Can you buy back building land if the contract is breached?


Lerato Khumalo

Anyone who does not build on a piece of land for decades despite being obliged to do so should sell it again. The Federal Court of Justice (BGH) now has a clear opinion on this.

This became apparent on Friday in a hearing of the Federal Court of Justice (BGH) on a case from Lower Bavaria. There, the market town of Frontenhausen near Landshut wants to get back a piece of land that was sold in 1994.

The buyer had committed to building a ready-to-move-in house on the property within eight years. But that never happened. In this case, the municipality had secured a right of repurchase. The right of repurchase guarantees the seller the right to buy back the property sold within a certain period of time.

In 2014, the municipality informed the owner that it now wanted to make use of this option. The 950 square meter property would be bought back. In this case, the former buyer would receive the original purchase price of almost 60,000 D-Marks, including reimbursement of expenses.

The question is whether this is still possible after such a long time. According to the law, a right of repurchase for land can be exercised for 30 years unless a shorter period is specified in the contract.

However, the Munich Higher Regional Court considered this to be inappropriate in this specific case. The buyer had not benefited from a price reduction at the time and there were no other circumstances that could justify such a long commitment.

The highest civil judges of the BGH have a different opinion after initial discussions. The municipality is concerned with ensuring rapid development and avoiding gaps in development, said chairwoman Bettina Brückner. It is also important to prevent someone from buying a piece of land just to resell it years later at a profit. These are legitimate goals.

And the buyer had only one condition. If he had built the house, he would have been free of all obligations and could have done whatever he wanted with the property, says Brückner.

The man’s lawyer, Barbara Genius, nevertheless sees the long term as a very heavy burden. After 20 years, the buyer assumed that the undeveloped property would be accepted as it was. Then suddenly the letter arrived in his mail. The man also has no plans to resell the property.

However, the BGH judges believe that the long deadline can also have advantages for the property buyer – for example, if construction comes to a standstill due to financial difficulties and the house is not finished on time. In this case, a deadline of eight or ten years would be much more unfortunate, said Brückner. With three decades, the municipality is more flexible in its decision and can also wait and see how things develop for a while.

However, the Senate wants to discuss the case further. The verdict has been announced for December 16. (Ref. V ZR 144/21)