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Agency law from December 2020

Agency law from December 2020

What do real estate agents have to pay attention to from 23.12.2020?

For information for our brokers and E1 licensees:

Shortly before Christmas, there was a change in the brokercommission commission: the new law on brokerage commission from 23 December 2020 was already adopted by the German Bundestag in June and now enters into force on time before the turn of the year. The new change to regulate brokerage commission by law requires increased attention from all those involved in brokering and marketing real estate. Changes are coming to all parties involved, brokers as intermediaries as well as sellers and buyers. However, only when brokering private real estate to consumers as end customers.

New law expressly only for mediation of private real estate for sale

The new legislation for real estate agents entered into force on 23 December 2020, and agreements and contracts concluded before this cut-off date remain unaffected. In addition, according to the legal text, only buyers of private apartments and single-family homes will benefit explicitly from the new regulation. So if you, as a broker and E1 licensee, have your focus on commercial real estate, then the commissions can still be freely negotiated. A mandatory requirement to divide the brokerage commission evenly between seller and buyer is still not provided for the brokerage of commercial real estate and the new brokerage law does not apply here. However, the buyer principle, introduced in 2015 for the rental of real estate, still does not apply to the sale and purchase of private or commercial properties.

Commission to be paid by buyer and seller in mediation to consumers

The new brokerage commission scheme from 23 December 2020 has caused unrest and uncertainty among brokers and our licensees. Above all, the question kept arose: Who pays the broker from 23.12.2020? Until now, the payment of the broker’s commission was not uniformly regulated. The statutory ordering principle for the placement of rental apartments still does not apply to the seller or the buyer for real estate sales. The amount of the commission also remains generally freely negotiable, but the minimum amount can vary greatly from state to state. What is changing is the rule, which is now mandatory under the new brokerage law from 23 December 2020, to divide the amount of the commission evenly between the seller and the buyer of the house or apartment. From 23 December, oral agreements are not legally binding, as is the frequently practiced full or predominant payment of the commission by the buyer. In plain language: If you are still the owner of the agent to broker a private property for sale, you have to pay half of the commission due before the buyer. The legal situation for commercial sales and purchases is different.

Long-time experienced real estate agents wanted for existing customer support!

Licensees and brokers for commercial real estate not affected by the new law

In this context, we would like to point out once again the brokers and licensees cooperating with us: The new brokerage right from 23 December 2020 definitely does not apply to the brokerage of commercial real estate and also not to transactions with commercial sellers or buyers of real estate. In principle, the new law on the distribution of brokerage commissions was concerned with strengthening the position of the private buyer, for example, a condominium or a single-family house, in relation to the seller. Until now, according to an unwritten law in the real estate industry, the buyers usually had to pay the commission in full or for the most part at the end of the sale. Since 23 December 2020, this practice has not been possible in the broker’s mediation of real estate such as a house or apartment from private to private. Also important: the buyer of a property does not have to pay his share of the commission until the seller has paid his previous. And everything must be laid down in a written contract.

Contracts concluded before 23 December will remain valid

Important for brokers: Even with a new brokerage law, contracts concluded before the cut-off date remain valid on the old terms, for which the new legal provisions do not yet apply. In order to make the commission safe, the broker did not have to explicitly point out in writing the new regulation on brokercommission commission from 23 December 2020 in the case of old contracts. The commission claim to both parties, seller and buyer, in equal parts is thus protected by law. However, the law on the division of the brokerage commission only applies if it concerns the brokerage of private real estate. In the case of commercial real estate, even off-market, the existing rules and no new law on brokerage commission sapply from 23 December 2020. However, double activity for both sides is quite permissible. However, this should be clearly indicated in the brokerage agreement in order to avoid a possible challenge by a party.

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