Success before the Supreme Court │ The invalidity of a purchase and property development contract due to an overly vague clause

Georg Männl  (Partner),  Dr. Erich Gibel (Partner) and  Paul Breuer, LL. M.  (associates) have represented numerous buyers of real estate developments and assisted them in getting out of their contracts. In its recent decision on GZ 9 Ob 108/24h, the Supreme Court followed the argumentation of our law firm and ruled that purchase and property development contracts with an undefined completion date are null and void.

In the case of a real estate development, a large number of identical purchase and development agreements are usually concluded with the buyers. This makes it all the more important that the text of the purchase and development contract is carefully formulated. Numerous provisions of the BTVG and the KSchG must be complied with, which are often not given the necessary attention.

Several buyers of a real estate development wanted to withdraw from their contracts with the developer before the project was completed for various reasons. The buyers represented by GZ therefore declared their withdrawal from the contracts and relied on various grounds for withdrawal. The property developer did not accept the withdrawals and sued a couple of buyers for a declaration that the concluded contract was still valid and that the withdrawal was therefore not effective.

However, the contracts concluded, which were subject to the Property Developer Contract Act (BTVG), contained a contractual clause on the handover of the properties that we argued was too vague. It only stated that the properties would be handed over 24 months after the start of construction and that construction would probably start one month after the building permit had been issued. However, according to § 4 BTVG, property development contracts must have a mandatory minimum content, which also includes a certain the transfer date counts. If the contracts do not meet the requirements of Section 4 BTVG, they are relatively null and void. In addition, property development contracts must also comply with the provisions of the KSchG. According to our reasoning, the clause violated the BTVG and the KSchG in several respects: This is because, on the one hand, the start of construction was not communicated to the buyers, which meant that the completion date was also unclear. On the other hand, the word "presumably" leads to a further ambiguity, so that this clause violates not only the BTVG but also § 6 para. 1 no. 1 KSchG and § 6 para. 3 KSchG.

The courts followed our argument through all instances, the provision on handover in the contracts was too vague and therefore did not meet the requirements of the BTVG and the KSchG. The consequence of this is that not only the relevant clause was void, but the entire contract.

A group of buyers also represented by us GZ sued the property developer on the basis of this argument in parallel to the above proceedings for rescission of the contracts and were also successful.

Particularly bitter for the property developer: Due to the nullity of the contracts, they must be reversed, whereby not only the usual statutory interest of 4% applies, but also the special provision of Section 14 BTVG. This provides for interest of 8% above the prime rate for all payments to the property developer that are made contrary to the BTVG. By invoking the (relative) nullity, the basis for the payments made to date ceases to apply, meaning that the significantly higher interest rates under Section 14 BTVG apply from this point onwards.

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