Intermediaries, who for their customers
Sample calculations of returns,
Value enhancement potential or other
future assumptions, are based on
a liability risk, should the bill
Contain false statements. This applies in particular
if they contain speculative elements
Thus, in July 2007, the Federal Court of Justice (BGH) ordered a reorganizer of
Old housing stocks to the back completion condemned (Az. V ZR 227/06).
The latter had bought up old housing stocks, refurbished them
Residential Property Act (WEG) and divided together with a
“sample profitability calculation” by an agent with a
Provide funding proposal. An incorrect or overly optimistic
Calculation of distributions from a rental pool then led to the
Liability risk with sample calculations
According to settled case law, a consultancy agreement with the
seller comes into effect when the seller offers a prospective buyer
Examples of calculations of costs and revenues or financial benefits
of an acquisition. The resulting liability for information
generally applies to “sample calculations” in connection with
Numerous incorrect calculation items can lead to liability.
lead. Thus, the BGH considers a calculation to be too optimistic,
reflected an overly positive picture of the potential for value growth
Sync and corrections by n17t01
an inaccurate picture of the expected return is created
an incorrect statement of the achievable rent (e.g. due to a lack of additions or
markdowns) is carried out
in particular incorrect information on the rental pool risk or
Loss of rental income risk
the calculation has insufficient revenue reserves (e.g. for vacancies,
Uncollectability of rents, maintenance expenses,
Compensation for accumulated defaults) includes
or speculative approaches about future developments, including
if it was not theoretically impossible.
Also, other ambiguities about “the true mode of action and
Meaning” of a yield calculation can lead to liability: This
was already demonstrated by the judgment of the Munich II Regional Court (Az. 9B
3493/05) on the misleading of capital investors by the indication of the
internal rate of return (IRR). Advertising with the IRR was considered
“misleading advertising of an investment” is seen when its
mode of action has not been explained in detail. This was also confirmed by
several superior courts.
Life insurers can also be liable
According to the jurisprudence of the higher courts, the following are also liable
Life insurance companies, if their non-binding
Sample calculations based on an incorrect calculation
are based on. This is the case, for example, when outdated mortality tables
the basis of the calculation, so that overly optimistic maturity benefits or annuity
in the mediation process. In the respective cases
prove to the insurers that they knew that the
mortality tables were outdated and the negative effects on the
would occur, even if the extent is not yet known.
was known exactly.
Author(s): Attorney-at-law Dr. Johannes Fiala and Dipl.-Math. Peter A.
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About the author
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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