Germany: Newsletter 02/2014

Last Updated: 2 September 2014
Article by Detlef Brümmer

Dear readers,

Our early summer newsletter informs you about new legal developments which support you in your daily work.

In commercial and company law the law of compliance plays a role to which ever more attention is being paid.

The most current topic is represented by the effects of the new version of the Energy Saving Ordinance (EnEV) on real estate contracts and applicable with effect from May 1, 2014.

The private as well as the public real estate law again contributes numerous topics: liability questions in the case of deviations from building permit and construction planning; construction worker debt-securing mortgage; and the recurring written form problems concerning rental agreements, for example, when adjusting advance payments of operating costs and when announcing index-related rent increases.

Other topics are taken from public planning law, insurance law, labour law and (European) procedural law.

I wish you some stimulating reading.

Yours
Dr. Johannes Grooterhorst

CURRENT NEWS

By Dr. Detlef Brümmer

I. With effect from May 1, 2014: The new Energy Saving Ordinance (EnEV) – considerable effects on real estate contracts – contrary to the legislative objective

By way of the law of July 4, 2013 (Federal Law Gazette (BGBl) I 2197) the legislator established a new legal basis for the "saving of energy in buildings "(Energy Saving Act) (EnEG)). The second ordinance for amending the Energy Saving Ordinance of November 18, 2013 (Federal Law Gazette (BGBl) I, p. 3951) is based on this. Pursuant to the (mere) amendment ordinance comprising 40 pages it will come into force on May 1, 2014 or on May 1, 2015 (new version of the regulatory offences regulation in § 27 Sec. 2 of the ordinance) respectively. The amendment ordinance itself covers 108 pages according to the printed matter 113/13 of the Federal Council of February 8, 2013. For that reason the Federal Council (Bundesrat) deemed it necessary in its decision by consensus to provide the information that the complexity of the legislative activities threatened to turn the objective of energy saving into its opposite.

II. Important amendment for the real estate industry – Duty of information for public advertisements

§ 16 a Energy Saving Ordinance (EnEV) –compulsory statements when made public

One of the central parts of the new ordinance is § 16 a Energy Saving Ordinance (EnEV). Sellers, landlords, lessors and leasing providers have to provide mandatory statements when displaying advertisements in "commercial media" (in case an energy performance certificate (Energieausweis) is available that has to be available). This applies in an individually differentiated manner to buildings (irrespective of the type), flats and miscellaneously independent utilization units.

Scope of information

Amongst other things the following information has to include

  • the value of energy need of the building or its final energy consumption as specified in the energy performance certificate,
  • the principal source of energy for the heating system of the building as specified in the energy performance certificate,
  • in case of residential buildings the year of construction as specified in the energy performance certificate and
  • in case of residential buildings the energy efficiency rating as specified in the energy performance certificate,
  • in case of non-residential buildings as compulsory statement the energy requirement or the final energy consumption both for heating as well as for electricity, but each specified individually

Energy performance

certificates Interim regulations apply to those energy performance certificates issued prior to October 1, 2007 as well as to those energy performance certificates (Energieausweis) issued subsequent to September 30, 2007 and prior to May 1, 2014 (§29 Sec. 1 or Sec. 2 new version respectively).

A presentation of the manifold legal, economic and technical regulations is dispensed with in this overview: The consequences under contract law are of particular importance for the real estate industry and its drafting of contracts.

III. Effects on real estate contracts (Contract Law)

Legislators and regulators have made their life easy – as it is so often the case: Today it is part of legislation marketing to use (to invent) euphemistic and belittling headlines or those that conceal the political objective. At first the legislator and the regulator intend to gain acceptance as quietly as possible among members of parliament (who do not always understand the details to the full) and finally among citizens.

For that reason the following is stated in the explanation regarding the draft version to be submitted to the Federal Council of February 8, 2013 (printed matter 113/13) in the middle of a statement concerning the new § 16 a (mandatory information in real estate advertisements) covering several pages:

No consequences under civil law?

"Effects under civil law in rental and purchasing contracts are not intended to be substantiated by § 16 a".

This formulation of the ordinance is supported by the regulation in § 5 a EnEG which was already made part of the revised Energy Saving Act (EnEG) in 2013, and the last sentence of which is as follows:

"Only information?"

"The certificates pursuant to the Energy Saving Act (EnEG) and the information resulting from the energy performance certificates (Energieausweis), which have to be stated in real estate advertisements in commercial media due to a regulation pursuant to Sent. 2 No. 6, only serve the purpose of providing information."

Unfortunately, the real estate industry is not content with this rather political objective of the legislator and regulator. It has to consider and it has to prepare itself for the fact that the new duty of information pursuant to § 16 a Energy Saving Ordinance (EnEV) may have legal effects concerning purchasing and rental contracts. The basis of those contracts is the German Civil Code (BGB). An ordinance could, of course, by no means amend statute law – which is higher in rank. The regulator possibly intended to say "only for information purposes" – following the revised law – that the regulation "shall" actually not amend the law (comp. wording of the passage in the text).

Compulsory statements as quality agreements pursuant to § 434 German Civil Code (BGB)

A decisive and principle regulation for real estate purchasing contracts is § 434 German Civil Code (BGB). Pursuant to the basic rule of § 434 Sec. 1 Sent. 1 German Civl Code (BGB) it depends on the "agreed quality". The existence of it renders the purchased item free from defects. In the event a quality has not been agreed, it depends on the customary quality or the one to be expected (§ 434 Sec. 1 Sent. 2 No. 2 Germann Cvil Code (BGB))) or on the presupposed use according to the contract (§ 434 Sec. 1 Sent. 2 No. 1 German Civil Code (BGB)). Sedes materieae for the new duty of information and its consequences when breaching it is § 434 Sec. 1 Sent. 3. According to that, quality also comprises those properties "the purchaser can expect following the public statements of the seller... in particular in the context of advertising or when denominating specific properties of the item". The version of § 16 a Energy Saving Ordinance (EnEV) applicable as of May 1, 2014 states what the purchaser can expext: The aforementioned detailed presentation of the energy data as specified in the energy performance certificate (comp. above II.).

In spite of the political declaration about the "mere informational effect" of the energy performance certificate and of the statements to be made in the public statement, the seller has to expect that this public information requested of him are assessed as quality information for which he has to be made liable in the event of incorrect information as is the case with other quality defects.

Another consideration would have been possible if the legislator had already expressed in the Energy Saving Act that such information would not be considered as information on quality, that they are not deemed as information on quality in the meaning of § 434 German Civil Code (BGB).

Since this has not happened the real estate industry has to face the risk that civil courts will judge the information specified in the energy performance certificate (Energieausweis) as basis for liability (quality information) in spite of the wording of the law and the ordinance.

Practical considerations: Negative quality agreement – ensuring an individual agreement.

Buyer and Seller are interested in not jeopardizing the negotiated contract structure through liability risks. For that reason, they are both well-advised to protect their price-performance ratio as well as the contractual apportionment of risk against the new risks of a quality regulation that comes as a surprise to them by means of a careful and individually negotiated quality agreement (clause – no General Terms and Conditions!). They should no longer rely on the legislative mere information programme of the Energy Saving Ordinance (EnEV) as of May 1, 2014.

To read this Newsletter in full, please click here.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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