The term scrap iron real estates has itself as key word in-patriated for circumstances, in which about the bank-financed acquisition of free-hold flats one argues. Substantial characteristic of the scrap iron real estates is that they were sold at a clearly made too expensive price, today a substantially lower (or none) value more to have and that the purchase as in the article real estate fraud taken place described.

Usually the contentious business was locked by a trustee. The Erwerber is often consumers, that wanted to use the real estate acquisition as tax savings model and to the age precaution; hopes for advantages from the acquisition usually did not fulfill themselves however. At present many complaints on back completion of the present Treaties employ the German law.

Circumstances

The tax savings model planned to charge by loss gaining within other ranges beside the actual wages, this loss with the actual incomes and to reduce so fiscal charges. Beginning of the 90's came the real estate industry on the idea, real estate plants also at the broader circles of the society - thus also at the small people - to marked out. Over 300.000 investors too expensive real estates invested into such tax savings models and bought. The financing was taken over by large German banks - in particular the Badenia building society and the today's HypoVereinsbank -, even if the investors had no own capital funds. Both the real estate acquisition, and the raising of credit were often obtained by structure selling, which visited and to the business persuaded the investors at home.

The mediators of these business usually indicated, the real estate alone by the tax benefits and the renting incomes would count itself. The calculation did not come up however regularly, the renting incomes remained the far under warranty and the tax repayments was not sufficient, in order to pay the interests on loans.

The designation "„scrap iron real estates "“was in-patriated, because these real estates do not bring in that, which the mediators promised first. Although the term seems rather colloquially, it found also entrance into the upper-judicial iurisdiction.

Legal problems

A set of legal questions in connection with Schrottimmoblien were raised and clarified by judgements of the European Court of Justice (EUGH) and the Federal High Court.

Requirements against salesmen, mediators or renting guarantors

Core of the arguments was the question, to what extent the financing banks for the losses of the investors could be made liable. The fact that there were requirements for damage at salesmen, mediators or renting guarantors is to a large extent indisputable. These were however regularly organized as GmbH. Demands against these could not be realized after the bankruptcy usually no more.

The only solvent contracting party was usually the financing bank.

Right of revocation for the credit agreement also after the entry door revocation law

After earlier right consumers could recall contracts, to which they had been tempted in an entry door situation, after the entry door revocation law (HWiG); the revocation was also still for a long time possible after conclusion of a contract, if a normal instruction were missing over its right of revocation. If it concerned however consumer credits, the HWiG for unanwendbar explained itself; however applicably the consumer credit law (VerbrKrG) should be on the present Treaties. The VerbrKrG regulated the conditions of a revocation, the instruction, an expiring of the right of revocation which can be made and the legal consequences of a revocation differently than the HWiG; bestimmete credits (credits on real property) were not at all revocationable thereafter.

In the so-called Heininger decision the European Court of Justice complained of the Unanwendbarkeit of the HWiG on consumer credits. After thereupon an investor can recall changed iurisdiction a consumer credit also after the HWiG, if he closed these for instance with a mediator as entry door business.

The consequences of the revocation depend on whether the credit agreement was economically connected with the purchase contract for the real estate (purchase, fund entry). Goods both contracts economically separately, remain them it also after revocation of the loan. The consumer must refund then the received validity to the bank; to the place of the contractual interest the legal step. The purchase contract remains unaffected by the revocation of the Darlehnsvertrages.

If credit and purchase contract were in contrast to this economically connected, then the revocation of the loan agreement explanation leads in accordance with "§ 1 HWiG also to the inefficacy of the financed business. Thereafter no requirement is entitled to the money lender out "§ 3 HWiG against the borrower on repayment the partner of the financed business of flowed loan amount, but a direct requirement for enriching against the business partner of the borrower. This has the BGH already with judgement of 17.09.1996 - XI ZR 164/95 = BGHZ 133, 254 decided. It has its iurisdiction again confirmed also of 25.04.2006 - XI ZR 193/04 ''' : If the loan agreement recalled after "§ 1 exp. 1 HWiG and the financed fund entry form a connected business in the sense of "§ 9 exp. 1 VerbrKrG, the purpose of the legal revocation regulation requires that after revocation no pecuniary claim is entitled to the money lender against the borrower. The back completion has in this case directly between the credit giver and the partner of the financed business to take place i.e. with the seller of the real estate.

No right of revocation for the real estate sales contract after the HWiG

The revocation possibilities for (real estates) a sales contract depended since more jeher on the HWiG. After its "§ 1 exp. 2 number 3 did not exist a right of revocation, if the declaration of intention had been recorded by a notary. Real estate sales contracts were regularly notarially recorded and thus after the HWiG not revocationable.

The EuGH decided on 25 October 2005 (legal matters C-350/03 and C-229/04) that the guideline does not lend right to the consumer for the revocation of the real estate sales contract, even if this component of the credit-financed investment model is. The guideline is to protect the consumer against the dangers, which are in particular devoted from conclusion of a contract during an attendance of the manufacturing one in the case of the consumer, by providing a right of revocation under certain circumstances, but sales contracts over real estates expressly excluded from the range of application of the guideline. The EuGH however on the other hand also stated that in cases, in which the consumer was not instructed about his right for the revocation of the loan agreement, which has to carry Kreditinstitut the risks connected with the questionable investments. This decision will have which effects on the law practice, is still open.

No obligation of the bank for the clearing-up of the customer over the value of the real estate

Also regarding the injury of obligations to explanation of the bank opposite the investors, which leads to claims for damages, the IITH senate is opposite that XI. Senate clearly more generously. The XI. Senate (chairman Richter Gerd Nobbe) rejected claims for damages against the bank so far. The investor must worry rather over the value of the real estate and the chances of success of the plant.

Validity of the authority

A further problem is in many cases whether the authority, which was given typically to the so-called trustees for the conclusion of the contracts is futile because of offence against the legal advice law. The XI. Senate is also here rather consumer unfriendly and lets the outside appearance of an authority be sufficient.

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