RA Johannes Fiala
With interest rates down, many property owners and business owners want to reschedule to get cheaper financing: Debt restructuring at no cost and no compensation, plus money back from the bank. This is also the dream of many an investor whose capital investments have for years failed to yield what was promised in full when they were sold. Legal errors in the loan agreements of the banks often make it possible to reduce the debit interest to a maximum of 4%. Commission-maximised financing: Horst Schmidler (name changed) financed several closed-end investment funds at his bank. The broker, intent on optimally high commissions, not only arranged the investment, but also the financing. So that equal three times a commission results, naturally a fixed credit is recommended, and a further investment (building society contract or life insurance) for the later credit repayment mediated. The BGH punishes bankers for cross-selling: The Federal Court of Justice has ruled that even when combining a fixed loan on the one hand and an investment for repayment on the other (e.g. life insurance), the credit institution must state the total price. This means that it is not sufficient if the life insurance contract specifies a monthly instalment in DM or Euro. Rather, this cost component of the financing must also be reflected in the bank’s loan agreement. The credit institution must therefore add up the individual charges for the consumer from the life insurance premium and the bank loan interest rate and disclose them as a total charge, Section 4 I 4 No. 1 b VerbrKrG. The rescheduling and recalculation of the loan: Horst Schmidler is pleased because when he took out a loan in 1995 he agreed just under 9% interest with his bank, today he would pay 4-5% if he took out a real loan on his property again to finance it. He asks his bank to recalculate his loan, and to apply a maximum of 4% interest retroactively since 1995 (BGH judgement of 18.12.2001): This means for the credit institution after eight years a repayment to Schmidler of about 40% related to the loan amount. No loan termination by the bank: Schmidler avails itself of the support of a financing appraiser (cf. e.g. the list of experts at www.fiala.de on the Internet), who had given him the hint about this interesting design option to improve his credit rating. The credit institution terminated the loan after Schmidler stopped paying the bank. Previously he had asked for months without success for the recalculation and interest refund. The BGH (AZ. XI ZR 156/01) decided that the consumer as credit customer of the bank is not in such a situation in the default, and the bank therefore also not simply the notice of a fixed credit can pronounce. Result: With annual sales of closed funds in the two digit billion range, still substantial ?quiet loads? from the credit financing of such Investments wait for some banker. Affected is however also the real estate financing with a repayment over an additional savings contract (e.g. life insurance, building savings contract). Not to be forgotten here are also the cases of so-called ?leverage transactions?, a combination of fixed loan, ?instant annuity? and simultaneous life insurance contracts.
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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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