The Bestellerprinzip – What Applies for Sale and Rental?

Law aims to relieve buyers when purchasing real estate

Key Facts

• According to the Bestellerprinzip, the person who hires the broker also pays the broker.

• In rentals, the landlord usually pays the broker.

• In property sales, buyer and seller share the commission.

Broker Commission Is a Hot Topic

• Who pays the broker is a frequently discussed question in rental, purchase, or sale of real estate.

• While the Bestellerprinzip has regulated broker fees for rentals since 2015, a new law from December 2020 now also applies to property sales.

• This law clarifies who pays the broker and how much.

What is the Bestellerprinzip?

• The Bestellerprinzip states: the person who hires the broker must pay the broker.

• Different rules apply depending on whether it is a property sale/purchase or a rental.

Who Pays the Broker in Rentals?

• Since 2015, the Bestellerprinzip applies: the person who hires the broker pays.

• Usually, this is the landlord; tenants do not pay.

• The commission amount is not legally fixed.

• Exception: if the tenant hires the broker, the fee may not exceed two net cold rents plus VAT according to the Residential Brokerage Act.

Who Pays the Broker in Sales and Purchases?

• Broker fees for property purchases were often disputed in the past.

• Depending on the state, up to 8% of the purchase price could be borne partially or fully by the buyer, even if they did not hire the broker.

• Since December 23, 2020, a new law relieves private buyers of residential properties from full ancillary costs.

• Buyers now pay at most 50% of the agreed broker commission.

Important:

• This applies only to broker contracts for apartments and single-family homes (including semi-detached houses).

• The buyer must live in the property personally and not acquire it for commercial purposes.

Three Possible Commission Agreement Variants

The new law allows three types of broker commission agreements:

1. Double Commission (Doppelprovision)

2. Commission with Refund (Provisionsübernahme mit Rückerstattung)

3. Full Commission by One Party (Vollständige Provisionsübernahme)

Double Commission Agreement

• The broker contracts with both seller and buyer.

• Commission is shared equally (50% each).

• If the broker agreed to work without charge for one party, they cannot claim fees from the other party.

Commission with Refund

• One party (usually the seller) agrees to pay the full commission, but may recover part of it.

• Only the seller is represented by the broker.

• Buyer must pay at least the same share as agreed.

• Seller must pay minimum 50%, may pay more.

Full Commission by One Party

• Only one party may cover the broker fee.

• The 2020 law does not force double commission.

• Broker and seller can agree on an internal commission where the seller pays all fees, but only by mutual agreement.

• Similarly, an external commission is possible if the buyer requests a broker search and the property has not yet been acquired or assigned.