Real Estate Brokerage Act (2020 Revision)

The 2020 Real Estate Brokerage Reform-officially known as the “Act on the Allocation of Brokerage Fees in the Brokerage of Residential Property Purchase Agreements”-took effect on December 23, 2020, and fundamentally restructured the regulations governing brokerage fees for the purchase of residential property. The key new provisions (Sections 656a-d of the German Civil Code) mandate the 50/50 split principle: The client (typically the seller) may no longer pass on the entire brokerage commission to the buyer. Both parties must bear at least half of the total commission.

Overview of the Most Important Changes

Prior to 2020, it was common practice in many federal states-including Bavaria-for sellers to engage the real estate agent, yet have the buyer bear the entire commission. This has not been permitted since December 23, 2020. The new rule is: whoever hires the broker first may demand no more than half the amount from the other party. If both parties hire the broker simultaneously (dual agency), the 50/50 split also applies.

Since 2020, brokerage agreements with buyers must be concluded in writing (Section 656a BGB); verbal agreements do not establish a claim to brokerage fees. In addition, the requirement for advance payment by the client has been revised: The buyer is not liable for their commission until the seller has paid their commission (Section 656d BGB). The broker must provide the buyer with proof of payment by the seller upon request.

Which properties are covered by the reform?

The reform applies exclusively to purchase agreements for residential real estate-specifically: single-family and two-family homes as well as condominiums. It does not apply to multi-family homes held as investment properties, commercial real estate, land without residential buildings, or commercial lease agreements. For these properties, the general brokerage regulations of §§ 652 ff. BGB continue to apply without the 50/50 split principle. For rental apartments, the “buyer pays” principle has been in effect since 2015 (§ 2 (1a) WoVermRG): Whoever engages the broker pays the fee.

Practical implications for sellers and buyers

For sellers, the reform means that they now generally pay the brokerage fee themselves-which initially surprised many owners. In Bavaria, this is typically 3.57% of the purchase price, including VAT. For buyers, the burden has been reduced, as they no longer bear the full commission. The total cost for both parties combined (7.14%) remains unchanged in Bavaria but is distributed more fairly.

In practice, some real estate agents have attempted to circumvent the reform through contractual arrangements (buyer-only mandate, no seller mandate)-such arrangements must be scrutinized critically and may be invalid if they contradict the principle of equal division. Legally, the situation is clear: Section 656d(1) sentence 2 of the German Civil Code (BGB) is mandatory; any deviation to the detriment of the buyer is void.

Tax Implications of the Reform

The introduction of the seller’s commission has changed the tax situation: Sellers who had rented out their property can claim the brokerage commission they paid themselves as income-related expenses against rental income or-in the case of a private sale with a taxable profit-reduce the capital gain. This is an unintended but certainly welcome tax-related side effect of the reform.

Practical Tip for Property Owners in Nuremberg and Franconia

As a seller in Nuremberg, you have generally paid a 3.57% commission since 2020. This is tax-deductible as an income-related expense if you had rented out the property, or it reduces the taxable profit in the case of a private sale within the speculation period. Have the brokerage contract explained to you before signing: Pay attention to the written form, clear commission amount, due date, and any refund clauses. At my-home.de, we operate transparently-no fine print, clear description of services.

Frequently Asked Questions

Does the 2020 real estate brokerage reform also apply to commercial properties?

No. Sections 656a-d of the German Civil Code (BGB) apply exclusively to the brokerage of purchase agreements for residential real estate (single-family and two-family homes, condominiums). For commercial real estate, multi-family homes held as capital investments, or land, the general brokerage regulations of Sections 652 et seq. BGB continue to apply without the 50/50 split principle.

Can the buyer pay more than half of the brokerage fee?

No. The law is mandatory in this regard: The buyer may pay no more than the same amount as the seller. Any agreement to the contrary is void (Section 656d(1), sentence 2 of the BGB).

Does the brokerage agreement with the buyer have to be concluded in writing?

Yes. According to § 656a BGB, the brokerage agreement with the buyer must be in writing (e.g., email or written contract). Since 2020, a brokerage agreement with the buyer that is agreed upon verbally does not give rise to a claim for brokerage fees.

What happens if the seller does not pay their brokerage fee?

The buyer is only liable for the buyer’s commission after proof of payment by the seller. If the seller does not pay, the broker may claim the commission from the seller, but the buyer’s commission does not become due until the seller’s share has actually been paid. This protects the buyer from double payment.

International Buyers and the Brokerage Law Reform

For foreign real estate buyers in the Nuremberg metropolitan region-such as EU citizens seeking an investment here-the provisions of the 2020 real estate brokerage reform apply without restriction. Since German law applies to domestic real estate transactions, brokerage agreements with foreign buyers must also be in writing and are subject to the principle of equal division. In practice, we recommend providing international buyers with a bilingual summary of the brokerage contract and explicitly pointing out the order of payment (seller first, then buyer), as this system is unfamiliar abroad.

Does the real estate brokerage reform also apply to private direct sales without a broker?

No. Sections 656a-d of the German Civil Code (BGB) exclusively govern the legal relationships between the client, the broker, and the buyer. Anyone selling their property without a broker (private sale) pays no commission and is not subject to the brokerage regulations. Private sales are generally possible in Bavaria but require professional preparation: Determining the market price, preparing the property listing, vetting buyers, and coordinating the notary appointment are then entirely the responsibility of the owner. We are happy to advise owners who wish to decide between self-marketing and hiring a real estate agent, based on a neutral cost-benefit analysis.

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