31. May 16

Right of withdrawal not forfeited in cases involving withdrawal from a loan

Banks often claim that the right of withdrawal has been forfeited as a way of fending off attempts to withdraw from a loan. However, this argument generally fails to convince.

GRP Rainer Lawyers and Tax Advisors in Cologne, Berlin, Bonn, Düsseldorf, Frankfurt, Hamburg, Munich, Stuttgart and London conclude: While consumers can potentially save a lot of money by withdrawing from a loan due to favourable interest rate developments, banks and savings banks stand to lose just as much as a result of withdrawal. For this reason, they often argue that the right of withdrawal has been forfeited to prevent this from happening. However, that is only the case in exceptional circumstances.

This has been confirmed by the OLG Brandenburg (Higher Regional Court of Brandenburg) in its ruling of January 20, 2016 (Az.: 4 U 79/15). According to this, forfeiture of the right of withdrawal for violating the principles of good faith only comes into question if the borrower has not asserted his right over a long period of time despite being in a position to do so and the bank, having regard to its client’s overall behaviour, could have expected and in fact did expect the former not to assert his right going forward. Thus, in addition to the passage of time, there need to be special circumstances justifying such confidence on the part of the bank for forfeiture to occur. The Court went on to say, however, that the bank cannot simply rely on a client who has not availed himself of his right of withdrawal over a period of many years not doing so in the future, as a lot of consumers are not initially aware that the withdrawal period will not have commenced owing to flawed guidance on the right of withdrawal. That is why there is no basis of trust.

This ruling of the OLG Brandenburg is one of a series of consumer-friendly judgments concerning withdrawal from loans. A prerequisite for withdrawing from a loan is the provision of flawed guidance on the right of withdrawal by the bank. Many banks and savings banks have made use of flawed guidance regarding the right of withdrawal, particularly with respect to real estate loans concluded between 2002 and 2010, with the result that it is still possible to withdraw from the loans in a lot of cases. That being said, this “perpetual” right of withdrawal is set to come to an end with the implementation of the EU-Wohnimmobilienkreditrichtlinie (EU Directive on Residential Property Loans) on June 21, 2016. Consumers should therefore act swiftly. Lawyers who are experienced in the field of banking law can examine whether it is possible to withdraw from a loan in a given case.

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