BGH: No Letting Commission for Property Managers in Residential Real Estate

What is this about?

An owner had entrusted a property manager with 129 residential units for management. The property management agreement provided, in addition to ongoing remuneration, for a letting commission of two months’ cold rent per new lease. The property manager concluded 13 new lease agreements as part of their activities and invoiced a total of  EUR 16,815.71. After termination of the contract, the owner demanded reimbursement – successfully.

What did the BGH decide?

• Commission prohibition: Anyone who manages residential properties and simultaneously handles their re-letting is a “manager of the appartment“ within the meaning of § 2 Abs. 2 Satz 1 Nr. 2 WoVermittG (Wohnungsvermittlungsgesetz – German Housing Brokerage Act). In this dual role, there is no entitlement to commission – neither from the tenant nor from the owner.
• Contractual clauses do not help: Even if the commission is agreed in the management contract, the agreement is void. The law is mandatory and cannot be overridden by contractual provisions.
• Reimbursement: Commissions already paid can be reclaimed.

Where are the limits?

The decision relates exclusively to the management of residential real estate. Condominium administrators (WEG-Verwalter) and property managers for commercial real estate remain entitled to commission.

Recommended next steps

Review contracts: Does your management or property management agreement contain a letting commission for residential units from the managed portfolio?

Review reimbursement claims: Have such commissions been paid in the past? If so, a reimbursement claim exists – the statute of limitations must be observed.

Adjust remuneration models: Property managers who handle re-letting of residential units should reflect their services in the ongoing management fee – not through a separate commission.

Termination risk: Property managers for whom the letting commission forms the basis of their business model may be entitled to extraordinary termination despite a fixed term.

Practical significance

Owners of institutional residential portfolios, asset managers, and property managers must review, adjust, and renegotiate their management and property management agreements. The continuation of arrangements that include a letting commission poses a commercial risk for both the owner and the manager/property manager.

We would be happy to assist you with this.