April 26, 2023, 2:51 am | Read time: 4 minutes
Found the dream house, but the financing isn’t quite settled? It’s even better if the realtor offers an exclusive reservation. But can they charge for it?
In most cases, realtors are not allowed to charge prospective buyers a fee for reserving a property exclusively for them for a certain period. Such a clause in the general terms and conditions unfairly disadvantages customers, ruled the Federal Court of Justice (BGH). For the judges in Karlsruhe, it doesn’t matter whether the agreement was made directly in the realtor contract or separately later. This was previously unclear, but the BGH (Case No. I ZR 113/22) has now clarified the issue of reservation fees for real estate.
Realtors are, of course, free to offer a potential buyer a reservation promise as a complimentary service. Additionally, it is still possible to agree on a reservation fee in individual cases, provided there is a good reason. In detail:
Reservation Fee for Real Estate – What It Was About
The plaintiffs wanted to buy a specific single-family home, but the financing wasn’t yet secured. The real estate company promised to reserve the house exclusively for them for one month–for a fee of 4,200 euros.
This was one percent of the purchase price of 420,000 euros. The amount was to be offset against the commission upon purchase. But it never came to that: The plaintiffs couldn’t come up with the money for the house purchase. In court, they sought to get the fee back from the realtor.
The Previous Legal Situation
In 2010, the BGH had already objected to a similar fee. The top civil judges saw it as an attempt to secure a success-independent payment even if the brokerage efforts failed. At that time, the clause was directly in the pre-formulated contract terms, so the customer had to sign it or leave it altogether.
In the current case, there was a separate reservation agreement made more than a year after the realtor contract. The Dresden Regional Court therefore awarded the money to the realtor. Courts can only review terms in general conditions if they are considered a side agreement to the main contract. This was questionable here.
Related: Reserving Property – When Is a Purchase Intent Declaration Worth It?
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The Verdict
For the BGH judges, the reservation contract is merely an addition to the realtor contract despite the significant time gap–and can therefore be reviewed. Otherwise, it would be easy to circumvent the fee ban by setting up two separate contracts, said Senate Chairman Thomas Koch.
According to the judges, the clause benefits the realtor unilaterally. Koch said that while customers have an interest in ensuring no one else snaps up the property–and pay a significant amount for it–“they don’t gain much from it.” The owner could still back out or sell the property elsewhere on their own.
The fee also creates some pressure to purchase the property. The realtor, on the other hand, doesn’t face significant disadvantages from the reservation. The judges consider it unrealistic that they would have found another buyer for the property in such a short time. Therefore, the plaintiffs will get the 4,200 euros back.
Also interesting: These Are the Rights and Duties of a Real Estate Agent
The Implications
According to the German Real Estate Association (IVD), charging a reservation fee was not particularly widespread in the industry even before–partly due to the uncertain legal situation. The BGH has now completely buried its standardized agreement, said IVD legal advisor and deputy federal managing director Christian Osthus. “Unpaid agreements are, of course, always possible. That also characterizes a good customer relationship.”
For individual agreements, the content requirements are high. It must be evident that there is a give and take. Osthus therefore assumes that reservation fees for real estate will continue to play a role primarily in the developer business. That is, when buying into a larger new construction project.
In this area, it may happen that certain planning steps are postponed for a certain consideration period–for example, so that the potential buyer can still influence whether they prefer three large or four smaller rooms in their condominium. In this area, fee-based individual agreements are conceivable.