goodwill

Goodwill - In the real estate sector, goodwill refers to a voluntary service provided without any legal obligation. It is based on the goodwill of one of the contracting parties and does not establish an enforceable legal claim-neither for the current case nor for future ones.

Goodwill in Real Estate Purchases and Defects

Unlike statutory warranty claims or contractual guarantees, goodwill is a purely voluntary gesture of goodwill. It has no legal basis and cannot be enforced by the recipient in court or claimed for the future. This distinction is particularly important in the real estate sector, as warranty periods under sales law (§ 438 BGB) for real property are five years - after which there is no longer a legal claim for the rectification of defects.

Typical goodwill situations in real estate sales arise when hidden defects emerge after the warranty period has expired, which the seller neither knew about nor was required to know about. In such cases, the seller may voluntarily accommodate the buyer-for example, by covering a portion of the costs for repairing a leaky roof or by commissioning a repair at their own expense. Even in the case of minor defects discovered before the handover that would not justify a reduction in the purchase price, the parties often agree on a goodwill solution: The seller has the defect repaired or grants a small price reduction without being contractually obligated to do so.

Goodwill agreements in the purchase contract are a special case. Sometimes sellers wish to put certain commitments-such as undertaking a repair after the handover-in writing. Caution is advised here: If a goodwill provision is set forth in the notarized purchase contract, it can be interpreted as a contractual obligation and is therefore enforceable. We recommend clearly stating goodwill agreements as voluntary and without setting a precedent, or deliberately documenting them outside the purchase agreement in a separate, non-notarized statement.

Tradespeople’s Goodwill and Its Limits

In the context of real estate, we often encounter goodwill in connection with tradespeople’ services. If a defect becomes apparent after the four-year warranty period under the contract for work and services has expired (Section 634a BGB), many tradespeople are willing to remedy it as a gesture of goodwill-especially if the client is a long-standing customer or the defect is due to a material issue rather than a workmanship problem.

It is important to note: A one-time goodwill gesture by a tradesperson does not establish a legal claim to further goodwill in the event of future defects. The Federal Court of Justice has repeatedly confirmed that voluntary services do not revive warranty rights and do not establish a commercial practice that the client can invoke. Tradespeople should therefore always document goodwill work in writing as voluntary and without acknowledgment of any legal obligation.

Practical Tip for Nuremberg and the Metropolitan Region

In the Franconian real estate industry, goodwill plays a greater role than one might assume at first glance. Particularly with existing properties in the Nuremberg, Fürth, and Erlangen areas-which are often several decades old-defects occasionally arise after the sale that are neither covered by the warranty nor were they fraudulently concealed. We regularly see that a fair goodwill solution between seller and buyer not only resolves the specific defect but also strengthens trust in the entire transaction. We recommend always documenting goodwill offers in writing and explicitly stating that the service is provided voluntarily and does not establish a legal claim for future cases. This protects all parties involved from misunderstandings.

Frequently Asked Questions

Can a goodwill gesture give rise to a legal claim?

Generally, no. By definition, goodwill is voluntary and does not establish an enforceable claim. However, an exception may arise if the goodwill gesture is recorded in the notarized purchase agreement or in a legally binding supplementary agreement-in which case it is no longer considered goodwill but rather a contractual obligation. A repeated, similar practice of goodwill may also be considered an implied agreement under certain circumstances. We therefore advise that goodwill gestures always be designated as voluntary and without setting a precedent.

Should goodwill agreements be documented in writing when purchasing real estate?

Yes, absolutely-but in the correct form. A goodwill agreement should be clearly formulated as a voluntary gesture without acknowledging any legal obligation. We recommend setting out such agreements in a separate letter outside the notarized purchase agreement. If the goodwill gesture is recorded directly in the purchase agreement, there is a risk that it will be interpreted as a contractual obligation.

In which cases does it make sense for a seller to show goodwill?

Goodwill can be strategically sensible if a defect is not covered by the warranty, but the buyer is understandably upset and a legal dispute is looming. The costs of a legal dispute often far exceed the costs of a goodwill repair. Even in the case of minor defects that arise shortly after the warranty period expires, a goodwill gesture can preserve the relationship with the buyer and prevent negative reviews or word-of-mouth criticism.

How does goodwill differ from fraudulent misrepresentation?

This distinction is relevant in practice: Anyone who is aware of a defect and deliberately conceals it is acting fraudulently-which is the opposite of goodwill. Goodwill requires that a defect was either unknown or, although known, reasonably not covered by the warranty, and the seller nevertheless voluntarily offers compensation. Fraud entitles the buyer to rescind the entire sales contract and may result in claims for damages-no warranty limitation applies here. Any seller who generously offers goodwill after the sale, even though they were aware of the defect, should be aware that this can be interpreted as evidence of prior knowledge in a subsequent legal dispute. We recommend carefully reviewing the legal situation before making any goodwill decisions.

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