30. Aug 16

Get-out-of-jail-free card still an option

The right of withdrawal for real estate loans concluded between November 2, 2002 and June 10, 2010 is set to come to an end on June 21, 2016. In the case of more recent agreements, withdrawal remains an option.

GRP Rainer Lawyers and Tax Advisors in Cologne, Berlin, Bonn, Düsseldorf, Frankfurt, Hamburg, Munich, Stuttgart and London conclude: There have been intense discussions in recent weeks concerning the end of the so-called “ewiges Widerrufsrecht” (perpetual right of withdrawal). It should be noted here that the expiration of the right of withdrawal on June 21, 2016 only applies to real estate loans concluded between November 2, 2002 and June 10, 2010. In the case of real estate loans that were taken out after June 10, 2010, it may still be possible to play this get-out-of-jail-free card because banks were still making use of flawed or inadequate guidance on the right of withdrawal after this date. In many cases, it remains possible to withdraw from these loans, since the withdrawal period never commenced. In view of interest rate trends over the past few months, a successful withdrawal could entail a considerable decrease in the interest burden in the case of these loans as well.

In cases involving older agreements, consumers who still wish to withdraw from their real estate loans ought to take action now, as time is beginning to run out. That being said, the chances of a successful withdrawal remain high. According to research conducted by the Verbraucherzentrale Hamburg (Hamburg Consumer Advice Centre), flawed or inadequate guidance regarding the right of withdrawal was used in connection with around 80 per cent of the real estate loans concluded between November 2002 and 2010. In most of these cases, it is still possible to withdraw from the loans because the withdrawal period never commenced as a result of the flawed or inadequate guidance on the right of withdrawal.

Arguments made by banks such as that the right of withdrawal has been forfeited or exercised in bad faith have since been rejected by various Oberlandesgerichte (higher regional courts). Should the banks have failed to apply the respective standard guidance in its entirety, they will also be unable to rely on arguments pertaining to legitimate expectations. The important thing is that the notice of withdrawal from the loan be received by the bank in question before June 21, 2016 and that its receipt be confirmed.

Lawyers who are experienced in the field of banking law can assess whether the conditions for a successful withdrawal are met.

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