obligation

An obligation is, in legal terms, a requirement of conduct whose non-fulfillment is not enforceable in court but results in a loss of rights or a disadvantage for the party subject to the obligation. It thus falls between a true legal obligation (the breach of which gives rise to claims for damages) and a mere recommendation. Obligations play a central role in real estate and insurance law-for example, in the duty to report damage, the duty to notify in the event of sale or renovation, and the tenant’s duty to maintain the property.

Obligations in Tenancy Law

In tenancy law, both landlords and tenants are subject to numerous obligations. The tenant is obligated to immediately report any imminent damage to the leased property (Section 536c of the German Civil Code). If they fail to do so, they lose their right to a rent reduction and are liable for consequential damages-even if the defect itself was not caused by them.

Typical obligations of the tenant:

• Immediate notification of defects in the event of damage to the rental property (e.g., water damage, heating failure)
• Careful treatment of the rental property and its fixtures
• Tolerance of maintenance work carried out by the landlord
• Compliance with cosmetic repair obligations as specified in the lease agreement (provided they are validly agreed upon)
• Obtaining the landlord’s consent for subletting

Typical obligations of the landlord:

• Disclosure of known defects to the tenant - if the landlord fails to do so, they cannot invoke a contractually agreed exclusion of liability.
• Carrying out cosmetic repairs (if these have not been validly transferred to the tenant)
• Proper settlement of operating costs within 12 months of the end of the billing period

Obligations under Insurance Law

Obligations are particularly significant in real estate insurance law. Under the Insurance Contract Act (VVG), the policyholder (building owner) must comply with certain duties to avoid jeopardizing insurance coverage:

Pre-contractual obligations:

• Providing complete and truthful answers to risk-related questions when concluding the contract

Ongoing obligations during the term of the contract:

• Immediate notification of an insured event (fire, water damage, etc.)
• Do not repair the damage on your own before the insurer has inspected it
• Avoid gross negligence in causing or aggravating damage
• Notify the insurer of significant increases in risk (e.g., prolonged vacancy, renovation work with increased fire load)

If these obligations are breached, the insurer may reduce or completely deny coverage-even if the insured event has clearly occurred. We recommend that property owners be fully aware of the obligations under their building and liability insurance policies and always contact the insurance company first in the event of a claim.

Obligations in Real Estate Purchases and Sales

When purchasing real estate, the seller has important disclosure obligations: Known defects, contaminated sites, ongoing legal disputes, or public law restrictions must be disclosed to the buyer-even if the purchase agreement contains a general disclaimer of liability. A breach of this obligation may be considered fraudulent misrepresentation and render the purchase agreement voidable (Section 123 of the German Civil Code).

What must be disclosed?

• Known construction defects, even if they are not visually apparent (e.g., previous water damage hidden behind new wall paneling)
• Legal disputes with neighbors or the condominium association (WEG)
• Ongoing regulatory requirements or administrative orders
• Known contaminated sites in the soil or hazardous substances in the building (asbestos, PCBs)
• Planned special assessments in the homeowners’ association that have already been decided or are under serious discussion

Practical Tip for Property Owners in Nuremberg and Franconia

Anyone selling a property in Nuremberg should document all known defects and special features of the property in writing and provide this documentation to the buyer-even if they appear to be minor. This documentation protects against later attempts to contest the sale and allegations of fraudulent misrepresentation. We assist sellers in fulfilling their disclosure obligations completely and in a legally compliant manner.

In practice, we recommend preparing a defect documentation that records all known material defects and special features of the property in an appendix to the purchase agreement. This appendix then becomes part of the notarized deed and permanently protects the seller against challenges.

Frequently Asked Questions

What happens if I, as a tenant, violate an obligation?

Typically, you lose a right that you would otherwise have had-e.g., the right to a rent reduction for a defect that you did not report in a timely manner. In serious cases, a breach of obligation may also give rise to claims for damages by the landlord if the damage has become significantly greater due to the delayed notification than it would have been had it been reported in a timely manner.

Is the difference between an obligation and a legal duty relevant in practice?

Yes. A genuine legal duty (e.g., payment of rent) can be enforced in court. An obligation does not-but its breach still has consequences: loss of legal rights (right to a rent reduction), reductions in insurance benefits, or the other party’s right to rescind the contract. This is relevant for owners when insurance companies reduce benefits or buyers wish to rescind contracts.

As a seller, do I have to disclose every defect?

Known defects that are relevant to the purchase decision must be disclosed. Insignificant cosmetic flaws or unknown defects are not subject to a duty of disclosure-one cannot be obligated to disclose the unknown. The line is blurred: When in doubt, we recommend disclosing too much rather than too little. Those who deliberately conceal or mislead are liable-those who communicate honestly are protected.

What are the consequences of breaching insurance obligations?

In the case of a minor breach, the insurance company may reduce the benefit on a pro-rata basis, and in the case of a gross breach, it may deny the benefit entirely. In the case of an intentional breach (e.g., knowingly providing false information), insurance coverage is completely excluded. In the event of a claim, it is advisable to always inform the insurance company first and not to carry out any repairs on your own before the damage has been assessed.

What obligations apply specifically when a property is vacant?

A long-term vacancy-in practice, often four weeks or more-is considered by most building insurance policies to be a risk-increasing change that must be reported to the insurer immediately. If the owner fails to report this, the insurer may reduce or deny coverage in the event of a claim. In addition, many insurance policies require certain protective measures when a property is vacant: regular inspections (e.g., every two weeks), protecting water pipes in winter, and safeguarding against unauthorized access. For property owners in the Nuremberg metropolitan area who are temporarily leaving a property vacant-for example, between two tenancies, during a renovation phase, or in the case of an inherited property-we recommend reviewing the vacancy clause in the insurance policy and proactively informing the insurer.

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