Federal Court of Justice
Recently, the Federal Court of Justice (BGH) issued a much-noticed ruling on 15 September 2023 (V ZR 77/22) regarding a property seller's duty to provide information. The seller may not be content with simply uploading documents to a virtual data room in order to fulfil their duty of disclosure to the buyer. In the case in question, the seller had uploaded further important documents to the data room three days before the purchase contract was concluded without giving any notice. The seller had thus failed to fulfil his duty to provide information. He cannot expect the buyer to look around the data room again shortly before the notary appointment in order to check the latest information.
Facts of the case
The decisive factor for the BGH is whether the seller can legitimately expect in the individual case that the buyer will actually take note of the information in the data room and include it in their purchase decision. Only then is a separate explanation by the seller not necessary. In addition to the importance of the information, it must also be taken into account whether and to what extent the buyer carries out a due diligence review, although it is not legally obliged to do so.
Not every property sale is accompanied by a comprehensive due diligence check. But did the seller provide sufficient information? In principle - according to the BGH - the seller cannot fulfil his obligation to disclose circumstances (decisive for the purchase) by giving the buyer the opportunity to obtain knowledge of these circumstances. In other words, simply setting up a data room and filling it with information is not sufficient. The seller has only fulfilled his obligation if he can reasonably expect, based on the circumstances, that the buyer will look through the documents not only for the purpose of general information, but also from a specific point of view. In all other cases, the seller must draw the buyer's attention to this important circumstance. If he fails to do so, there is a risk that he will be liable for damages due to a breach of a pre-contractual duty of disclosure (§ 280 para. 1, § 311 para. 2 no. 1, § 241 para. 2 BGB).
Significance in practice
But what exactly does this mean in practice? The seller of a property would be well advised to provide the buyer with all the information he knows about the property so that the buyer can check it. In case of doubt, he will have to point out particularly important facts or information to the buyer, otherwise he may be in breach of his duty of disclosure. The submission of incorrect or incomplete information constitutes a breach in any case. The concealment of facts, on the other hand, regularly only gives rise to liability if the other party could reasonably expect clarification in good faith, taking into account the public opinion. This depends on the individual case. But you should not let it come down to that, therefore: provide all information and specifically name or emphasise information that appears to be essential for the purchase decision.
Düsseldorf, 16 November 2023
Dieter Jasper
Lawyer