FACTS

The defendant was a subtenant of a flat in an apartment block. The main tenants of the flat since 1985 were the defendant’s sister and person C. The owner of the property transferred 1/5 of her co-ownership share to B in 1990. After the owner’s death, 4/5 of her co-ownership share was transferred to the heir A. In 1996, the division of the property was declared in accordance with § 8 WEG and A and B were entered in the land register as co-owners in 1997. In the same year, B transferred 1/5 of his co-ownership share to A, and A was also entered in the land register as the sole owner of the apartment building.

After the death of A, A’s sole heir concluded a supplementary agreement to the tenancy agreement of 20 December 1985 with the defendant, her sister and C in 2014. According to this agreement, C left the tenancy agreement and the defendant entered into the tenancy as the main tenant. In 2015, the defendant’s sister died and her husband P became her sole heir. The residential property was transferred to O- GmbH in 2015 and a land register entry was also made in the same year. In 2018, the plaintiffs then acquired the residential property in the disputed flat, and in December 2018 they gave notice of termination for personal use. In the appeal proceedings, the plaintiffs are seeking to have the judgement of the local court, which had initially upheld the plaintiffs’ action for eviction, reinstated.

RESTRICTION ON TERMINATION IN THE EVENT OF FLAT CONVERSION

The central provision of the judgement is Section 577a BGB. This standard contains a restriction on cancellation following the conversion of a rented flat into a condominium. After the conversion, a blocking period of 3 years applies to the assertion of justified interests of the purchaser. Such a legitimate interest may result from a termination for personal use or (under strict conditions) also from a termination for realisation. The lock-up period can be extended from 3 to 10 years in regions with a tight housing market. The main reason for extending the lock-up period is to ensure that the population is adequately supplied with rental accommodation on reasonable terms and to protect them from losing their homes. Already tight housing markets should be relieved as far as possible or at least not put under further strain. Berlin has had a tight housing market for some time and therefore made use of this regulation in 2013. The extension of the lock-up period is not limited to districts, but applies consistently throughout Berlin.

WHEN DOES THE LOCK-UP PERIOD START?

The BGH bases this on the time of the first acquisition of the residential property. Pursuant to Section 577a I BGB, the lock-up period begins with the first sale of the previously formed residential property to the purchaser. This first sale took place here for the first time with the acquisition of ownership by M-GmbH and its entry in the land register in 2015. Although the transfer of B’s co-ownership share to A constitutes a legal sale of a property share, this is not a sale to the purchaser within the meaning of Section 577a I BGB. The court justified this with the lack of a change of landlord. The purpose of the standard is to protect the tenant from terminations for personal use, which are to be feared due to a change of ownership and the (regular) associated change of landlord. However, the tenant’s risk of termination (for personal use) has not increased significantly due to the acquisition of the co-ownership share in this case, which is why this point in time should not be taken as the first acquisition.

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Der Beitrag EFFECTIVENESS OF THE BERLIN TERMINATION PROTECTION CLAUSE erschien zuerst auf JUR LAW.

By way of eviction enforcement, the eviction and surrender of an immovable object are to be obtained by means of state coercive measures. A classic case is a tenant who does not leave the flat voluntarily after termination and must be evicted by the landlord.

Pursuant to section 885 of the Code of Civil Procedure, eviction is carried out by the bailiff by removing the debtor from possession and placing the creditor in possession. The creditor thus receives an empty object.  Movable property that is not part of the execution is removed by the bailiff and handed over to the debtor. Especially in the case of rented flats, the costs for the creditor are very high in case of doubt. He must first pay for the costs of the removal of the objects and their safekeeping, in addition to the costs of the bailiff. Even if the creditor is basically entitled to reimbursement from the debtor, i.e. the former tenant, the chance of full repayment is rarely given, especially in the case of tenants without means.

So-called “BERLIN MODEL”

In order to reduce costs, the so-called Berlin eviction model has developed. This is because it has become apparent, especially in enforcement practice, that the creditor regularly does not get the costs of enforcement enforced against the debtor because the debtor is not able to pay.

In the case of a Berlin eviction, there is no eviction in the true sense of the word. The debtor can no longer enter the flat because the bailiff changes the lock. Since 2013, the Berlin model of eviction enforcement has been stipulated as a so-called limited enforcement order in section 885a ZPO. Here, the landlord exercises the landlord’s lien stipulated in § 562 BGB. Freely visible objects are to be documented by the bailiff for the purpose of preserving evidence. The costs for the creditor are limited to the advance payment of the bailiff.

So-Called “HAMBURGER MODEL”

The Hamburg model of eviction enforcement takes place in two phases.

In the first phase, the bailiff changes the locks. After setting a deadline of two weeks, the debtor has the opportunity to settle his debts. In the second phase, the eviction hearing takes place. However, the new flat key is not initially handed over to the landlord, but to an employee of a commissioned forwarding company. When the actual eviction takes place, the bailiff inspects the flat and takes a report and photos of the seizable objects. Subsequently, all attachable items are stored by a forwarding agency. If the tenant has found a new flat by then, the items will be delivered there. The landlord only receives the keys when the flat has been completely vacated.

So-Called “FRANKFURT MODEL”

The Frankfurt model of eviction is carried out by the creditor himself, but subject to conditions imposed by the bailiff. This procedure significantly reduces the costs for the creditor. The landlord must store the tenant’s furnishings in rooms that are accessible to the bailiff. If the landlord stores the furniture himself, he will also be liable for any damage. Precise documentation is therefore advantageous in this procedure.

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Der Beitrag Tenancy Law: Enforcement of eviction of a tenant erschien zuerst auf JUR LAW.

According to Section 903 of the German Civil Code (BGB), owners have the right to deal with an object as they see fit and to exclude others from any influence. If the effects of the action affect other properties in the vicinity, this leads to a conflict with the rights of the owners. Such conflicts can be reconciled by mutual consideration and toleration of the impact. Neighboring rights are the totality of norms that regulate the relationship between property owners. The goal is peaceful coexistence between neighbors.

Where is neighbor law regulated?

Neighbor law is made up of a large number of regulations under private and public law.

The regulations are not unrelated to each other, but are basically of equal importance.

Private neighbor law regulates the relationship between two neighbors. This is regulated in §§ 903-924 BGB and § 1004 BGB and applies uniformly to all federal states.

In contrast, public neighbor law also involves the administrative authority in the neighborly relationship. Neighbor-protecting regulations are to be assumed if a regulation protects individual interests.

Public neighbor law is essentially regulated in building law and in the Federal Immission Control Act.

In addition, the individual states can enact neighboring rights laws. Furthermore, regulations can be concretized by statutes of the municipalities.

Further rights and obligations are derived from court rulings in accordance with the law of judges. The law often uses undefined legal terms that require interpretation. The rulings therefore often diverge.

Neighbors can also agree on applicable neighboring rights by means of legal transactions, in particular contracts.

In addition, land registers can provide information on certain easements for neighbors.

Right of defense under Section 1004 (1) of the German Civil Code (BGB) 

Pursuant to Section 1004 (1) of the German Civil Code, an owner may demand that an interfering party remove or refrain from interfering. The claim presupposes that the addressee is the interferer of action or the interferer of condition. The impairment must be substantial. The assessment must be based on the perception of a “reasonable” average person and on what is reasonable. The claim is excluded if the owner is obliged to tolerate the impairment. Obligations to tolerate can exist by contract, by operation of law or within the framework of the neighborly community relationship. The claim can then be asserted by way of a defense action.

Obligations to tolerate pursuant to §§ 906 et seq. BGB

Neighborhood law imposes a duty on the property owner to tolerate certain encroachments on his property. In this respect, the obligation to tolerate is subject to the insignificant impairments of imponderable substances according to § 906 para. 1 BGB, the customary use of the property, the overhang according to § 910 BGB, the encroachment of fruits according to § 911 BGB, the overbuilding according to § 912 BGB, the emergency route according to § 917 BGB, the boundary conditions and boundary facilities according to §§ 919-923 BGB, as well as the effects according to the state road laws and from the neighborly community relationship. An insignificant encroachment according to Section 906 (1) of the German Civil Code can result from the limit or guideline values specified in the laws or from administrative regulations, for example, according to the Federal Immission Control Act or the Technical Instructions on Noise.

Compensation claim under neighbor law as a claim for compensation 

The claim for compensation under neighbor law in accordance with Section 906 (2) sentence 2 is not legally defined. According to the Federal Court of Justice (BGH), this is the case if a property has an unlawful impact on another property in the course of private commercial use, which is not to be tolerated.

The claim is not dependent on fault and is subsidiary to other claims for damages.

According to a BGH ruling of October 25, 2013, V ZR 230/12, the condominium owner and landlord is entitled to a claim for compensation under neighbor law in corresponding application of Section 906 (2) sentence 2 if a hose connection comes loose in the sterilization room of the defendant’s outpatient surgery center, resulting in a water leak in the practice rooms of the plaintiff’s medical practice.

According to OLG Düsseldorf, Appeal Judgment of January 15, 2002, 4 U 73/01, the neighbor has a claim against the property owner under § 906 II 2 of the German Civil Code (BGB) by analogy if a tree falls onto the neighboring property as a result of a storm of force 7-8, which a healthy tree would have withstood.

Neighborhood Law of the State of Berlin

The neighboring rights laws of the federal states largely coincide in terms of content, but in some cases contain divergent regulations. For example, the federal state of Berlin has also created independent regulations with the Berlin Neighborhood Law Act of 1973, with the last amendment by Article 1 of the Amendment Act of December 17, 2009.

Examples of conflicts under neighboring law

Noise pollution and disturbance of the peace

The volume, time and environment are of essential importance. Neighbors must be particularly quiet in a bright residential environment. A noise level that is customary in the locality must be taken into account. Misunderstandings can arise when moving from the city to the countryside due to mooing cows, crowing roosters in the early morning hours and agricultural vehicles (cf. VG Freiburg, judgement of 22.12.2008, ref. 4 K 2341/0; VGH Baden-Württemberg, judgement of 08.11.2000, ref. 10 S 2317/99).

Rest periods

Different rest periods may apply in the federal states and municipalities. However, night rest applies everywhere from 22:00 to 06:00. Disturbing activities such as lawn mowing, renovation and the use of tools must then cease. On Sundays and public holidays, quiet is to be maintained throughout the day, including the midday rest period from 13:00 to 15:00. Noises from washing machines or vacuum cleaning are to be accepted as socially acceptable noise disturbances (cf. LG Freiburg, judgment of 10.12.2013, ref. 9 S 60/13). There is no midday rest period in Berlin. The noise protection regulations according to the State Immission Protection Act apply. However, quiet times can be determined by rental agreement or house rules.

Young children

Children enjoy freedom in their development. The tolerance requirement only concerns children’s noise caused by screaming, laughing or romping as a natural urge to play and move and must be tolerated (cf. AG Hamburg-Bergedorf, judgment of 11.11.2018, ref. 409 C 285/08). Tolerance ends, however, where noise is no longer considered appropriate behavior for children and there is a duty on the part of parents to take educational measures (cf. LG Berlin, judgment of 05.09.2016, ref. 67 S 41/16).

Dog barking

Dogs are allowed to bark and be audible. Decisive factors are duration, frequency and time of day (cf. VG Düsseldorf, Urt. v. 11.11.2014, Az. 3 L 2216/14; LG Mainz, Urt. v. 22.06.1994, Az. 6 S 87/94). A noise log is recommended. In case of disturbances, the landlord is the contact person or the public order office is responsible.

Playing music

Playing instruments may not be prohibited in a rental agreement. The limit for practicing is two, three hours on weekdays and one to two hours on Sundays and public holidays outside of the midday and nighttime rest periods (see BGH, judgment dated October 26, 2018, Ref. V ZR 143/17).

Trees, shrubs and hedges

Pruning

If branches, twigs or roots of trees or hedges grow into the neighboring property, the neighbor has a claim for pruning according to Section 910 (1) BGB. However, the claim may become time-barred. In Berlin, too, the limitation period is three years from knowledge of the encroachment. First of all, the neighbor must be set a reasonable deadline for removal. Only when this period has elapsed can he carry out self-help, i.e. prune the tree himself. If the tree dies due to improper pruning, a right to damages may arise.

Who owns the fruit?

Fruit from a neighboring tree may not be picked even if its branches and twigs extend onto the other property. This is because the person who owns the plant also owns its fruit. Otherwise, theft is to be assumed. The situation is different if the fruit falls onto the property because it is ripe. The fruits then belong to the person on whose property they fall, according to § 911 p.1 BGB.

Property boundaries, enclosures and plant distances

An enclosure is an installation for demarcation to the outside in order to protect the property from encroachment (trespassing by people and animals, weather-related influences and views from outside) and to preserve its peace.

There is no federal fencing requirement. However, every property owner has a right to erect an enclosure on his property.

The federal states differentiate between a common enclosure and a legal enclosure. In Berlin, according to § 21 NachbG Bln, the right side of the property as seen from the street must be enclosed if the neighbor demands it. § Section 22 provides for exceptions to the obligation to enclose. §§ Sections 23, 24 describe the nature and location of the enclosure. Only an enclosure customary in the locality or a fence approximately 1.25 m high can be erected. According to Section 23 (2), regulations under public law (development plan or statutes of a municipality) take precedence over the Neighbor Rights Act with regard to the material and height of the fence. Cost allocation and maintenance costs are governed by §§ 25, 26 NachbG Bln.

A distinction is made between dead fencing (fence, wall) and living fencing (hedge).

When planting a hedge as a boundary enclosure, certain regulations must be observed. In Berlin, according to § 28 para.1 NachbG Bln, a distance of 0.50 m must be maintained for hedges less than two meters high and at least one meter for higher hedges. According to § 28 para.2, this does not apply if the neighbors erect the enclosure on the common boundary.

Privacy fences are building structures and may require building permission. A look at the building regulations of the respective federal state or a call to the responsible building authority is recommended. These must not deviate greatly from already existing visual protection measures. Thus, a fence several meters high does not have to be accepted in case of shadows.

The border distances for plants are regulated in §§ 27 ff. NachbG Bln. These are based on the type and height of the plant. Thus, different regulations apply to trees, shrubs and hedges. § 29 regulates the exception to the distance regulations. § Section 30 describes the calculation of the distance. If the regulations are violated, the neighbor can demand the removal of the planting according to § 31. However, this claim expires after 5 years, § 32 NachbG Bln.

Odor nuisance

Odors from the land

Agricultural odors are customary in the locality and must be tolerated as long as they do not exceed a reasonable level. Thus, the spreading of liquid manure, fertilization or the horse yard will be part of the normal operation of a farm (see OVG Lower Saxony, judgment of 15.06.2017, Az.1 ME 64/17 and 1 ME 66/17, OLG Düsseldorf, judgment of 28.07.1995, Az. 11 U 24/94; AG Neuss, Urt. v. 13.10.1989, Az. 36 C 337/89).

Barbecue

When it comes to barbecuing, it is particularly important for the tenant to know what is stated in the rental agreement or the house rules. There may be individual clauses that prohibit barbecuing on the balcony, terrace or garden or provide for certain barbecue devices (cf. AG Westerstede, Urt. vom 30.06.2009, Az. 22 C 614/09, LG Stuttgart, Urt. v. 14.08.1996, Az. 10 T 359/96; AG Bonn, judgment of 29.04.1997, Az. 6 C 545/96).

Homeowners are restricted by fewer regulations. At least if they have a single-family house on a single plot of land. They do not have to agree with a landlord whether barbecues are allowed and whether a charcoal, gas or electric barbecue is permitted. The State Immission Control Act stipulates a barbecue ban if there is a nuisance due to heavy smoke development. This is to be assumed in the case of health impairment if smoke clouds drift into the living and sleeping quarters of other residents.

Cigarette smoke

Smoking is generally permitted on the balcony or terrace. This falls under the contractual use. In the event of a significant impairment, smoking may be limited in time under certain circumstances (cf. BGH ruling of 16.01.2015, Ref. V ZR 110/14).

Dealing with pets and farm animals

Cats are allowed to enter the neighbor’s property (AG Bonn, judgment of 12.05.2009, Az. 11 C 553/08). However, the obligation to tolerate ends where the neighbor can no longer be expected to do so, for example if the cat defecates there or rummages through the garden beds. With dogs it is different. There, already the unleashed running around represents a violation of property by the dog owner (see LG Berlin, judgment of 07.12.2016, Az. 35 O 251/16).

Attempt at conciliation before court proceedings

In many German states, a neighbor dispute must go through a so-called mandatory conciliation procedure before the matter is heard in court. This is intended to help relieve the burden on the courts. Compulsory dispute resolution has been introduced in many federal states, including Brandenburg with the Brandenburg Conciliation Act – BbgSchlG. In Berlin, this has not yet been required.

However, this conciliation procedure should not be confused with arbitration, in which the parties voluntarily submit to an arbitrator’s ruling or attempt on their own initiative to find a solution to the conflict under the guidance of a mediator. A court ruling can make it difficult for neighbors to continue living together. In contrast, an amicable settlement with a mediator can often establish lasting legal peace.

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Der Beitrag Regulations around the neighborhood law erschien zuerst auf JUR LAW.

According to Section 903 of the German Civil Code (BGB), owners have the right to deal with an object as they see fit and to exclude others from any influence. If the effects of the action affect other properties in the vicinity, this leads to a conflict with the rights of the owners. Such conflicts can be reconciled by mutual consideration and toleration of the impact. Neighboring rights are the totality of norms that regulate the relationship between property owners. The goal is peaceful coexistence between neighbors.

Where is neighbor law regulated?

Neighbor law is made up of a large number of regulations under private and public law.

The regulations are not unrelated to each other, but are basically of equal importance.

Private neighbor law regulates the relationship between two neighbors. This is regulated in §§ 903-924 BGB and § 1004 BGB and applies uniformly to all federal states.

In contrast, public neighbor law also involves the administrative authority in the neighborly relationship. Neighbor-protecting regulations are to be assumed if a regulation protects individual interests.

Public neighbor law is essentially regulated in building law and in the Federal Immission Control Act.

In addition, the individual states can enact neighboring rights laws. Furthermore, regulations can be concretized by statutes of the municipalities.

Further rights and obligations are derived from court rulings in accordance with the law of judges. The law often uses undefined legal terms that require interpretation. The rulings therefore often diverge.

Neighbors can also agree on applicable neighboring rights by means of legal transactions, in particular contracts.

In addition, land registers can provide information on certain easements for neighbors.

Right of defense under Section 1004 (1) of the German Civil Code (BGB) 

Pursuant to Section 1004 (1) of the German Civil Code, an owner may demand that an interfering party remove or refrain from interfering. The claim presupposes that the addressee is the interferer of action or the interferer of condition. The impairment must be substantial. The assessment must be based on the perception of a “reasonable” average person and on what is reasonable. The claim is excluded if the owner is obliged to tolerate the impairment. Obligations to tolerate can exist by contract, by operation of law or within the framework of the neighborly community relationship. The claim can then be asserted by way of a defense action.

Obligations to tolerate pursuant to §§ 906 et seq. BGB

Neighborhood law imposes a duty on the property owner to tolerate certain encroachments on his property. In this respect, the obligation to tolerate is subject to the insignificant impairments of imponderable substances according to § 906 para. 1 BGB, the customary use of the property, the overhang according to § 910 BGB, the encroachment of fruits according to § 911 BGB, the overbuilding according to § 912 BGB, the emergency route according to § 917 BGB, the boundary conditions and boundary facilities according to §§ 919-923 BGB, as well as the effects according to the state road laws and from the neighborly community relationship. An insignificant encroachment according to Section 906 (1) of the German Civil Code can result from the limit or guideline values specified in the laws or from administrative regulations, for example, according to the Federal Immission Control Act or the Technical Instructions on Noise.

Compensation claim under neighbor law as a claim for compensation 

The claim for compensation under neighbor law in accordance with Section 906 (2) sentence 2 is not legally defined. According to the Federal Court of Justice (BGH), this is the case if a property has an unlawful impact on another property in the course of private commercial use, which is not to be tolerated.

The claim is not dependent on fault and is subsidiary to other claims for damages.

According to a BGH ruling of October 25, 2013, V ZR 230/12, the condominium owner and landlord is entitled to a claim for compensation under neighbor law in corresponding application of Section 906 (2) sentence 2 if a hose connection comes loose in the sterilization room of the defendant’s outpatient surgery center, resulting in a water leak in the practice rooms of the plaintiff’s medical practice.

According to OLG Düsseldorf, Appeal Judgment of January 15, 2002, 4 U 73/01, the neighbor has a claim against the property owner under § 906 II 2 of the German Civil Code (BGB) by analogy if a tree falls onto the neighboring property as a result of a storm of force 7-8, which a healthy tree would have withstood.

Neighborhood Law of the State of Berlin

The neighboring rights laws of the federal states largely coincide in terms of content, but in some cases contain divergent regulations. For example, the federal state of Berlin has also created independent regulations with the Berlin Neighborhood Law Act of 1973, with the last amendment by Article 1 of the Amendment Act of December 17, 2009.

Examples of conflicts under neighboring law

Noise pollution and disturbance of the peace

The volume, time and environment are of essential importance. Neighbors must be particularly quiet in a bright residential environment. A noise level that is customary in the locality must be taken into account. Misunderstandings can arise when moving from the city to the countryside due to mooing cows, crowing roosters in the early morning hours and agricultural vehicles (cf. VG Freiburg, judgement of 22.12.2008, ref. 4 K 2341/0; VGH Baden-Württemberg, judgement of 08.11.2000, ref. 10 S 2317/99).

Rest periods

Different rest periods may apply in the federal states and municipalities. However, night rest applies everywhere from 22:00 to 06:00. Disturbing activities such as lawn mowing, renovation and the use of tools must then cease. On Sundays and public holidays, quiet is to be maintained throughout the day, including the midday rest period from 13:00 to 15:00. Noises from washing machines or vacuum cleaning are to be accepted as socially acceptable noise disturbances (cf. LG Freiburg, judgment of 10.12.2013, ref. 9 S 60/13). There is no midday rest period in Berlin. The noise protection regulations according to the State Immission Protection Act apply. However, quiet times can be determined by rental agreement or house rules.

Young children

Children enjoy freedom in their development. The tolerance requirement only concerns children’s noise caused by screaming, laughing or romping as a natural urge to play and move and must be tolerated (cf. AG Hamburg-Bergedorf, judgment of 11.11.2018, ref. 409 C 285/08). Tolerance ends, however, where noise is no longer considered appropriate behavior for children and there is a duty on the part of parents to take educational measures (cf. LG Berlin, judgment of 05.09.2016, ref. 67 S 41/16).

Dog barking

Dogs are allowed to bark and be audible. Decisive factors are duration, frequency and time of day (cf. VG Düsseldorf, Urt. v. 11.11.2014, Az. 3 L 2216/14; LG Mainz, Urt. v. 22.06.1994, Az. 6 S 87/94). A noise log is recommended. In case of disturbances, the landlord is the contact person or the public order office is responsible.

Playing music

Playing instruments may not be prohibited in a rental agreement. The limit for practicing is two, three hours on weekdays and one to two hours on Sundays and public holidays outside of the midday and nighttime rest periods (see BGH, judgment dated October 26, 2018, Ref. V ZR 143/17).

Trees, shrubs and hedges

Pruning

If branches, twigs or roots of trees or hedges grow into the neighboring property, the neighbor has a claim for pruning according to Section 910 (1) BGB. However, the claim may become time-barred. In Berlin, too, the limitation period is three years from knowledge of the encroachment. First of all, the neighbor must be set a reasonable deadline for removal. Only when this period has elapsed can he carry out self-help, i.e. prune the tree himself. If the tree dies due to improper pruning, a right to damages may arise.

Who owns the fruit?

Fruit from a neighboring tree may not be picked even if its branches and twigs extend onto the other property. This is because the person who owns the plant also owns its fruit. Otherwise, theft is to be assumed. The situation is different if the fruit falls onto the property because it is ripe. The fruits then belong to the person on whose property they fall, according to § 911 p.1 BGB.

Property boundaries, enclosures and plant distances

An enclosure is an installation for demarcation to the outside in order to protect the property from encroachment (trespassing by people and animals, weather-related influences and views from outside) and to preserve its peace.

There is no federal fencing requirement. However, every property owner has a right to erect an enclosure on his property.

The federal states differentiate between a common enclosure and a legal enclosure. In Berlin, according to § 21 NachbG Bln, the right side of the property as seen from the street must be enclosed if the neighbor demands it. § Section 22 provides for exceptions to the obligation to enclose. §§ Sections 23, 24 describe the nature and location of the enclosure. Only an enclosure customary in the locality or a fence approximately 1.25 m high can be erected. According to Section 23 (2), regulations under public law (development plan or statutes of a municipality) take precedence over the Neighbor Rights Act with regard to the material and height of the fence. Cost allocation and maintenance costs are governed by §§ 25, 26 NachbG Bln.

A distinction is made between dead fencing (fence, wall) and living fencing (hedge).

When planting a hedge as a boundary enclosure, certain regulations must be observed. In Berlin, according to § 28 para.1 NachbG Bln, a distance of 0.50 m must be maintained for hedges less than two meters high and at least one meter for higher hedges. According to § 28 para.2, this does not apply if the neighbors erect the enclosure on the common boundary.

Privacy fences are building structures and may require building permission. A look at the building regulations of the respective federal state or a call to the responsible building authority is recommended. These must not deviate greatly from already existing visual protection measures. Thus, a fence several meters high does not have to be accepted in case of shadows.

The border distances for plants are regulated in §§ 27 ff. NachbG Bln. These are based on the type and height of the plant. Thus, different regulations apply to trees, shrubs and hedges. § 29 regulates the exception to the distance regulations. § Section 30 describes the calculation of the distance. If the regulations are violated, the neighbor can demand the removal of the planting according to § 31. However, this claim expires after 5 years, § 32 NachbG Bln.

Odor nuisance

Odors from the land

Agricultural odors are customary in the locality and must be tolerated as long as they do not exceed a reasonable level. Thus, the spreading of liquid manure, fertilization or the horse yard will be part of the normal operation of a farm (see OVG Lower Saxony, judgment of 15.06.2017, Az.1 ME 64/17 and 1 ME 66/17, OLG Düsseldorf, judgment of 28.07.1995, Az. 11 U 24/94; AG Neuss, Urt. v. 13.10.1989, Az. 36 C 337/89).

Barbecue

When it comes to barbecuing, it is particularly important for the tenant to know what is stated in the rental agreement or the house rules. There may be individual clauses that prohibit barbecuing on the balcony, terrace or garden or provide for certain barbecue devices (cf. AG Westerstede, Urt. vom 30.06.2009, Az. 22 C 614/09, LG Stuttgart, Urt. v. 14.08.1996, Az. 10 T 359/96; AG Bonn, judgment of 29.04.1997, Az. 6 C 545/96).

Homeowners are restricted by fewer regulations. At least if they have a single-family house on a single plot of land. They do not have to agree with a landlord whether barbecues are allowed and whether a charcoal, gas or electric barbecue is permitted. The State Immission Control Act stipulates a barbecue ban if there is a nuisance due to heavy smoke development. This is to be assumed in the case of health impairment if smoke clouds drift into the living and sleeping quarters of other residents.

Cigarette smoke

Smoking is generally permitted on the balcony or terrace. This falls under the contractual use. In the event of a significant impairment, smoking may be limited in time under certain circumstances (cf. BGH ruling of 16.01.2015, Ref. V ZR 110/14).

Dealing with pets and farm animals

Cats are allowed to enter the neighbor’s property (AG Bonn, judgment of 12.05.2009, Az. 11 C 553/08). However, the obligation to tolerate ends where the neighbor can no longer be expected to do so, for example if the cat defecates there or rummages through the garden beds. With dogs it is different. There, already the unleashed running around represents a violation of property by the dog owner (see LG Berlin, judgment of 07.12.2016, Az. 35 O 251/16).

Attempt at conciliation before court proceedings

In many German states, a neighbor dispute must go through a so-called mandatory conciliation procedure before the matter is heard in court. This is intended to help relieve the burden on the courts. Compulsory dispute resolution has been introduced in many federal states, including Brandenburg with the Brandenburg Conciliation Act – BbgSchlG. In Berlin, this has not yet been required.

However, this conciliation procedure should not be confused with arbitration, in which the parties voluntarily submit to an arbitrator’s ruling or attempt on their own initiative to find a solution to the conflict under the guidance of a mediator. A court ruling can make it difficult for neighbors to continue living together. In contrast, an amicable settlement with a mediator can often establish lasting legal peace.

JUR | URBAN ADVISES ON NEIGHBOR LAW. DO YOU HAVE ANY QUESTIONS?

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Der Beitrag Regulations around the neighborhood law erschien zuerst auf JUR LAW.

The regulations on property development contracts in section 650 u BGB (German Civil Code) and section 650v BGB were introduced into the BGB with the Act to reform the law on construction contracts in 2018.

The developer contract is legally defined in section 650 u (1) sentence 1 BGB as a “contract which contains the construction or conversion of a house or a comparable structure and the obligation of the contractor to transfer ownership of the land to the purchaser or to order or transfer a heritable building right.”

The property development contract is a mixed contract with elements of a purchase contract and a contract for work and services.

The law of sale is applicable to the obligation to provide the property or heritable building right and the law of contracts for work and services is applicable to the obligation to provide a construction service. In addition, elements of the law on contracts for work and services may apply.

The purchaser claims a property for an agreed fixed price without risks on completion. The construction description, planning, and management are carried out by the contractor. For the contractor, the sale of the property and the construction of the building are already connected for calculatory and constructional reasons.

II. WHAT DOES A DEVELOPER CONTRACT INVOLVE?

The contractor is also referred to as a property developer. A “property developer” is someone who wants to prepare, carry out and/or use building projects commercially as a builder in his own name for his own account or for the account of a third party. Pursuant to section 34 c (1) no. 3 a GewO, he requires permission from the competent authority. In addition, according to section 1 (1) MaBV, the regulations of the Makler- und Bauträgerverordnung (MaBV) apply to him.

The buyer, also called “purchaser”, can be a consumer or a commercial entrepreneur.

The general rules for property contracts apply to the conclusion of the contract. The contract requires notarial certification according to section 311 b sentence 1 BGB. The same applies to co-ownership in the form of residential or partial ownership.

In the area of heritable building rights, the formal requirement of section 311 b BGB applies over section 11 ErbbauRG.

According to section 650 u (1) sentence 2 in conjunction with section 650 j BGB, a building description must be provided if the purchaser is a consumer.

In addition, pre-formulated contractual conditions must comply with the requirements of section section 305 BGB and the general terms and conditions. Many development contracts fail to fulfill these requirements with regard to consumers which makes legal assessment beforehand very recommendable.

Section 650 u BGB applies to contracts concluded as from 1.1.2018. Pursuant to art. 229 section 39 EGBGB, the provisions of the EGBGB, the BGB and the Ordinance on Payments on Account for Property Development Contracts (Verordnung über Abschlagszahlungen bei Bauträgerverträgen), in the version applicable up to that date, shall apply to contracts concluded prior to that date.

Application and restriction of purchase and work contract law

On the legal consequences side, section 650u (1) sentence 2 BGB refers to the application of work/construction law regulations, (1) sentence 3 to the application of purchase law regulations.

According to section 650u (2), the paragraphs sections 648, 648a, 650b to 650e, 650 k (1) and section 650 l and 650 m (1) do not apply to the developer contract.

III. WARRANTY RIGHTS: WHAT DO I HAVE TO WATCH OUT FOR?

• LIABILITY OF THE BUILDER FOR DEFECTS

Liability for construction defects and planning defects is determined by the provisions of the contract for work and services in section 633 BGB. Construction defects may include, for example,

• • the use of materials they didn’t agree upon,
  • cracks in the walls and floors,
  • leaks or faulty installation.

• SUPPLEMENTARY PERFORMANCE ACC. sections  634, 635 BGB

The purchaser can demand supplementary performance in accordance with section 635 BGB. The contractor may remedy the defect or produce a new work. For this purpose, the developer must be given an appropriate period of time.

• SELF-PERFORMANCE ACC. sections  634, 637 BGB

After the expiry of the appropriate period, the contractor may – in some cases – do the work himself, i.e. remedy the defect at the developer’s expense, and demand reimbursement of the necessary expenses, section 637 of the BGB. Please note that these pissibilities only arise in exceptional cases.

• MINDFULNESS REGARDING section 634, 638 BGB

The condition for a reduction is also an unsuccessful deadline for supplementary performance. The reduction claim is calculated by comparing the value of the house or work in the defect-free condition and the actual value in the defective condition and is reduced by the difference. The reduction according to section 634 no. 3 BGB can no longer be demanded after a validly declared withdrawal. It also applies in the case of insignificant defects, section 638 (1) sentence 2 BGB.

• COMPENSATION FOR DAMAGES ACC. sections 634, 281, 311a BGB

A deadline for supplementary performance must have been set without success. In accordance with section 278 (1) BGB, compensation for damages also requires the developer to have acted in breach of duty, unless a liability guarantee has been assumed in accordance with section 276 (1) sentence 1 BGB. The obligation to represent is legally presumed, the developer must exculpate himself and bears the burden of presentation and proof, section 280 (1) sentence 1 BGB.

The purchaser may also claim damages if he has previously validly withdrawn from the contract or demand a reduction in price.

• COMPENSATION FOR FUTILE EXPENSES UNDER sections 634, 284 BGB

After an unsuccessful extension of the deadline, claims for reimbursement of expenses may be asserted that were incurred in reliance on the handover of defect-free construction work. These are “frustrated expenses” that have arisen after liabilities are incurred.

• WITHDRAWAL ACCORDING TO sections 634, 323, 326 (5) BGB

The client has the right to withdraw from the contract after an unsuccessful extension of the deadline.

The breach of duty must be substantial.

If the right of withdrawal is exercised once, the contract shall be transformed into an unwinding relationship. The performances received by each other must be returned.

Partial withdrawal is generally not possible because the developer’s performance is not divisible. The purchaser cannot withdraw from the construction and at the same time demand the purchase of land. However, the purchaser can be given the option of terminating the part of the contract for work if this has been agreed upon in contract law. A corresponding provision must be included in the developer’s contract. This may be important if there are significant construction delays or possible, subsequent insolvency of the developer.

Pursuant to section 323 (6), withdrawal is excluded if the purchaser is solely or predominantly responsible for the circumstance or if the circumstance for which the developer is not responsible occurs at a time when the purchaser is in default of acceptance.

The exclusion of the obligation to perform pursuant to section 275 BGB matters in which it is impossible or unreasonable for the developer to perform.

IV. LIABILITY OF THE DEVELOPER FOR DEFECTS IN THE PROPERTY

The liability for defects of the real property and for movable objects sold together with the real property is governed by the law of sale, section section 433 BGB.

A property is defective if it has a legal or a material defect. It is defective in quality if it does not have the agreed properties, for example, if the property does not have the declared area in the contract.

If the conditions are met, the purchaser has the same rights, i.e. supplementary performance under section 439, reduction under section 441, damages under section section 440, 280, 281, 283, 311a or withdrawal from the contract under section 440, 323, 326 (5) BGB.

Property defects are not as important in property development law as construction defects.

V. BUILDING IS COMPLETED TOO LATE – THE “STUCK BUILDING”

The BGB has various rights for the purchaser in the event of delayed completion of the construction project for the compensation for damages.

The delay in performance with a claim for damages according to section 286 BGB requires that the client has a due claim for the production of the agreed work against the work contractor. A further condition is the non-performance of the work contractor at the relevant time.

The work contractor must have been expressly reminded after this claim became due unless the reminder is dispensable in exceptional cases. This is particularly the case if – as is customary in the case of a construction contract – deadlines for completion or readiness for occupancy are included. Finally, the contractor must be responsible for his failure to perform, i.e. the delay.

Damages incurred by the purchaser as a result of delayed construction are, for example, the

• rental costs,
• travel expenses,
• hotel accommodation or storage costs for furniture,
• financing costs, in particular interest on travel costs,
• attorney’s fees,
• expert costs or
• compensation for loss of use.

Example from case law:

In its judgment of 15.05.2018 – 21 U 90/17, the Kammergericht ruled that the defendant had to pay damages to the plaintiff for delayed handover of a condominium. These damages consisted to the extent of the rental of a replacement apartment, the broker’s commission for the extension of the replacement lease, the costs of storing the furniture, costs of accommodating guests and commitment interest.

DISCLAIMER

The developer cannot invoke a liability agreement if it can be proven that he concealed the defect fraudulently.

The exclusion of liability also includes the assumption of a guarantee by the contractor.

Pursuant to section 309 no. 7a of the BGB, a form of consumer contract may not include a limitation or exclusion of liability for damages arising from injury to life, body or health that are based on a negligent breach of duty by the user. This also applies in accordance with section 309 no. 7b BGB for other damages. In addition, section 309 no. 8 BGB contains a list of inadmissible clauses that must be observed.

PROHIBITION

In the case of defect rights, the client has a right of choice.

The start of the limitation period for defect rights is structured differently.

For work on a property, the warranty periods under commercial law apply from the time of the handover in accordance with section 438 BGB. For work on a building, the warranty periods apply under the law on contracts for work and services. Pursuant to section 634a (1) no. 2, construction defects expire after five years from the acceptance of the building.

Case law defines acceptance as an approval of the work. There must be an inspection of the contractual object by the purchaser and the developer. Legal changes are associated with the acceptance: Transition from the stage of performance to the stage of supplementary performance, the start of the limitation period for claims for defects, transfer of risk, due date for payment, and reversal of the burden of proof.

From this on, the warranty period begins, and the buyer must prove that there is a defect in the property. Until the time of acceptance, the developer must prove that he has built without defects and that the property was ready for acceptance.

TERMINATION OF THE DEVELOPER’S CONTRACT

Section 650u (2) BGB excludes the applicability of free termination under section 648 BGB and termination for cause under section 648a BGB to the developer contract. They can agree on the inclusion of the VOB/B in the contract and attempt to enforce its validity or include different termination rights in the contract.

LIABILITY FOR DEFECTS UNDER THE VOB/B (CONTRACTING RULES FOR CONSTRUCTION WORK)

The performance of construction service is generally assessed in accordance with the BGB, unless the provisions of the German Construction Contract Procedures (Vergabe- und Vertragsordnung für Bauleistungen) have been agreed upon as an exception.

According to this, the purchaser has no right of withdraw when it comes to warranty rights. At most, he has a claim to subsequent performance, reduction of the purchase price, or compensation for damages in accordance with section 13 VOB/B.

Section  8, 9 VOB/B regulates more extensive termination opportunities for the purchaser.

In addition, the statute of limitations for the VOB construction contract in section 13 no. 4 VOB/B must be observed. Claims expire within two or four years if the VOB has been agreed upon, and even one year for defects in buildings and for work on a plot of land.

CONTRACTUAL PENALTIES

Under circumstances, there may be compensation in addition to damages for delay. But only if the parties have included a contractual penalty provision for the event of the delay.

Contractual penalties are available to the client as exerting pressure to ensure that the contractor performs the agreed construction work to the planned extent and meets the completion date on time. The client doesn’t have to provide proof of damage as in the case of a claim for damages.

Contractual penalties must be agreed upon in the notarized property development contract. In addition, they must be limited in amount. The amount of the limitation is based on the contract value.

The time limits must also be determined at the time the contract is concluded, or they must be effectively included in the contract later.

Development restrictions during the construction period and the resulting postponements of the completion date can cause problems.

EFFECTS OF THE CORONA PANDEMIC ON THE EXTENSION OF OCCUPANCY AND COMPLETION DEADLINES

Developers are facing challenges due to the Corona Pandemic. When are they allowed to invoke an extension of ready-for-occupancy and completion deadlines because the construction has been delayed?

Property development contracts often contain clauses that provide extensions in the event of “force majeure.” The Corona pandemic is regarded to be an unforeseeable, unavoidable and extraordinary event, and therefore as “force majeure”.

In this case, the burden of proof is shifted to the developer. The developer must then demonstrate and prove that there were difficulties in the delivery of materials and the deployment of personnel.

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For spouses, real estate regularly represents the most valuable joint possession. The situation becomes all the more emotional when it comes to divorce. The spouses must clarify what is to happen to the joint property in the event of divorce. The prerequisite for both spouses to be able to decide is that both spouses are the owners of the property, i.e. both are registered as owners in the land register.

By law, both spouses have an equal right to use the property. In order to clarify what happens to the property, the law focuses on the period of separation up to the divorce and the period after the divorce.

USE OF THE PROPERTY BETWEEN SEPARATION AND DIVORCE

In principle, separation is not a reason to require the other to move out of the joint property. The law assumes that both can live separately in the joint property. In this case, the division is the same as in a shared apartment. In practice, however, it turns out that this situation can lead to emotional stress, especially for joint children.

In order to avoid undue hardship, an assignment can also be applied for at the family court according to § 1361b BGB. However, this is only justified if assault, serious insults or similar occur. However, an assignment does not change the property relations. Even with an assignment, both spouses remain owners of the property.

If both spouses agree on who will move out and who will remain, the law assumes that the one who remains in the house or apartment must pay compensation to the other (known as compensation for use). The purpose of this is to provide compensation. It is a prerequisite that payment is clearly demanded. A retroactive request is not possible. Compensation for use also does not apply if, for example, the spouse remaining in the apartment or house has no income and looks after the joint children.

USE OF THE PROPERTY AFTER DIVORCE

§ Section 1568a of the Civil Code, following Section 1361b of the Civil Code, regulates the final use of the marital apartment or house by a spouse on the occasion of divorce. According to this provision, one spouse may demand that the other spouse give him or her the property if he or she is more dependent on it for the welfare of the children living in the household and due to his or her own living conditions than the other spouse, or if it is equitable for other reasons.

Pursuant to Section 1568a (5) of the German Civil Code (Bürgerliches Gesetzbuch – BGB), in the event of a transfer, each spouse may demand that the other spouse establish a tenancy on terms customary in the locality.

If the spouses cannot reach an agreement, one may demand that the other change the management and use of the property pursuant to Section 745 (2) of the German Civil Code, i.e., either grant the use of the property or pay a compensation claim. It is recognized in case law that only this demand can give rise to a subsequent compensation claim.

SALE AND AUCTION OF THE JOINT PROPERTY

If one spouse wants to take over the co-ownership share from the other, he or she must buy this share. The amount corresponds to the share of the market value. This can be determined either by comparison objects, by banks or brokers, or in case of dispute by an expert.

If there are debts, it must be clarified who bears the debt burden. If the home is financed by a loan, it is advisable to release the spouse who does not remain in the apartment or house from the loan agreement. Otherwise, he or she will also be liable for the fulfillment of the obligations under this contract, even though he or she is no longer the owner. Since the bank is regularly the lender and must give its consent, the remaining spouse must be solvent. Otherwise, the bank will withhold its consent.

Since a divorce is always emotionally stressful, it may happen that one spouse rejects the other’s proposal to sell.

If no amicable solution can be reached, the spouse’s only option is to force a so-called partition auction in court proceedings. In the course of the partition auction, both spouses can also bid. However, this can be economically disadvantageous for both spouses. In the worst case, it can even come to a situation where the debts are not covered due to a lack of equity capital in the case of a very high financing share.

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The insolvency of a property developer is still the number one business insolvency in the construction sector. The insolvency of a developer usually means that the property ordered by the buyer cannot be completed, additional costs are incurred and the entire construction project comes to a standstill.

If insolvency proceedings are to be carried out, it is first of all imperative that there is a reason for insolvency (§ 16 InsO) and that the debtor’s assets are sufficient to bear the costs of the insolvency proceedings. This is stipulated in § 26 InsO. If the developer does not have enough assets to cover the costs of the proceedings, the insolvency court will dismiss the case for lack of assets. The company is then liquidated. In this case, the rights and obligations of the respective contracting parties remain in force. The developer must therefore complete the building owed and transfer it to the purchaser. The purchaser must pay the agreed price, § 650u BGB.

Formal insolvency is spoken of when insolvency proceedings are opened. However, the developer may already be materially insolvent irrespective of the opening of proceedings. In other words, the developer can no longer meet its obligations on time; it is insolvent or overindebted, §§ 17 ff InsO. If the creditor becomes aware of the material insolvency, he may be able to challenge the contract under §§  119, 123 of the German Civil Code and claim damages.

OPENING OF INSOLVENCY PROCEEDINGS

When insolvency proceedings are opened by order of the insolvency court, the debtor loses the power to dispose of his assets, § 80 InsO. At the same time, there is a prohibition of enforcement by creditors by way of individual compulsory enforcement. The insolvency administrator becomes the central figure of the insolvency proceedings. The insolvency court appoints him. His task is essentially to determine the insolvency estate and divide it among the creditors. In doing so, he must increase the insolvency estate as much as possible during the insolvency proceedings in order to satisfy the creditors.

RIGHT OF CHOICE OF THE INSOLVENCY ADMINISTRATOR

The insolvency administrator has a right of choice here, § 103 InsO. However, a right of choice exists only if the contract has not yet been performed or has not been performed in full.

He can choose between the fulfillment of the contract instead of the debtor and thus also demand the fulfillment of the payment claim or leave it at the effect of the opening of the insolvency proceedings. The creditor must then file his claim in the insolvency table and is served according to his quota.

As a result, the insolvency administrator can have the construction project completed, but is not obliged to do so. There is no deadline for this decision. If delays occur as a result of the decisions, he is not liable for damages. The decision-making criteria for the selection are purely economic. The focus is always on increasing the insolvency estate. However, the creditor may request the insolvency administrator to exercise his right of choice, § 103 II 2 InsO.

LEGAL CONSEQUENCES OF THE DECISION

If the insolvency administrator opts for performance, the content of the contract remains unchanged. The main and ancillary performance obligations of the contract to be performed become so-called obligations of the insolvency estate (§ 55 InsO I No. 2 InsO), as do the warranty or defect claims or contractual penalties, even if they arose before the opening of proceedings. This also means that both contracting parties are bound by the terms of performance. If the contractual partner is obliged to perform in advance, he cannot, for example, invoke the plea of uncertainty pursuant to § 321 of the German Civil Code.

If he decides against performance, the contracting parties merely lose the enforceability of their claims. It remains with the consequences that the opening of insolvency proceedings entails. §103 II p.1 InsO grants the creditor a claim for damages for non-performance. This must be filed in the insolvency table and will then be served according to its quota in the proceedings. If the client has independently remedied the defects or had the building completed, the insolvency administrator can claim damages because it has been made impossible for him to perform.

REFUSAL OF PERFORMANCE IN THE CASE OF A DEVELOPER’S CONTRACT

If the insolvency proceedings of a developer are opened and the insolvency administrator refuses performance, the concluded developer contract is divided into a part relating to the purchase contract and a part relating to the contract for work.

If a priority notice of conveyance for the creditor has already been entered in the land register at this point in time, the purchase contract part must be fulfilled in accordance with § 106 I InsO. Thus, the purchaser retains the claim to fulfillment, since the priority notice secures the claim. He, therefore, retains his claim to transfer of ownership vis-à-vis the building entity at the time of insolvency.

The part of the contract for work and services involves the production of the contractually agreed work and as such cannot be enforced against the insolvency estate. The purchaser is entitled to damages for non-performance. If the purchaser has already paid the full amount, he shall be entitled to a claim for damages in the amount of the overpayment against the state of construction.  There is no obligation to complete in this case.

SPECIAL PROBLEM: TERMINATION AFTER INSOLVENCY OF A DEVELOPER

A special problem is the termination of the developer’s contract by the purchaser in the insolvency of the developer. Reasons for this can be the late completion or the presence of serious defects. This renders the registered priority notice of conveyance invalid, as it is accessory to the claim under the law of obligations. This means that it is dependent on it. As a result, the insolvency administrator can then demand approval of the cancellation of the priority notice without having to refund the purchase price to the purchaser from the assets. In this respect, the termination may have serious consequences.

SPECIAL PROBLEM: ASSERTION OF WARRANTY CLAIMS

The insolvency of a developer is particularly problematic if the purchaser wishes to assert warranty rights. This is the case if a defect occurs after the property has been handed over.  If the developer is already insolvent, it is highly likely that it will be difficult to assert warranty rights. The creditor has no claim to subsequent performance against the craftsmen commissioned by the developer. In some property development contracts, an assignment of these claims is agreed upon. Then, and only then, does the creditor have a direct claim against the craftsmen. However, these assignment clauses are the absolute exception. Even after the opening of insolvency proceedings, the creditor has the option of demanding the assignment of the claims from the insolvency administrator.

The risk of insolvency can also be included in the contract in other ways. By way of a warranty bond (also called a defect bond), the builder can demand that the developer provide a guarantee for completion and warranty. Another possibility is to agree on a performance security in the form of a down payment amounting to 5% of the construction sum. This can be retained by the builder. Thus, in the event of insolvency of the developer or incomplete partial performance, the project can be advanced from these funds. The aforementioned performance security is standardized by law in Section 632a (3) of the German Civil Code (BGB).

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While movable assets are enforced in the case of execution on movables, immovable assets are enforced in the case of execution on real estate. Immovable assets are essentially land, its structures, condominium ownership, partial ownership and rights equivalent to land, i.e. real estate.

In accordance with § 866 ZPO, there are various ways of enforcing execution. In addition to the foreclosure auction, among other things, the registration of a security mortgage can also be considered.

Foreclosure auction (zwangsversteigerung)

The purpose of a forced or foreclosure sale is to realize the existing assets. The creditor is satisfied from the proceeds. In simple terms, the property is auctioned off and the creditor receives the amount of his existing claim from this. Since the debtor thereby loses his ownership of the property, this is probably the most drastic measure for him. First of all, the creditor has to pay some costs in advance. These include expert costs and costs for announcing the auction date. The decisive factor for the amount of the costs is the market value of the object and the costs of the expert. In this respect, the disadvantage of the forced auction is the initial cost intensity for the creditor.

A special form of foreclosure auction is the partition auction. Here, no creditor is satisfied, but according to § 180 ZVG the community is to be dissolved, as it does not agree on the whereabouts of the property.  Special cases of application are those for a marriage community, a community of heirs or a civil law partnership (GbR).

Proceedings of the Partition Auction (Teilungsversteigerung), §§ 180 ff ZVG

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The partition auction procedure is a special procedure of the foreclosure auction. Here the community regarding the property is to be cancelled. A divisible sum of money is to be put in place of the property in order to satisfy the part owners and finally dissolve the community.

According to § 180 para. 1, 15 ZVG, the partition auction is initiated by application of the entitled party to the competent court. Unlike the “normal” foreclosure auction procedure, no title is required here, § 181 ZVG. Creditors of liens on real property are involved in the proceedings and are taken into account in accordance with their status in the land register.

In principle, every co-owner is entitled to file an application, regardless of the size of his share.

If the court decides positively on the application, the partition auction is ordered by resolution. This results in seizure and, according to § 23 ZVG, a prohibition of sale.

After seizure, a market value appraisal is prepared. This determines the market value. Value limits are then determined on the basis of this. The most important of these is the 5/10 limit. This must be exceeded at the auction.

Once the lowest bid has been determined, the court schedules a date for the auction. The court announces the date publicly. If a valid bid is made at the auction, the successful bidder becomes the new owner of the property.

The court refuses to accept the bid if the highest bid is lower than the lowest bid. In a second hearing, the lowest bid is then considered as the lower limit. If there is then no valid bid, the proceedings are discontinued.

Proceeds Distribution

After the foreclosure sale has taken place and the successful bidder becomes the new owner, the proceeds are distributed at the distribution meeting. Here, the procedural costs are taken from the auction proceeds and the rights are served, which are to be covered by payment. The community regarding the property ends and only continues in the proceeds. The actual distribution of the proceeds is not made by the court. If the former co-owners cannot agree on the distribution of the proceeds, the proceeds of the auction shall be deposited with the court for the benefit of all of them.

If the debtor does not agree with the partition auction, he/she may oppose it. § 180 ZVG provides as a protective provision that the temporary suspension of the proceedings can be applied for.

Marital partnership

If both spouses have bought an apartment or house together and now divorce, there is often disagreement about the whereabouts of the property.

A distinction must be made between the time before the divorce becomes final and after. A partition auction prior to a final divorce is only possible if the spouses are not in the status of community of gains or community of property and the joint property does not represent the entire assets.

The legal matrimonial property regime at the time of marriage is regularly that of community of accrued gains. In this case, the assets remain separate during the marriage. If a divorce or the death of one of the spouses does occur, an equalization of gains is carried out.

If spouses acquire real estate, they regularly do so in a community of fractional shares. In case of doubt, it is assumed that both have equal shares. Theoretically, each can then dispose of his or her share, but not of the property as a whole. For this reason, the partition auction is of particular importance here.

Separate from this is always the question of how the use of the property is to be remunerated.

Civil law partnership

The property of a civil law partnership can also be the subject of a partition auction procedure. In this case, the apartment or house is the sole property of the civil-law partnership (GbR).  The rules of community also apply to the GbR according to § 731 para.2 BGB. Consequently, the division must be carried out by way of a partition auction according to § 753 BGB.

The individual shareholder is entitled to file an application. The provisions of § 181-184 ZVG apply here. In its decision of May 16, 2013 (Bundesgerichtshof Beschluss v. 16.05.2013, Ref.: V ZB 198/12) established that the individual shareholder can file an application without having to first enforce his claim for auction of the property in court. This means that the individual shareholder can apply for the partition auction against the will of the others and force the sale.

If the other partners raise objections, they may then assert them by way of an action for opposition pursuant to § 771 ZPO by analogy.

Heirship

The partition auction in the case of a community of heirs is of equally great importance. A community of heirs comes into existence upon the death of the testator. If the decedent has not made a will or designated multiple heirs for an item, intestate succession takes effect. Each co-heir then becomes part of the community of heirs. The members of the community of heirs share ownership of the objects of the estate. Each can dispose of his or her part. However, when disposing of the whole thing, all must agree. In this respect, it is obvious that disputes about the common property may arise. If a member of the community of heirs desires the dispute of this and the other members are not willing to compromise, ultimately only the possibility of the partition auction remains.  According to the provisions of Section 2042 of the German Civil Code, each co-heir can demand the division. To do this, he must submit an informal, written application for a partition auction. Content is the dispute of the community of heirs.

Recording of a forced security mortgage

The compulsory security mortgage or also compulsory mortgage is a security from which the foreclosure auction can be pursued. It is thus a state means of compulsory enforcement and secures the claim against the debtor. There is no direct satisfaction. In this respect, the compulsory security mortgage differs from the foreclosure auction.

The general provisions of the security mortgage pursuant to §§ 1184 – 1186 BGB apply as the means of security here. The difference to the ordinary security mortgage is in the origin. The forced security mortgage is acquired by way of execution. The security mortgage is an agreement under the law of obligations.

Here, too, it is a prerequisite that the creditor has an enforcement title against the debtor, which proves that he has a titled claim against the debtor in the amount of at least €750. This is intended to ensure the clarity of the land register, as this would no longer be guaranteed in the event of registration due to many low-value claims.

According to § 867 ZPO, the creditor can have the security mortgage entered in the land register upon application. Responsible for this is the land registry office, which also checks before registration whether the conditions for compulsory enforcement are met.

Advantages for the creditor

In this way there are advantages for the creditor:

– the registration of the forced security mortgage discourages buyers and thus puts the debtor under pressure

– the mortgage creditor automatically becomes a party to the foreclosure auction proceedings in accordance with § 9 no. 1 ZVG and can thus, for example, file applications

– the costs of registration are relatively low

– in the event of an auction, the mortgagee has a better ranking than creditors of unsecured claims and is thus satisfied with priority

The disadvantage for the creditor is the fact that his claim is only secured and he can only obtain satisfaction through the realization (i.e. through forced sale or administration).

If the debtor pays after the forced mortgage has been registered, the forced mortgage is automatically converted into a land charge against the owner. He can then either have this deleted or use it to secure other claims.

Clearance after the forced sale

If the purchaser wants to use the property himself, problems may arise. Insofar as the former owner wants to remain in the apartment, it must be vacated by way of eviction execution. The creditor needs an enforcement title for this. According to § 93 ZVG, the award decision is such an eviction title. With the help of this title, he can pursue the execution against the former owner.

Eviction of a tenant

The case is different if the property is rented. Here, the tenant cannot be evicted by the award order. § 57 ZVG refers to the §§ 566 ff BGB. The tenancy continues with the buyer. However, according to § 57a ZVG he is entitled to a special right of termination. The termination must be made on the first permissible date, otherwise it is inadmissible. The first permissible date is calculated on the basis of the surcharge. The decisive date for the effectiveness of the award is the announcement, § 89 ZVG. It is important that the purchaser has a legitimate interest in the termination and complies with the statutory period of § 573d BGB. The termination must be declared on the third working day of a month with the end of the month after next. The standard examples of § 573 BGB are to be applied with regard to legitimate interests. A justified interest represents regularly the own need.

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In addition, Section 577 of the German Civil Code grants tenants a statutory right of first refusal.

PREREQUISITES OF THE PRE-EMPTIVE RIGHT OF TENANT / RIGHT OF FIRST REFUSAL

The prerequisites of a statutory pre-emptive right under Section 577 (1) sentence 1 BGB are met if the apartment is occupied by a tenant, a tenancy agreement exists and condominium ownership is created after the apartment has been transferred to the tenant. If the prerequisites of a right of first refusal exist, the tenant can buy the apartment first, before anyone else. The conversion takes place in accordance with the Condominium Act (Wohnungseigentumsgesetz, WEG).

The right of first refusal always applies only to a first-time sale.

Pursuant to Section 577 (1) sentence 3 BGB, the provisions on pre-emption pursuant to Section 463 et seqq. BGB apply to the right of first refusal, unless otherwise stipulated in Section 577 BGB. The provisions include the right to enter into an existing contract in place of the purchaser on the same contractual terms.

Pursuant to Section 577 (2) BGB, the landlord must inform the tenant of his right of first refusal by sending him a notice of the entire contents of the concluded purchase agreement, informing him of his right of first refusal and advising him of the time limit for exercising it.

The right of first refusal exists as soon as the landlord or the seller of the condominium enters into an effective, notarised purchase agreement for the rented condominium.

The right of first refusal is not transferable. The tenant can only exercise the right of first refusal himself and demand the transfer of ownership to himself. The right of first refusal is not inheritable. If the tenant dies, the right of first refusal passes to those who enter into the tenancy under Section 563 (1) or (2) BGB, in accordance with Section 577 (4) BGB.

HOW DOES ONE EXERCISE THE RIGHT OF FIRST REFUSAL / PRE-EMPTIVE RIGHT AS A TENANT?

Pursuant to Section 577 (3) BGB, the right of first refusal is exercised by written declaration of the tenant to the landlord. According to the general regulations on the right of first refusal under Section 469 (2) BGB, the tenant has two months to exercise the right of first refusal from the date of receipt of the notification of the right of first refusal. An extension of the time limit is conceivable, but a shortening is not.

NON-EXISTENCE OR EXCLUSION OF THE RIGHT OF FIRST REFUSAL

The right of first refusal does not exist if the rented appartment was already a condominium converted according to the WEG when the tenant moved in or if the landlord intends to sell the apartment to a family member or a member of his household according to Section 577 (1) sentence 2. It also does not exist if a property built on with an apartment building is sold (BGH, judgement of 22.11.2013, ref.: V ZR 96/12). However, it exists if a terraced housing estate is divided into individual plots and these are sold individually with the terraced houses (BGH, judgement of 28.5.2008, ref.: VIII ZR 126/07).

Pursuant to Section 577 (5) BGB, an agreement in the tenancy agreement to the detriment of the tenant, for example a waiver of the right of first refusal, is always invalid.

LEGAL CONSEQUENCES OF EXERCISING THE RIGHT OF FIRST REFUSAL

If the tenant exercises his right of first refusal, a new independent purchase agreement is concluded between the seller and the tenant, which, however, contains all the contractual clauses that were agreed between the seller and the third party. The purchase contract is therefore not renegotiated or amended.

FAILURE OF THE LANDLORD TO PROVIDE INFORMATION: CLAIM FOR DAMAGES

If the landlord fails to comply with the duty to inform, the period for exercising the right of first refusal does not start to run. Pursuant to Section 280 BGB, the tenant is also entitled to damages if the landlord fails to comply with his duty to inform and the tenant is denied his right of first refusal.

Damages may be the difference between the market value of the apartment and the purchase price agreed with the third party. The tenant must actually have suffered damage because he was not informed about his right of first refusal. He has to prove that he would have exercised the right of first refusal, i.e. that he had a loan or certain equity. 

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Der Beitrag Pre-emptive right of the tenant | sale of a condominium erschien zuerst auf JUR LAW.

TYPES OF BROKERS AND BROKERAGE CONTRACTS 

There are different types of brokers regulated by law. A broker receives a commission if he provides evidence of the opportunity to conclude a contract or if he mediates this contract.

There are different types of brokerage contracts. In the case of a general commission, several estate agents can be commissioned at the same time to market the property. The client her-/himself is entitled to identify interested parties and to bring about a conclusion of the sale/purchase. In the case of a sole mandate, only one agent is commissioned. However, the client may also act and handle the sale. In the case of a qualified sole mandate, only the commissioned broker may identify interested parties for the property and bring about a sale.

PROVISIONS OF BROKERAGE LAW AND THE FORMATION OF THE BROKERAGE CONTRACT

A brokerage contract is a contract between the broker and his principal. For an effective brokerage contract, the principal can be a seller as well as a buyer or a prospective buyer. A brokerage contract is already deemed to have been concluded when the prospective buyer accepts the broker’s offer to view real estate with him. However, the prospective buyer should be informed about his right of withdrawal beforehand.

Since 23 December 2020, a new regulation applies to the sale of owner-occupied apartments and single-family houses to consumers according to Section 656b BGB. According to Section 656a BGB, these brokerage contracts require text form, an agreement made verbally is not sufficient. According to Section 2 (I) WoVermG, text form is also required for brokerage or proof of the conclusion of a tenancy agreement.

The brokerage contract should at least include the type of contract, the name of the client, the property to be marketed, the sales price, the agreed brokerage commission, the term of the contract and the duties of the real estate agent.

PAYMENT OF A BROKER BY CONTRACTING PARTIES

In brokerage law, when it comes to payment, terms such as “broker’s commission”, “broker’s fee” or simply “broker’s fees” are used. This amounts to a percentage of the sum received by the seller. The commission should already be regulated in the contract, as the amount of the broker’s commission is not regulated by law. The question of who has to pay the broker has been answered differently at Land level. In most federal states, the seller and buyer shared the commission. In Berlin and Brandenburg, for example, the buyer had to pay the commission of 5-7 per cent.

Since 23 December 2020, a new law will applies to many real estate purchases and commissions: the agent may then only demand his commission from the buyer and the seller in equal shares, i.e. half each, in accordance with Section 656c BGB or 656d BGB when selling owner-occupied apartments and single-family houses to consumers. This also applies if the broker agrees with one party to work for him free of charge.

In the case of renting, on the other hand, this so-called “buyer principle” has long been in force: the agent is paid by the party who has commissioned him. This is usually the landlord. The broker’s commission may not exceed two net monthly rents.

TERMINATION OF THE BROKERAGE CONTRACT

In the case of a contract for an indefinite period, it may be terminated at any time without giving reasons. In the case of a fixed-term contract, it may be terminated either with due observance of the notice periods or extraordinarily for good cause. Good cause may exist when the broker does not fulfil his contractual obligations, the term of the contract is too long or the relationship of trust is disturbed.

COMPENSATION FOR DAMAGES IN THE EVENT OF BREACH OF DUTY BY THE CLIENT

If the principal breaches his contractual obligations under the brokerage contract, the broker is entitled to claim damages pursuant to Section 280 et seqq. BGB. He must be placed in the position he would have been in if the breach of duty had not occurred. In addition, he can demand reimbursement of his expenses according to Section 652 (II) BGB, if agreed. However, the broker is only entitled to a commission if he can prove that the apartment or property has been sold or arranged elsewhere.

Furthermore, there is also a special need for protection in the area of housing in the law on estate agents. To protect the person seeking housing, there are therefore additional protective provisions that can be found in the Wohnungsvermittlungsgesetz and are always applied when the broker mediates housing on a commercial basis.

LIMITATION OF THE BROKER’S COMMISSION UNDER COMMERCIAL TENANCY LAW 

In commercial tenancy law, there is no corresponding limitation of the broker’s commission. The Wohnungsvermittlungsgesetz restricts the contractual autonomy in favor of the person seeking housing. According to Section 4a (I) WoVermG, no down payments may be agreed in the brokerage contract as payment for a partial service already rendered. According to Section 4a (II) WoVermG, only furnishment or inventory items are exempt from this. The estate agent may only offer a apartment if he has been commissioned to do so. In addition, he has to observe certain compulsory details in advertisements for  apartment. In the event of violations of the provisions of the Wohnungsvermittlungsgesetz, a fine can be imposed on him.

EXCLUSION OF the claim to commission due to entanglement and EXCEPTION with ABSTRACT acknowledgement of debt

Section 652 of the German Civil Code (BGB) requires a 3-person relationship between the broker, the client and a third party. If the broker is economically or personally connected with one person, this is called interconnection and the broker loses his claim to commission.

The broker does not lose his entitlement to commission if he fully informs the client about the existing interlocking and the client commits himself by an independent promise of commission.

genuine interlocking in the case of economic involvement

In the case of genuine interlocking, the broker is economically or socially identical with the third party.

Economic involvement is assumed, for example, if the broker holds shares in the company or if he acts as managing director of the selling company. So that there is no independent and autonomous formation of will and that he exercises a controlling influence on the business of the contracting party.

non-genuine interlocking in the case of institutionalised conflict of interests

In the case of a non-genuine interlocking relationship, case law focuses on whether the formation of interests on the part of the broker is so institutionalised that he appears unsuitable for the brokerage activity.

This institutionalised conflict of interest exists, for example, if the broker is the spouse of the seller, if the broker has acted as the administrator of the common property and must agree to the purchase agreement on the sale of the condominium, if the broker is a commercial agent, if he is the executor of the will over the property to be sold as an estate or if he is a forced administrator.

forfeiture 

According to Section 654 BGB, the broker’s claim to broker’s commission is excluded if the broker has also acted for the other party contrary to the content of the contract.

However, case law has developed Section 654 BGB beyond the prohibition of double brokerage to a norm in the case of conduct of the broker in breach of duty. In this context, case law sees Section 654 BGB as a sub-case of Section 242 BGB, whereby the broker proves unworthy of his wages if he breaches his duty of loyalty intentionally, maliciously or at least in a grossly reckless manner. A serious breach of fiduciary duty exists, for example, in the event of a breach of duties to inform and advise.

The client then bears the burden of explanation and proof.

limitation of claims 

The claim for commission is subject to the regular limitation period of Section 195 BGB and thus ends after 3 years.

Pursuant to Section 199 (1) BGB, the limitation period begins at the end of the year in which the commission claim arose.

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Der Beitrag Brokerage law when concluding a real estate purchase or rental agreement erschien zuerst auf JUR LAW.