Broker Commission – No Room for Shortcuts

When it took effect on December 23, 2020, brokerage law in the German Civil Code received a new section titled "Mediation of Purchase Agreements for Residential Properties and Single-Family Homes." Section 656a not only requires such agreements to be documented in writing—Sections 656c and 656d go further, establishing specific rules for the broker's commission entitlements when buyers are consumers, as defined in Section 656b. When a broker acts as a dual agent for both seller and buyer, they must charge equal commissions to both parties and cannot work for one side free of charge while billing the other. This principle also applies when a broker represents only one party but the other party is expected to pay their fee. In such cases, both seller and buyer must ultimately pay identical commissions.
For consumers facing a commission bill, a natural question emerges: how can they verify that sellers and brokers are following these rules? Section 656d requires that anyone seeking partial reimbursement of a single-sided broker's fee must produce evidence of the original payment. However, in a landmark 2024 ruling (case I ZR 185/22), Germany's Federal Court of Justice clarified that buyers have a right to request information from dual agents about their activities on the seller's side. This right covers disclosure of the dual agency arrangement, the seller's brokerage agreement, the agreed commission rate, how the seller was invoiced, and payment confirmation. Importantly, buyers can also demand to review the seller's brokerage agreement itself. The court's reasoning is straightforward: buyers cannot determine whether they owe a commission, or how much, without access to all this information and documentation. Only through such transparency can the equal-sharing principle that lawmakers intended actually be enforced.

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