The practice of charging reservation fees by real estate agents has been the subject of intense legal debate for some time. Despite the supposed advantages that these fees are supposed to offer for estate agents and potential buyers, there are considerable legal concerns regarding their admissibility. This article examines the legal framework and the inadmissibility of estate agent reservation fees from a lawyer's perspective.
Brokerage law
The actual brokerage contract is regulated in §§ 652 ff. BGB (German Civil Code). Accordingly, the broker's commission is only due after successful brokerage or proof of a purchase contract. Preparatory activities, such as the reservation of a property, are generally not eligible for separate remuneration by law.
In practice, however, provisions on reservation fees often appear in estate agent contracts. However, the reservation fee is often agreed before or after the actual brokerage contract by means of a “reservation contract”. However, the latter does not necessarily lead to a different legal assessment.
2. “Reservation contract” as general terms and conditions
If the broker demands the reservation fee by means of a reservation contract that is detached from the brokerage contract but is unilaterally pre-formulated for a large number of contracts, a general terms and conditions test in accordance with §§ 307 ff. BGB takes place. The reservation of a property does not constitute an independent brokerage service that would justify additional remuneration. Rather, it is a preparatory activity that is already covered by the brokerage agreement. The reservation agreement is therefore regarded as a mere ancillary agreement, so that the “ancillary fee provision” made in this respect is subject to review.
3. BGH on reservation agreements
In recent years, various courts in Germany have examined the admissibility of broker reservation fees. Of particular note is the ruling of the Federal Court of Justice (BGH) of 20.04.2023 (I ZR 113/22), which confirmed the inadmissibility of such reservation fees.
The case to be decided by the Federal Court of Justice (BGH) concerned a “reservation contract” for a reservation fee of €4,200.00 (1% of the purchase price) that was subsequently concluded after the brokerage agreement was signed. The estate agent was to reserve the property for the clients for 1 month. In the meantime, the clients wanted to look for financing. The estate agent did not actively support them in this, but only recommended a specific bank. In addition, she was not exclusively commissioned for the sale, so that the property could have been sold elsewhere during the reservation period. The reservation fee was due upon signing the agreement and was non-refundable without exception. The BGH considered the reservation agreement to be inadmissible due to unreasonable disadvantage to the estate agent client in accordance with Section 307 I BGB.
The court ruled that the reservation agreement was invalid. The reservation fee had to be repaid. The reason for this was, on the one hand, that the estate agent was not exclusively commissioned and the property could have been sold elsewhere during the reservation period. Secondly, the reservation was only guaranteed for a period of one month. This did not offer the customer any significant advantage. In the execution of mutual contracts, performance and consideration must always be in reasonable proportion to each other. In the opinion of the BGH, the mere reservation in the form of refraining from offering to other customers is not a significant service. This could only be said to be the case if the duration of the reservation was so long that the risk of no longer being able to sell the home elsewhere at the envisaged purchase price would be significantly increased. Furthermore, the contract was structured in such a way that the reservation fee was not to be repaid even if the purchase did not materialize later for other reasons, e.g. because the seller changed his mind. This exclusion of the repayment obligation without exception disadvantaged the broker client unreasonably within the meaning of Section 307 I BGB and was therefore inadmissible.