GER: House Building – Does a Reduction Exclude Self-Remedy?

Oct 18, 2024 Benn-Ibler Rechtsanwälte

If something goes wrong in having a house built, customers have quite flexible rights in the event of defects. This has recently been decided by the German Federal Court of Justice (Bundesgerichtshof, hereinafter BGH).

In 2012, a construction company had built a single-family home for a couple. However, the construction work, in particular the soundproofing, turned out to be defective. In its final invoice, the construction company demanded an additional EUR 100,000 and eventually sued for payment of this amount. In their statement of claim, however, the couple demanded a reduction in remuneration under Section 634 no. 3 of the German Civil Code (Bürgerliches Gesetzbuch, hereinafter BGB) and, by way of counterclaim, demanded repayment of the sum already paid.

On the basis that the defects had not resulted in a reduction in value, the district court dismissed the couple’s claim.

This view was upheld by the court of appeal. Therefore, instead of claiming a diminution in value, the couple claimed an advance on the cost for repairing the faulty soundproofing themselves.

The BGH ruled in favour of the couple:

A declared reduction of the remuneration for defective work does not exclude the right to an advance on costs for the independent rectification of defects.

The couple are therefore entitled to an advance on costs even though they had previously declared a reduction on account of the defects.

The BGH stated that there is no provision which would exclude the assertion of a claim for an advance on costs if the customer has previously declared a reduction in wages. According to the wording of Sections 634 et seq. of the BGB, it can be assumed that these rights exist in parallel.

Systematic considerations also suggest that the rights in the case of defects do not exclude each other. This is only regulated by law in the case of compensation for damages instead of performance. If this is claimed, customers expressly lose their right to subsequent performance.

BGH VII ZR 68/22 (22 August 2024)