. The judgment of the BGH
The BGH ruled that the seller had not fulfilled his duty to provide information simply by providing a virtual data room.
What matters is whether the seller can reasonably expect that the buyer will actually take note of the relevant information in the data room. In special cases, an additional obligation to provide information and notice may be necessary.
4. What does this mean for buyers and sellers?
a) For the seller:
A virtual data room with documents and information provided alone is not sufficient to fulfill the obligation to provide information. The seller must ensure that the buyer actually takes note of the relevant information (if necessary by asking).
b) For the buyer:
The buyer is not legally obliged to conduct due diligence. However, the buyer should carefully examine all information provided. However, the BGH has lowered the hurdles for the buyer with its current ruling.5. Conclusion
The ruling makes it clear that the seller’s obligation to provide information is far-reaching and is not simply fulfilled by providing a data room with all relevant information.
The BGH is thus softening its previous case law in favor of the property seller and setting higher requirements for the seller of a property.
As a consequence, this increases the risk for the seller that the buyer will challenge and reverse a real estate transaction due to fraudulent deception.
Buyers and sellers should therefore both take action to ensure that all relevant information is made transparent.
This article does not represent specific and individual legal advice, but rather only provides a rough initial overview of the very complex legal matter described. Minor deviations and processes in contract design and conclusion as well as the behavior of those involved can trigger different legal consequences. You can only obtain legal certainty for your specific case constellation through coordinated examination and advice from an expert lawyer.
I would be happy to assist you as a lawyer and specialist lawyer for a legal assessment and assessment of your case and to accompany and support you in real estate purchases, real estate transactions and disputes relating to real estate. Please feel free to contact me by phone or write to me.
I advise nationwide on site or via Zoom as a specialist lawyer in the legal areas of corporate law, tax law, insolvency law, banking and capital markets law and real estate law, especially in the cities and metropolitan areas around Stuttgart, Heilbronn, Karlsruhe, Freiburg, Ulm, Augsburg, Munich, Frankfurt and Wiesbaden , Saarbrücken, Kaiserslautern, Bonn, Wuppertal, Duisburg, Nuremberg, Münster, Saarbrücken, Düsseldorf, Cologne, Dortmund, Hanover, Kassel, Leipzig, Dresden, Bremen, Hamburg and Berlin.
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