Update: Ways out of real estate financing - No early repayment penalty in case of insufficient information on the calculation of the VFE; BGH (XI ZR 320/20) confirms decision of the OLG Frankfurt

In rejecting Commerzbank’s non-admission appeal (Ref.: XI ZR 320/20) against the judgment of the Higher Regional Court of Frankfurt (Ref.: 17 U 810/19), the Federal Court of Justice confirmed the protection of bank customers in the event of an exit from real estate financing without an early repayment penalty if the customer was not sufficiently informed about the calculation method of any VFE when the contract was concluded. We already reported on the previous decision in our article Auswege aus der Immobilienfinanzierung – Keine Vorfälligkeitsentschädigung bei unzureichender Information über die Berechnung der VFE. Now, the Federal Supreme Court (BGH) has also strengthened the rights of consumers and thus confirms its previously expressed legal opinion (see BGH, judgment of 28 July 2020 – XI ZR 288/19).
In its decision, the BGH agrees with the content of the OLG Frankfurt and does not consider further clarification of the matter to be necessary. While this represents a significant setback for banks, borrowers find themselves in a strengthened position.
In the previous decision, the Higher Regional Court of Frankfurt came to the conclusion that there was no legal ground for the early repayment penalty. The information on the basis of calculation had not complied with the legal requirements, therefore the bank had lost its claim to an early repayment penalty, cf. section 502 (2) no. 2 BGB. As a result, it could be reclaimed from the borrowers. We have numerous other formulations on the calculation method that are to be considered insufficient.
The ruling, which has now been confirmed by the BGH, will also have considerable significance for the clients of other banks. Although the contract forms of many banks have already been revised, they are often still vulnerable. Consumers now have the possibility, if necessary, to escape an early repayment penalty by invoking the new case law. This applies to all contracts from 22.03.2016 onwards, because from this date at the latest, the banks were in principle obliged to properly instruct their customers.
If you have any questions on the subject of early repayment fees, please contact us. We are happy to advise you!

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Reform of the Transparency Register

On 25 June 2021, the Federal Council approved the draft law on the Transparency Register and Financial Information Act (TraFinG). The aim of the law is to enable the interconnection of European transparency registers in the fight against money laundering and terrorist financing. The law is to come into force as early as 01.08.2021.
Until now, notifications to the German transparency register were only required if the information on the beneficial owners did not result from other registers, such as the commercial register. Consequently, the transparency register was initially designed as a catch-all register. However, a full interconnection of the European transparency registers requires a so-called full register, i.e. a place where all information on beneficial owners can be retrieved in a uniform data format. Through the TraFinG, the German transparency register is now to be expanded into such a full register.
In future, almost all legal entities will thus be obliged to provide the transparency register with all information on their beneficial owners. This applies irrespective of the size of the company; both listed public limited companies (and their subsidiaries) and small “one-man limited liability companies” are obliged to submit their data. Only associations are initially excluded from the notification obligation. For them, a transfer of the association’s board members, who are usually the fictitious beneficial owners of the association according to Section 3 (3) sentence 5 AMLA, from the register of associations is provided for; thus, the association does not incur any additional bureaucratic expenses. In order to take into account the far-reaching practical consequences for all other persons required to report, the legislator has provided for transitional periods. These staggered transition periods require subsequent registration by:

  • 31.03.2022 für Aktiengesellschaften (AG), Kommanditgesellschaften auf Aktien (KGaA) und Societas Europea (SE)
  • 30.06.2022 for limited liability companies (GmbH), cooperatives and partnership companies
  • 31.12.2022 for all other companies subject to transparency requirements, e.g. GmbH & Co. KG.
    In addition, the corresponding fines do not take effect with the expiry of the transitional period. Here, too, the legal entities are granted a staggered grace period until the:
  • 31.03.2023 for the AG, SE or KGaA
  • 30.06.2023 for the GmbH, cooperative, partnership
  • 31.12.2023 in all other cases.

Another innovation concerns in particular those obliged under money laundering law, such as banks. Until now, they could not rely exclusively on the information in the transparency register. Durch das TraFinG ändert sich dies nun jedoch: Geldwäscherechtlich Verpflichtete sollen die Angaben zur Identifizierung des wirtschaftlich berechtigten Vertragspartners weiterhin selbstständig erheben. However, provided that this information then coincides with the transparency register, they have sufficiently fulfilled their duty of identification.
In this respect, the TraFinG entails a considerable additional effort for the entities required to register, but those obliged under money laundering law in particular benefit from bureaucratic savings.

Do you need assistance? Contact your lawyer directly!

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