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Fulfillment of disclosure obligations through data room

Fulfillment of disclosure obligations through data room

The ruling of the Federal Court of Justice (BGH) of September 15, 2023 – V ZR 77/22 deals with the disclosure obligations of a real estate seller, in particular in connection with the provision of a virtual data room during contract negotiations.

The plaintiff buyer acquired several commercial units in a large, mixed-use building complex from the 1970s by means of a notarized purchase agreement. The seller assured the buyer that no special assessments or extraordinary costs were to be expected and provided the buyer with minutes of the last owners' meetings. Shortly before the notarization, however, the seller posted minutes in a designated data room that included a decision by the owners to impose a special assessment of EUR 50 million for construction measures. As a result, the buyer was obliged to pay a special assessment for repair work, which prompted the buyer to contest the purchase agreement on the grounds of fraudulent misrepresentation. The Federal Court of Justice ruled that the seller was obliged to inform the buyer about these construction measures even without being asked, which could lead to a claim for damages under the German Civil Code (BGB). The Federal Court of Justice ruled that a seller only fulfills its duty to provide information in connection with a data room if it can reasonably assume that the buyer will obtain relevant information by inspecting the documents provided there.