Homebuyers who fear someone will snatch their dream home from under their noses may agree to a cash reservation — but is such an arrangement legal? A judgment by the Federal Court of Justice (BGH) in Karlsruhe should create more clarity today (8.45 a.m.). So far, brokers and customers have been operating in a legal gray area.

In the case from Saxony, the plaintiffs had paid their brokerage company 4,200 euros so that the envisaged single-family home would not be sold elsewhere for a month – one percent of the purchase price of 420,000 euros. When buying, the sum should be offset against the commission. But that never happened because the funding failed. Now the plaintiffs want the fee back.

Very old BGH case law

In 2010, the BGH had already objected to a similar fee. The top civil judges saw this as an attempt to secure remuneration that was not dependent on success even if mediation efforts failed. The customer has very little of it: It can still happen that the previous owner backs out or sells the property to someone else on their own.

Unlike then, however, the clause was not included in the brokerage contract from the outset. The reservation agreement was made separately more than a year later. This is relevant because courts can only control provisions in general terms and conditions if they are a so-called ancillary agreement to the actual contract. Whether that is the case here is questionable.

The plaintiffs would get their money back even if a notary had been needed for the reservation agreement. On the question of when this is necessary, there is only very old BGH case law from the 1980s. At that time, the judges said: if the fee is more than 10 to 15 percent of the agreed commission. The idea behind this is that no one should feel pressured into buying the property just because they have already spent so much money.

Uncertain legal situation

At the hearing in February, the presiding judge Thomas Koch indicated that his Senate may see a need for change here. One could ask oneself whether this value is still appropriate from today’s perspective. For one thing, the range is very large. On the other hand, the commissions are regulated differently depending on the federal state.

In that case, the fee was 14.37 percent of the commission. In the second instance, the Dresden Regional Court had therefore considered them admissible even without notarization.

According to the experiences of the German Real Estate Association (IVD), reservation agreements for a fee are not particularly widespread in the industry – also because of the uncertain legal situation. Accordingly, reservation fees are most frequently found when buying new apartments directly from the developer.