GER: Architects' Liability for Faulty Advice on Energy Subsidies

May 3, 2024 Benn-Ibler Rechtsanwälte

If an architect advises their clients on how to renovate a building to make it more energy-efficient, and the architect not only provides information concerning technical aspects but also with a view to obtaining subsidies, the architect is liable for any damages caused by faulty advice. This was decided by the German district court of Frankenthal in January 2024.

A couple had decided to buy a block of flats in Ludwigshafen, Germany. They also wanted to renovate the building in order to make it more energy-efficient and to obtain funding from the Kreditanstalt für Wiederaufbau, a so-called KfW loan. For this purpose, they sought the advice of an architect who also offers energy consulting services.

The architect recommended as a prerequisite for receiving KfW subsidies under the German energy-efficient renovation programme that the apartment building be converted into a condominium. Following the architect’s advice, the couple applied for the subsidy even before the building had been converted into a condominium.

Once the renovation work had been completed and the property had been converted into a condominium, the couple wanted to obtain to the funding that they had applied for. However, on the grounds that the conditions for the subsidy had not been met, the KfW refused to disburse the funds.

The reason for this was that only owners of existing owner-occupied dwellings are eligible for state funding. Conversion, as in this case, which took place only after the application was submitted, does not meet funding requirements.

As a result of the architect’s incorrect assessment of eligibility, the couple lost out on benefits. They, therefore, sought compensation from the architect.

The court found in their favour for the following reasons:

The architect had not only provided assistance on a technical level but had also provided a legal service with his advisory work. Because his information on the requirements for KfW funding was inadequate, the architect was in breach of his duty of care under the consultancy agreement.

Decision of the Landgericht Frankenthal, March 2024, on the judgement of LG Frankenthal, 7 O 13/23 (25 January 2024)