G: Repayment of early repayment penalty paid to bank

Sept 8, 2021 Benn-Ibler Rechtsanwälte

The Federal Court of Justice (Bundesgerichtshof, BGH) rejected a bank's appeal against non-admission and upheld the judgment of the Higher Regional Court (Oberlandesgerichts, OLG) of Frankfurt am Main in the dispute over prepayment penalties. The rights of bank customers have thus been significantly strengthened.

In the event of an early exit from a real estate loan, a so-called early repayment penalty, calculated on the basis of the net present value method, is often to be paid.

This is understood to mean the payment of an amount that a borrower has to pay to his bank in the event of premature termination of a loan over a longer period of time, unless a possibility of repayment before the due date has not been separately contractually agreed. The banks thereby secure their lost interest income.

The general requirement of an early repayment penalty was not criticized in the ruling and is legal. According to the OLG, the banks have the right to demand "an appropriate early repayment penalty for the loss directly related to the early repayment" from their customers.

However, the complex calculation of such an early repayment penalty must be described by the banks "clearly, concisely, understandably and precisely."

In the present case, the Higher Regional Court of Frankfurt am Main came to the conclusion that the explanations of how exactly the early repayment penalty is calculated do not meet the statutory requirements. The claim to an early repayment penalty is thus excluded under Section 502 (2) sentence 2 of the German Civil Code (Bürgerliches Gesetzbuch, BGB).

Consequently, a payment by the borrower was made without legal grounds, as there was no obligation to make the payment. The payment made can be reclaimed by way of enrichment under Section 812 (1) sentence 1 var 1 of the German Civil Code (BGB).

OLG Frankfurt am Main, 17 U 810/19 (01.07.2020)