Caution – liability for false statements in sample calculations

Intermediaries who prepare sample calculations of returns, appreciation potential or other future assumptions for their clients expose themselves to liability risk if the calculation contains misstatements. This is especially true when speculative elements are included.

For example, in July 2007 the Federal Court of Justice (BGH) sentenced a redeveloper of old housing stock to reverse the transaction (Ref. V ZR 227/06). The latter had bought up old housing stock, refurbished it, divided it up in accordance with the German Condominium Act (Wohnungseigentumsgesetz, WEG) and, together with a “sample profitability calculation”, had had an agent submit a financing proposal. An incorrect or overly optimistic calculation of the distributions from a rental pool then led to the underfunding.


Liability risk with sample calculations

According to established case law, a consultancy contract is concluded with the seller if the latter provides a prospective buyer with calculation examples of the costs and returns or financial advantages of a purchase. The resulting liability for information generally applies to “sample calculations” in connection with capital investments. Numerous incorrect calculation items can lead to liability. The BGH considers a calculation to be too optimistic, if – a too positive picture of the appreciation potential is given – an inaccurate picture of the expected income is generated – an incorrect indication of the achievable rent (e.g. due to missing additions or deductions) is given, in particular incorrect information on the rental pool risk or the risk of loss of rent is given – the calculation contains too low revenue reserves (e.g. for vacancy, uncollectability of rents, compensation for accrued losses) – or speculative approaches regarding the future development are given, even if this was not theoretically impossible.the calculation contains insufficient revenue reserves (e.g. for vacancies, uncollectible rents, maintenance expenses, compensation for accrued defaults) – or speculative approaches to future development, even if this was not theoretically impossible. Other ambiguities about “the true effect and meaning” of a yield calculation can also lead to liability: This has already been demonstrated by the ruling of the Munich II Regional Court (Case No. 9B 3493/05) on the misleading of capital investors by stating the internal rate of return (IRR). Advertising using the IRR was seen as “misleading advertising of an investment” if its operation was not explained in detail. This was also confirmed by several higher courts.


Life insurers can also be liable

According to the case law of the higher courts, life insurance companies are also liable, for example, if their non-binding model calculations are based on an incorrect calculation. This is the case, for example, if outdated mortality tables are used as a basis, so that overly optimistic maturity benefits or annuities are presented in the brokerage. In the respective cases, the insurers could be shown to have known that the mortality tables were outdated and that the negative effects on the surpluses would occur, even if the extent was not yet precisely known.


by Dr. Johannes Fiala and Dipl.-Math. Peter A. Schramm

by courtesy of (published on



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Dr. Johannes Fiala Dr. Johannes Fiala

Dr. Johannes Fiala has been working for more than 25 years as a lawyer and attorney with his own law firm in Munich. He is intensively involved in real estate, financial law, tax and insurance law. The numerous stages of his professional career enable him to provide his clients with comprehensive advice and to act as a lawyer in the event of disputes.
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