by RA Dr. Johannes Fiala*
MUNICH – About 1 million German citizens have had junk real estate sold to them. A typical trick of the agents was and is partly until today to present the property as “bank-approved”. The customer pays an “appraisal fee” in the loan agreement. Thus, the buyer gets a false idea of the corresponding value of the property. The old “banker’s rule” that only 50-60% of the property value is financed turns out to be a fallacy: in the case of junk properties, the market value is only a fraction of what the bank lent as “generous total financing”. Hundreds of lawsuits, some of them up to the Federal Supreme Court, had led to the fact that in narrowly exceptional cases (BGH judgements of 26. 9.2006, file no. XI ZR 283/03 and of 16.5.2006, file no. XI ZR 6/04) a reversal became possible. Now several higher regional courts (OLG) have taken the banks into liability: Reversal! The OLG Nuremberg (Az. 12 U 104/05 of 29.12.2005) wrote the deplored large bank into the Stammbuch that the obviously gesch?nte rent height in the mediator sample computation and the self information** of their customer is to be cleared up. This resulted from an “institutional interaction” between the bank and sales or sellers – but also the bank’s ability to gain knowledge by comparing the data with public data, for example the municipal collection of purchase prices or the rent index. In the case decided upon, the buyers had been fooled into believing that the rent had been overstated by more than 45% – the agents had also been provided with bank forms on an ongoing basis. The buyers had been fraudulently deceived, because the embellished rental amount gave the impression of an economically favourable purchase transaction: the opposite had been the case, as it were under the eyes of the bank employees.
The OLG Celle (Az. 16 U 5/06 of 13.2.2006) went still another step further, and condemned the credit institute because of “deliberate immoral damage”. This was due to systematic, deliberately inflated fair value determinations in the lending business. The OLG disapproved of the fact that the buyers had not been informed about the dangers of an interest rate increase with only a 5-year fixed interest rate period – and that the periods for built-in advance loans and 12-year building society savings contracts were disadvantageous for the buyer/borrower. Essential cost components had also been concealed in the agent’s calculation (e.g. WEG and rental pool administrator fees). The fact that the purchasers were made to believe that the monthly charges were “optically” low and that the purchase transaction appeared to be economically favourable because the purchase price included an interest subsidy in favour of the bank weighed particularly heavily. In the case decided, neither the risks of a rental pool nor the high two-digit internal commission had been explained. In this case, too, the buyers had been fraudulently deceived by incorrect information – the bank had a knowledge advantage. The market values of the properties had been systematically and deliberately overestimated by the bank by 40 %. What the agents liked to convey as an “all-round carefree package” or a “carefree and stress-free package” led to over-indebtedness for many buyer families. In the case of the OLG Celle, the bank had also had a share in the seller’s profits. In other cases, employees may be suspected of personal enrichment.
Even with funds … These principles are also applicable to the acquisition of real estate funds that have become worthless in the meantime: Here, too, some credit institutions are not afraid to lead their customers up the garden path again after the loss has become known. Customers are then offered, for example, a “comparison” that is favourable only for the bank. It is therefore advisable not to be fooled a second time.
(Dental Tribune 11/2007, 10)
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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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