The Federal Supreme Court (BGH) settled a previously open question of principle with its judgement dated 12 May 2016.
This concerns the case where a property developer builds a residential complex with approx. 20 units. The common property is completed; however, not all of the flats have been sold. The “nascent” homeowner association then authorises an engineering office to carry out the acceptance of the common property.
After the acceptance is completed, the remaining flats are sold. The owners of the remaining flats, who purchased them after the completed acceptance, now discover defects and demand an advance on costs from the developer for removing the defects after a period set to the developer expired without results. The developer points out that the acceptance was carried out without reservation and free of defects and that the purchasers were bound to this acceptance.
The BGH decides in favour of the purchasers:
Due to the fact that they had not been involved in the acceptance and had not been able to exercise any influence, they are not committed to the declaration of acceptance of the “nascent” homeowner association. The BGH even states that acceptance had not been declared even by the purchasers moving into their freehold flats, i.e. by conclusive behaviour. This has the consequence that any limitation periods arising from the law on contracts for work and services had not started. The BGH argues with the main obligation of the purchaser to declare acceptance and the corresponding right to decide itself about the acceptance of the common property. If there was a clause on a commitment to acceptance declared by previous parties involved, this reduced the warranty period. Such a clause is therefore invalid.
The decision of the BGH is to be welcomed, as otherwise important rights of individual purchasers in a commonhold property with regard to defects would be considerably reduced.
This risk is now eliminated. The defect-related rights are thus available to the “latecomers” without limitation.