on the usefulness of expert reports

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by Johannes Fiala, lawyer

Again and again capital investors save themselves the previous neutral consultation by an expert, an architect or a tax advisor and/or a lawyer with the decision to the purchase of a real estate (e.g. free-hold flat) or a closed real estate fund portion. The BGH deals with such ?carelessness in own affair? since more than one decade rudely, because with it the investor is to be treated either even as expert or he had (which the BGH assumes) expert advisors.

However, it is clear from legal practice that obtaining an expert’s opinion on the valuation of the property in question can be of decisive importance for numerous issues and decision-making possibilities.


Case 1:

The ?aggrieved party? has bought a property, a tax saving model, as the investor believed. After years he notices that interest and repayment by tax saving around rent income are not covered at all. Thus often the own debt mountain increases. The lawyer knows the ?usury border? around the real estate because of ?voidness or Sittenwidrigkeit? again back to give ? the value ratios will determine an expert, e.g. around the process risk better to estimate to be able.

Case 2:

The purchaser of a property wants to know how the income has actually been and could be in the future. Was the rent guarantee too high or in line with the market ? Was the investor deceived ? An answer promises an expert review of the profitability or the market prices of a lease at the time (purchase / acquisition) and today. on the usefulness of expert opinions in the assessment of ailing real estate investments In this context, further questions can also be clarified, such as the repair backlog and the scale of maintenance measures or the amount of (e.g. future) special apportionments.

Case Three:

The investor participated in a closed-end real estate fund. The object does not “run” as promised by the broker. Also the partners meeting does not bring new realizations. The investor asks itself whether it is to quit the society (in order to save, which is still to be saved, above all in order not to be involved in future losses further). Further questions are then still, whether it acted around a portion sold too expensively or ?only so-called management errors? for the unexpected losses are responsible. Finally it?s to clarify, whether investor?s money could not and should not be invested better, i.e. more profitable ? or whether at ?exit? from investment still money has to be brought along.
Also in this case it will depend on estimating the value of the real estate (and/or the portion at it) as well as current incomes and expenditures of the fund around an economic recommendation to give. The result can then still be to be examined fiscally, because possibly ?losses can be made deductible?

Without an exact assessment of the circumstances, a person affected cannot make a qualified decision. In the end, in the event of a ‘claim’, similar questions are sometimes raised again, which could have been clarified before the acquisition or the investment.
In many cases, an optimal decision will only be made on the basis of qualified expert advice and verification ? also and especially in the field of real estate valuation ? for the investor.

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About the author

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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