OGH: Borrowers’ Duty to Cooperate

Apr 28, 2023 Benn-Ibler Rechtsanwälte

In the case at hand, the Austrian Supreme Court (Oberster Gerichtshof, hereinafter OGH) dealt with the question of a savings bank's liability arising out of a credit check and a loan promise.

The plaintiff had contacted the defendant savings bank about financing his purchase of a private residence. At that time, the plaintiff owed approx. EUR 22,000 in back taxes to the tax office which was allowing him to pay off his back taxes in instalments. In the course of his loan application at the bank the plaintiff did not provide any information about his tax debts and the payment plan. When the bank’s financial advisor accessed data from the Austrian Credit Protection Association, KSV, he saw that the applicant was paying something off in instalments, but did not assume that this was a tax debt. Consequently, a preliminary loan promise was issued by the savings bank whereupon the plaintiff signed a valid purchase agreement. However, this agreement contained a contract penalty of approx. EUR 9,000 in the event of the plaintiff withdrawing from the contract. A few days later, the defendant bank, as third-party debtor, received a notice of seizure of the plaintiff's tax debt, whereupon the bank revoked the loan promise. Subsequently, the plaintiff demanded compensation for the contractual penalty as well as other related fees.

The OGH ruled as follows:

Before the signing of a loan agreement between an entrepreneurial creditor and a consumer, a creditworthiness check must be carried out according to Section 9 (1) Austrian Consumer Credit Act (Hypothekar- und Immobilienkreditgesetz, HIKrG), which states that creditors must perform a risk evaluation. However, this is not a one-sided issue: Borrowers have the duty to cooperate. In the present case, the plaintiff had not provided detailed and full information. In court he argued that he had only been asked about ‘outstanding credit liabilities’. The OGH countered that he had been asked about ‘liabilities’ and thus should have disclosed his tax debts. The OGH also referred to the claimant as ‘dishonest’. He should not have relied on the loan promise. The defendant bank was not liable for payment of the claimant’s contract penalty due for withdrawing from the contract after the loan promise had been revoked. The plaintiff's claim that the court had grossly misjudged his duty to cooperate was also negated.

OGH 2 Ob 8/23z (21.02.2023)