Because of low interest rates, many investors now find it attractive to use the high loan interest rates of existing old building society agreements to save, instead of investing in current financial products. But since building societies [Bausparkassen], on the other hand, have few opportunities to profitably invest the money that flows into their coffers, there is a need on their part to break from such old contracts with high interest payment obligations. Therefore, in the recent past existing building society savings agreements have been terminated by building societies. Particularly against the background of the European Central Bank’s most recent key interest rate reduction to zero percent and the continued expansive interest policy, the practical relevance of this subject will not decline in the near future.
B. Legal basis
The building societies are basing their cancellations on §489, para. 1 no. 2, BGB [Bürgerliches Gesetzbuch (Civil Code)], which allows the borrower to cancel a fixed interest rate loan agreement after the expiration of ten years after the receipt in full of the value of the loan. For the sake of understanding, it should be pointed out here that, according to prevailing opinion, a building society savings agreement is a consistent loan agreement within the meaning of §§ 488, et seq., BGB with the special feature that the building society member and the building society switch the roles of loan provider and borrower during the term of contract, upon the utilization of the building society loan. With the decisions of the Higher Regional Court of Hamm of 30 December 2015 – 31 U 191 / 151 and the Higher Regional Court of Stuttgart of 30 March 2016 – 9 U 171 / 152, mutually contradictory judgments have been issued by the lower courts on the issue of the preconditions under which the building societies are entitled to this right of cancellation. The judgments of the Higher Regional Court of Hamm and the Higher Regional Court of Stuttgart are therefore being presented as representative cases and examples.
C. Closer examination of the judgments
I. Decision by the Higher Regional Court of Stuttgart
After the Higher Regional Court of Stuttgart refuses a right of cancellation due to full savings under § 488, para. 3, BGB, it considers a termination under § 489, para. 1 no. 2, BGB.
The higher regional court does not resolve whether § 489, para. 1 no. 2, BGB can even be applied for building society savings agreements, since the court views the factual preconditions as non-existent. Even though a building society agreement is a loan agreement with a fixed debit interest rate within the meaning of § 489, para. 1 no. 2, BGB, the norm, however, is tied to the “receipt in full” of the loan value. Because the option of regulating the payout procedure is available, this point in time is subject to the arrangement of the parties. A loan is received in full if the loan provider has made it available to the borrower in accordance with the contractual agreement in the amount of the net amount of the loan. Insofar as partial payments were agreed, receipt in full occurs only on payment of the final instalment. However, the onset of allocation maturity has no influence on the payment obligation of the standard savings contribution. The amount of the agreed loan value is to be determined by means of contractual interpretation. The only firmly-agreed sum is the building society savings amount, which includes the building society credit balance and the building society loan. These alone, however, cannot automatically represent the loan value. Upon consultation of the building society savings terms, it turns out that the loan value is capped by the building society savings amount and therefore lies between the minimum savings credit balance of 40% and 100% of the building society savings amount. Furthermore, the uncertainty with regard to the point in time of the onset of allocation maturity as well as that of the availment of the loan is to be taken into account. Both points in time can be determined at least indirectly by the building society member. Even against the background of the special features of building society savings agreements, it cannot be assumed that the “receipt in full” also includes the onset of allocation maturity. The special features were already sufficiently considered by the ABB [Allgemeine Bedingungen für Bausparverträge (General Terms for Building Society Savings Agreements)] and other statutory provisions. Furthermore, the receipt in full cannot be evaluated exclusively from the perspective of the debtor. The building society must take into account the interests of the building society members as a partnership of convenience and therefore has an interest in a steady inflow of savings contributions in order to increase the allocation fund and thus accelerate the distribution of building society loans.
The court likewise views the preconditions for an analogous application of § 489, para. 1 no. 2, BGB as non-existent. To begin with, an unintended statutory loophole does not exist. A study of the legislative material does not indicate that the onset of allocation maturity is supposed to be covered by the regulations. For despite the minor inquiry by Alliance 90 / the Green Party on 04 / 02 / 2015 with regard to the existing legal uncertainty of cancellations by building societies on the basis of § 489, para. 1 no. 2, BGB, in the draft law of 21/12/2015, despite the awareness of the legal uncertainty, a clarifying or explanatory expansion of the concept of “receipt in full” was not undertaken, even though the goal of this draft law was the improvement of opportunities to respond to the phase of low interest rates. Also, the interests at stake when it comes to building society savings agreements are not comparable to those associated with “normal” loan agreements. Finally, a balancing of interests also does not justify an analogous application. The purpose of the building society savings agreement is the attainment of a reduced interest rate loan to be secured only at a lower tier below market level and not merely the attainment of the opportunity to exercise an option to obtain a building society loan. The similarly-worded formulation in § 1, para. 2, BauSparkG [Bausparkas sengesetz (Building Society Act)] seeks only to emphasize that the payout entitlement is not already established by the conclusion of the contract, but is dependent on one’s own savings and those of the building society collective. Receipt of the entitlement to a payout is therefore only a necessary intermediate goal, which is not to be ascribed any significance in the sense of an achievement of purpose.
II. Decision of the Higher Court of Hamm
The Higher Court of Hamm finds that § 489, para. 1 no. 2, BGB is applicable for the cancellation of building society loans by building societies. Accordingly, the regulations do not envisage restrictions in a personal sense to consumers. The right of termination of the borrower, who is also a consumer, is now found in § 500, BGB. In the view of the legislature, these are now supposed to supplement the termination rights of §§ 489, 490, BGB.
However, according to the view of the Higher Court of Hamm, the factual preconditions of §489, para. 1 no. 2, BGB already exist if ten years have passed after the first onset of the allocation maturity of the building society loan.
The onset of allocation maturity is equivalent to the receipt in full of the loan value. The purpose and objective of the norm is the creation of a balance of interests to protect the borrower from being bound too long to fixed interest rates. In addition, this is also necessary, because for building society savings agreements, until the availment of the loan after allocation maturity, there is no established fixed loan amount that can be used for orientation when applying § 489, para. 1 no. 2, BGB. But this does not justify a temporally unlimited extension at the discretion of the building society member.
Nor is this interpretation of the norm in conflict with the contractual parties’ goal of enabling the building society member to acquire the right to the granting of the loan through unilateral action. This still remains possible by means of the termination of the loan agreement and the acceptance of the allocation.
Finally, the building society member is also not penalized by the start of the ten-year deadline period upon allocation maturity, since the regulations only serve to protect the building society from an extended obligation and the building society member is free to accept the allocation during the course of the deadline period.
The Higher Regional Court of Stuttgart has, in knowledge of the deviation from other higher court decisions, allowed the appeal on questions of law to the BGH [Bun desgerichtshof (Federal Court of Justice)]. Because of the inconsistent case law of the lower courts, the Federal Court of Justice is asked to create legal certainty.
Particularly against the background of the political goal of building society savings agreements – the promotion of residential construction and creation of ownership – an excessively restrictive application of § 489, para. 1 no. 2, BGB would not be advantageous. The result could be a change in the culture of contracts of building society savings agreements, through which the “building society savings agreement” product could lose flexibility and popularity. Even if, viewed in the short term, the view of the Higher Regional Court of Stuttgart benefits the building society member, in the long term (in the event of increasing interest rates) building society members would not be helped if the building societies could no longer offer their building society savings agreements in the accustomed manner.
Preferable, therefore, is the view of the Higher Regional Court of Hamm, which, although not arguing as closely along the lines of the wording of § 489, para. 1 no. 2, BGB, duly takes into account the interests at stake in building society loan agreements and also gives due consideration to the special features. Particularly in light of the loan amounts during the savings phase, which are not fixed, tying the “receipt in full” of the loan value within the meaning of § 489, para. 1 no. 2, BGB to the onset of allocation maturity makes sense, since the onset preconditions (as a rule, term period, sufficient building society credit balance and sufficient valuation figure) are known abstractly to both parties when concluding the contract. In contrast, tying this to the complete building society savings sum ignores the special character of building society saving, since in this case the building society itself would not become a loan provider. Moreover, the result of a strict application of the view of the Higher Regional Court of Stuttgart would be that § 489, para. 1 no. 2, BGB would become meaningless with regard to building society savings agreements.
In the final analysis, it remains to be seen precisely what a solution by the Federal Court of Justice will look like.