Immo-Gazette 04-20: What exactly does the new commission system for sales mean?
What you need to know as a seller and what not
Published on: , by
Sketch: (c) Mirjam Talkenberger
The time has come: On 23.12.2020, the law on the new regulation of brokerage commission (§ 656a-d BGB) comes into force. However, the law does not apply to all sales cases, but is very narrowly limited:
It primarily concerns the type of housing ususally used by the owner: i.e. single-family houses and condominiums.
Moreover, it only applies to cases where the buyer is a consumer, not to commercial house or apartment buyers.
Thus, all other sales cases are not affected by this new legal regulation and in these cases the commission can still be freely agreed.
What does the law now say in concrete terms and what does it mean for you?
Let us quote it:
Mediation of sales contracts for apartments and single-family houses
§ 656a BGB Text form
A brokerage contract which is about the proof of the opportunity to conclude a contract of sale for an apartment or a single-family house or the mediation of such a contract must be in text form.
§ 656b BGB Personal scope of application of §§ 656c and 656d
Sections 656c and 656d shall only apply if the buyer is a consumer.
§ 656c BGB wage claim in case of work for both parties
(1) If the real estate agent allows himself to be promised a brokerage fee by both parties to the purchase contract for an apartment or a single-family house, this can only be done in such a way that the parties commit themselves to the same amount. If the Real Estate Agent agrees with one party to the purchase contract that he will act for this party free of charge, he cannot have the other party promise him a brokerage fee either. A remission is also effective in favour of the respective other contractual partner of the broker. Sentence 3 cannot be deviated from by contract.
(2) A brokerage contract which deviates from paragraph 1, sentences 1 and 2 is invalid. § 654 remains unaffected.
§ 656d BGB Agreements on brokerage costs
(1) If only one party to the contract of sale of an apartment or a single-family house has concluded a brokerage agreement, an agreement which obliges the other party to pay or reimburse brokerage fees shall only be effective if the party which concluded the brokerage agreement remains obliged to pay the brokerage fee at least in the same amount. The claim against the other party is only due when the party that has concluded the brokerage agreement has fulfilled its obligation to pay the brokerage fee and it or the broker provides proof of this.
(2) Section 656c (1) sentences 3 and 4 shall apply accordingly.
What has been laid down here in a few sentences needs to be explained with a view to its implementation in practice:
First, there must be a written instruction from the seller to the estate agent to sell the property. In this, it is agreed how high the commission will be, which the seller pays when the sale has been notarised. The buyer will then pay this exact same amount and no more than that to the estate agent. However, it is interesting that it is left open whether this clause can also work the other way round: If the buyer had instructed the estate agent to find him a suitable property, would the seller then be obliged to pay the agent a commission of the same amount? Not at all. And thus the clause opens up the following option: the party who instructed the broker may be obliged to pay a commission, the other party does not have to pay more commission than the party who instructed the broker. The other party does not have to pay more commission than the party that hired the broker, but may pay a lower commission or none at all. This in turn works both ways.
The bottom line is that the commission is shared and one party does not have to pay more than the other party.
The second sticking point in the story is that the client must have paid his share of the commission to the broker before the other party - usually the buyer - must transfer his share. And you have to show this other party the proof, i.e. the bank receipt, before they are obliged to pay.
Until now, the commission has been due and earned upon delivery of the service, i.e. upon conclusion of the sales contract. Many sellers, however, are likely to wait until they have received the purchase price, often also because they cannot do otherwise for liquidity reasons.
For the broker disadvantageous, but bearable. Avoiding this regulation is excluded by law.
From the point of view of the due date of the turnover tax, it would then be the case that the turnover tax for the commission payment of the client (usually the seller) is due when the broker's service - that is the legally effective purchase contract - is performed, but the second part is only due when the due date for the second party (usually the buyer) is reached, i.e. when the payment of the first party is received.
And then another important point: If the property is sold to a commercial investor, these regulations do not apply. In this case, therefore, the broker is free to decide whether to take the entire commission from the buyer or the seller or a proportion of both, but also without the mandatory amount identity.
Last but not least: This regulation of mandatory commission sharing applies only to the property types condominium and single-family house.
July 28, 2020
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