Germany: Real Estate Law

Last Updated: 29 September 2014
Article by Ralf-Thomas Wittmann

I. Private Building Law – Liability of the architect -: No joint and several liability without a causal contribution – Implementation planning deviating from approval planning

In its ruling of September 30, 2013 (7 U 32/13) the OLG Cologne has found that an incorrect approval planning does not have a relevant impact on the implementation planning.

The client commissioned architect A with the approval planning for, amongst other things, an underground car park, a further architect B with the implementation planning and a general contractor C with the turnkey construction.

Incorrect approval planning

In the context of independent proceedings for the taking of evidence initiated by the client it became clear that according to the expert the approval planning was incorrect, because the tractrix curve as well as the ramp of the underground car park did not comply with the Car Park Ordinance of North-Rhine Westphalia (GarVO-NW). The approval planning intended a length of 11,31 m.

Deviating implementation planning and implementation

The implementation planning of B, however, intended a continuous ramp passing around a curve with a length of 11,11 m. The actual implementation of the access built by C was carried out according to the implementation planning.

The client was of the opinion that architect A, architect B and the general contractor C are to be made jointly and severally liable.

The OLG Cologne has developed different opinion: For the Oberlandesgericht it was irrelevant whether the approval planning was incorrect and whether it violated the Car Park Ordinance of North-Rhine Westphalia (GarVO-NW). Actually according to the experts, there is a lack of a necessary causality between the approval planning on the one side and the damage that occurred in the form of the flawed implementation of the underground car park access on the other side. The approval planning did not have an impact on the subsequent implementation planning and on the defective implementation of the access that resulted hereof.

The court held that a mere comparison between the approval planning and the implementation planning demonstrated that there were substantial differences between both plannings and that the implementation planning in particular constituted a new planning concept. That alone triggered the damage in the form of a defective implementation.

Practical considerations

The case of the OLG Cologne shows that the division of approval planning on the one side and implementation planning on the other side between various architects gives rise, at least from the perspective of the building owner, to risks and unpredictabilities regarding the liability of the parties involved in the development if the implementation planning deviates from the approval planning.

In this case the building owner can only indemnify himself among the planners against the architect who established the implementation planning.

II. Private Building Law – Construction contract (Bauhandwerkervertrag) / Guarantee mortgage (Bauhandwerkersicherungshypothek): § 648 a German Civil Code (BGB) – client and property owner not identical

Difference between client and property owner (transferor of title to property for the purpose of security)

The Landgericht Berlin (ruling of July 17, 2013 – 28 O 275/13) has ruled that the registration of a priority notice for securing a construction worker guarantee mortgage (Bauhandwerkersicherungshypothek) pursuant to § 648 a German Civil Code (BGB) may also be possible if the client and the property owner are legally not identical.

Pursuant to § 648 Sec. 1 Sent. 1 German Civil Code (BGB) the contractor of a construction or of a single part of a construction is entitled to demand the granting of a construction worker guarantee mortgage on the building plot of the orderer. In order to secure the right of registration of the construction worker guarantee mortgage the contractor can file an application for a temporary injunction aimed at the registration of a priority notice pursuant to § 885 Sec. 1 Sent. 1 German Civil Code (BGB), § 935 Code of Civil Procedure (ZPO).

It is not uncommon that contractors face the problem that the client and thus the contracting partner of a contract for works and the property owner are not legally identical.

In that case a private limited company (GmbH) was the client, the registered owner of the plot of land, was a natural person who – at the time of commissioning – had been managing director as well as majority shareholder of the company owning the property at that time.

Economic advantage of the property owner due to construction work

Nonetheless, the Landgericht has issued the desired temporary injunction. It was decisive for the Landgericht that the construction work had ultimately not been carried out for the client, but the economic value of the construction work proved advantageous to the property owner.

Practical considerations

It was already in 1987 that the Federal Supreme Court (BGH) has ruled that the property owner had to accept to be treated like an orderer depending on the individual case and in good faith pursuant to § 242 German Civil Code (BGB) if and when the contractor sought to satisfy claims from the plot of land regarding cost for work he was entitled to (Federal Supreme Court, ruling of October 22, 1987 – VII ZR 12/87).

However it is insufficient that the property owner economically dominates the orderer. This would dilute the lacking legal identity between the legal entity on and its shareholders.

The situation, however, is different, as in the Berlin case, if it is the registered owner who economically benefits from the construction work. It is a comparable case if the owner uses a tenant without assets as client as a pretext (OLG Düsseldorf, ruling of February 25, 1993 – 5 U 162/92).

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