12. Apr 16

BGH to rule on withdrawal from loans on April 5

The issue of withdrawing from loans is to be addressed once again by the Bundesgerichtshof (BGH) [Germany’s Federal Court of Justice] on April 5 (XI ZR 478/15). A consumer had prematurely paid off and later withdrawn from his loan agreements.

GRP Rainer Lawyers and Tax Advisors in Cologne, Berlin, Bonn, Düsseldorf, Frankfurt, Hamburg, Munich, Stuttgart and London conclude: On April 5, the BGH will be grappling with a lawsuit brought by a consumer who concluded a total of six loan agreements between November 2004 and January 2010. The loans were prematurely paid off at the beginning of 2012, to which end the borrower paid an early repayment penalty of just under 30,000 euros. He later withdrew from the loan agreements in November 2013, claiming that he had not been properly informed about his option to withdraw and suing for reimbursement of the cancellation fee.

The consumer’s legal action was successful before both the Landgericht Stuttgart (Regional Court of Stuttgart) and the Oberlandesgericht Stuttgart (Higher Regional Court of Stuttgart). Now that the bank has appealed the judgment, the BGH has to rule on the matter on April 5.

The courts of lower instance found that the instructions provided by the bank regarding the right of withdrawal were flawed. In particular, the information concerning the commencement of the withdrawal period did not meet the relevant requirements. They went on to say that statements such as die Frist beginne frühestens mit dem Erhalt dieser Belehrung (the period begins at the earliest upon receipt of these instructions) lacked the necessary clarity, with the result that the consumer had not been effectively informed about his right of withdrawal. Thus, the withdrawal period had not commenced and the consumer was still able to withdraw from the loan agreements despite years having gone past since their conclusion. The courts also stated that the bank could not fall back on any provisions conferring protective effect, or argue that the right of withdrawal had been forfeited or exercised in bad faith. Moreover, the fact that the loans had been prematurely paid off did not preclude the possibility of withdrawal at a later date.

Ambiguous statements concerning the commencement of a withdrawal period can be found in a number of banks’ and savings banks’ withdrawal policies. In this connection, the OLG Stuttgart held that statements which deviate from the standard instructions are certainly flawed if they are not at least as clear as the information included in the standard instructions. Even minor substantive or formal deviations from the standard instructions could mean that the consumer was not properly informed about his option to withdraw and is then able to withdraw from the loan agreement, regardless of whether many years have passed since its conclusion. Having said that, the right of withdrawal for real estate loans concluded between 2002 and 2010 is set to expire on June 21, 2016. Anyone who is still considering withdrawing from a loan ought to act now.

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