Right of recourse

Right of recourse is the right of a person who has assumed liability for a loss or debt to seek reimbursement from another liable party. In the real estate sector, a right of recourse typically arises when a joint and several debtor (e.g., one of several co-owners) is liable to a third party, but internally only another party is expected to bear the burden, or when an insurer takes action against the party responsible for the damage after settling a claim. It is the civil law instrument of the “second round” following a claim settlement.

Right of Recourse Among Co-Owners and Joint and Several Debtors

If several co-owners are jointly and severally liable for an obligation-such as a joint loan or damages owed to a third party-the creditor may claim the full amount from any one of them. The party who pays acquires a right of recourse against the other co-owners in the amount of their respective shares (§ 426 BGB). Example: Two owners of a semi-detached house jointly cause flooding at a neighbor’s property. If one pays the full amount of damages, they may seek reimbursement of half from the other through recourse. A clear contractual provision regarding the internal liability shares protects against lengthy disputes.

The right of recourse is particularly relevant in communities of heirs: All heirs are jointly and severally liable for the estate’s debts. If an heir pays a debt alone, they may demand proportional recourse from the other heirs-in accordance with the inheritance shares or a different agreement in the inheritance contract or will. Anyone entering a community of heirs with real estate should therefore ensure a clear arrangement regarding the internal allocation of liability to avoid future recourse disputes.

Right of Recourse in Building Insurance

In the insurance sector, recourse is particularly relevant: If the building insurance settles a claim (e.g., water damage due to faulty workmanship), the policyholder’s insurance claim is transferred to the insurer by operation of law (cessio legis, § 86 VVG). The insurer can then seek recourse directly from the party responsible-for example, the contractor. Property owners should be aware that if they have contractually waived liability against the party responsible for the damage or if that party voluntarily pays directly, the insurer may only be able to seek recourse to a limited extent or not at all under certain circumstances.

In practice, the question of whether the tenant is considered a co-insured person under the building insurance plays an important role: Many courts have ruled that tenants who cause damage through simple negligence are covered by the landlord’s building insurance and therefore cannot be held liable. In cases of gross negligence or intent, however, the insurer may take action against the tenant. Landlords should check the provisions of their insurance policy to avoid unpleasant surprises.

Right of Recourse Under Warranty and Product Liability

In construction law, claims for recourse can arise at multiple levels: A building owner demands that the general contractor remedy defects; the general contractor, in turn, has claims for recourse against the subcontractor who actually caused the defect. For such scenarios, Section 445b of the German Civil Code (BGB) governs recourse within the supply chain with a separate statute of limitations. For property owners as end users, this means: Even if a defect originates from a long chain of subcontractors, the direct contractual partner (developer, general contractor) is fully liable-and must seek recourse themselves.

The recourse period under Section 445b of the German Civil Code (BGB) is five years and begins upon acceptance by the end user (or 8 months after delivery to the contractor if no prior acceptance by the end user has taken place). This separate period protects general contractors and developers from a situation where their claims for recourse against subcontractors become time-barred while the end users’ warranty claims against them are still pending. In practice, this means: Claims for recourse against subcontractors should be asserted promptly after the defect is discovered.

Practical Tip for Property Owners in Nuremberg and Franconia

In the Nuremberg metropolitan region, where many properties are held by co-ownership associations or within the framework of WEG structures, we recommend: Clarify internal liability and recourse issues contractually at the time of purchase or when the association is established. Especially for properties acquired jointly by multiple parties (siblings in cases of inheritance, unmarried couples), a written co-ownership agreement should regulate the allocation of liabilities, cost-sharing, and recourse in the event of damage.

We also recommend always requesting written order confirmations with clear liability provisions for contractor work to ensure you have the necessary evidence for recourse in the event of damage. In Nuremberg, there are numerous specialized attorneys for construction and architectural law who can assist with enforcing recourse claims. We would be happy to put you in touch with suitable attorneys should a claim arise.

Frequently Asked Questions

Can a landlord seek recourse against a tenant if a guest of the tenant causes damage?

Yes, under certain conditions. The tenant is liable for damages culpably caused by persons invited by them if they are at fault for failing to exercise due care in selecting or supervising such persons (Section 278 BGB, Liability for Vicarious Agents). If the building insurance has settled the claim, the insurer may seek recourse against the tenant; however, any provisions in the insurance policy designating tenants as co-insured persons must be observed.

How long can a recourse claim be asserted?

The statute of limitations for recourse claims is generally three years (Section 195 of the German Civil Code (BGB)), beginning at the end of the year in which the claim arose and the entitled party became aware of it. For insurance recourse claims (Section 86 of the Insurance Contract Act), the period is based on the transferred claim, meaning it often follows the five-year warranty periods under building law. It is advisable to assert recourse claims promptly after the claim has been settled to avoid the statute of limitations.

Can one protect oneself contractually against recourse claims?

In principle, yes: Recourse claims can be limited or excluded through an indemnity agreement or corresponding clauses in the contract for work and services. However, such agreements in general terms and conditions are subject to the limitations of the law governing general terms and conditions (Sections 305 et seq. of the German Civil Code (BGB)); a complete exclusion of liability for intentional or grossly negligent breaches of duty is invalid. Furthermore, a contractually agreed exclusion of liability cannot completely preclude insurance recourse under Section 86(3) of the German Insurance Contract Act (VVG).

What should a co-ownership agreement address regarding recourse?

A well-drafted co-ownership agreement should at least address the following: How are ongoing costs and debts allocated internally? What happens if a co-owner is unable to pay their share? Who is responsible for specific areas of the property? How are recourse claims asserted among the co-owners, and what is the applicable time frame? With a clear contractual basis, time-consuming legal proceedings regarding the internal allocation of liability can be significantly shortened or avoided entirely in the event of a dispute.

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