Search
Contact
Symbolbild zu BGH Aufklärungspflichten: Gewerbeimmobilie
20.09.2023 | KPMG Law Insights, KPMG Law Insights

BGH extends duty of disclosure of real estate sellers

In a highly relevant ruling for the legal real estate transaction practice, the German Federal Supreme Court (BGH) on September 15, 2023 (Az. V ZR 77/22) strengthened the rights of real estate buyers: Sellers must provide pre-contractual information about circumstances that are of significant importance to buyers. Simply putting documents in a virtual data room for a short period of time is not enough.

A buyer acquired several commercial units in a building complex for a total purchase price of approximately 1.5 million euros. The seller had provided the buyer with documents in a virtual data room. In the purchase agreement, the seller assured that no special apportionment with economic effects had been decided and that he had no knowledge of extraordinary costs not covered by the existing maintenance reserve. Shortly before the notarization date, the seller posted an earlier resolution of an owners’ meeting in the data room, by which a special allocation for upcoming renovation work in the amount of 50 million euros had been rejected. The purchaser was not informed of any ongoing legal proceedings to enforce the special levy. When the purchaser was held liable under a court settlement later, he declared the rescission of the purchase contract on the grounds of fraudulent misrepresentation.

BGH: Sellers must provide information in good time

The BGH ruled that the seller had an obligation to provide information regarding the legal proceedings and the scope of costs for the pending remediation measures and that he had breached this obligation here. The seller should have recognized that the scope of costs for the upcoming renovation measures was of considerable importance for the buyer in economic terms. As long as the structural measure had not been implemented and decided, there was a risk that these costs would have to be borne (proportionately) by the purchaser.

In the opinion of the BGH, posting the record of the owner’s resolution in the virtual data room was not sufficient to provide clarification. Rather, a seller must post the documents in the data room in a timely manner and ensure that a buyer can perceive the information provided and incorporate it into his or her purchase decision. Only then is a separate explanation by the seller unnecessary. The seller must take into account the scope of the buyer’s due diligence as well as the structuring and the organization of the data room.

A seller cannot expect that a buyer would find out at short notice on the basis of the posted minutes of the meeting that a special levy would be due, especially since in the case decided upon there was only the weekend between the posting of the minutes in the data room and the notarization of the purchase agreement.

Claims for damages are also possible

According to the BGH, a claim for damages due to an incorrect declaration by the seller can also be considered. The seller’s declaration of no knowledge of extraordinary measures could be incomplete in this respect.

Pre-contractual duty of disclosure of the seller

With this decision, the BGH has considerably expanded the rights of buyers in the context of real estate transactions. In practice, it is certainly the rule that sellers seek to exclude liability for material defects and defects of title as far as possible in a purchase agreement for an existing property. The consequence of an effective exclusion of liability used to be that defects in the property only entitled the buyer to rescind the contract and claim damages if the buyer had been fraudulently deceived. In its ruling of September 15, 2023, the BGH emphasized that sellers have a pre-contractual duty of disclosure. This exists even if the seller disclaims liability. The court extended the duty of disclosure to the effect that insufficient information or information provided too late can lead to a liability for damages, as can incorrect answers to buyer questions. This interpretation of the law should also apply to the sale of shares in companies, not only in real estate companies.

Sellers should carefully prepare the due diligence process

In the future, sellers should not rely on the fact that the buyer will take note of all documents and search the data room as part of a due diligence review. Instead, sellers are encouraged to carefully prepare the due diligence process on the buyer side, post the documents in a structured manner in a data room and designate them there. They should handle questions in a Q&A process with the utmost accuracy. Best practice is likely to be to disclose to the prospective buyer and, if applicable, to its technical, tax and legal advisors in advance any information that may be relevant to the purchase decision.

Explore #more

09.07.2025 | KPMG Law Insights

Restructuring with staff reductions: preparation is key

The downsizing or closure of a part of a company often also necessitates staff reductions. Depending on the number of employees affected, the works council…

08.07.2025 | Deal Notifications

KPMG Law advises Finish Finnfoam Group on the acquisition of the Phonotherm business of insolvent BOSIG Baukunststoffe GmbH

KPMG Law advised Finnfoam Group (Salo/Finland) on the acquisition of the business unit “Phonotherm” from BOSIG Baukunststoffe GmbH via the newly founded Warmotech GmbH as…

07.07.2025 | Deal Notifications

KPMG Law advises HEMRO International AG on the acquisition of Xenia Espresso GmbH

KPMG Law Rechtsanwaltsgesellschaft mbH (KPMG Law) provided legal advice to HEMRO Group, a global manufacturer of coffee grinders and grinding technologies headquartered in Zurich, Switzerland,…

04.07.2025 | KPMG Law Insights

BGH clarifies the limits of the definition of customer installations

On July 3, 2025, the BGH published the reasons for its ruling of May 13, 2025 (case no. EnVR 83/20) and provided the eagerly awaited…

02.07.2025 | In the media

Guest article by Moritz Püstow on the special fund for infrastructure

The German government wants to invest 500 billion euros in infrastructure and climate neutrality. This creates new business opportunities for the construction industry – but…

01.07.2025 | Deal Notifications

KPMG Law advised Bosch on the multinational carve-out of the entire product business of Bosch Building Technologies to investor Triton

KPMG Law advises Robert Bosch on the carve-out of the building technologies division’s product business for security and communications technology (Bosch Building Technologies) in more…

27.06.2025 | KPMG Law Insights

Hospital restructuring: three steps out of the crisis

Many clinics see their existence threatened in the short or medium term. Other healthcare facilities are also experiencing economic difficulties. Inadequate remuneration structures, staff shortages,…

27.06.2025 | In the media

KPMG Law nominated at the PMN Awards

We are delighted to have been nominated directly in two categories at the PMN Awards 2025. Our “Extended Workbench” project was nominated in the…

25.06.2025 | KPMG Law Insights

Business Travel and Assignment in the USA: What you need to know about US immigration

The recent changes in US immigration rules are causing uncertainty worldwide. In particular, since the new US government took office, processes regarding entry into the…

11.06.2025 | KPMG Law Insights

Omnibus IV brings some simplifications, especially in product law

The EU Commission proposed the fourth omnibus package on May 21, 2025. Omnibus IV contains simplifications in relation to numerous product law requirements and…

Contact

Dr. Rainer Algermissen

Partner
Head of Construction and Real Estate Law

Fuhlentwiete 5
20355 Hamburg

Tel.: +49 40 3609945331
ralgermissen@kpmg-law.com

Human Aghel

Senior Manager

Fuhlentwiete 5
20355 Hamburg

Tel.: +49 40 3609945451
haghel@kpmg-law.com

© 2024 KPMG Law Rechtsanwaltsgesellschaft mbH, associated with KPMG AG Wirtschaftsprüfungsgesellschaft, a public limited company under German law and a member of the global KPMG organisation of independent member firms affiliated with KPMG International Limited, a Private English Company Limited by Guarantee. All rights reserved. For more details on the structure of KPMG’s global organisation, please visit https://home.kpmg/governance.

 KPMG International does not provide services to clients. No member firm is authorised to bind or contract KPMG International or any other member firm to any third party, just as KPMG International is not authorised to bind or contract any other member firm.

Scroll