Transparency

Transparency in the real estate context means the complete and truthful disclosure of all material information about a property to buyers, tenants, members of a homeowners’ association, or government agencies. This includes structural defects, legal encumbrances, operating costs, energy consumption, and planned renovation measures. Transparency is not only an ethical commitment of reputable real estate agents and sellers, but in many cases is also required by law-violations can lead to claims for damages, rights of rescission, and the invalidation of the purchase agreement.

Seller’s Duty of Disclosure

Sellers are legally obligated to disclose to the buyer all material defects known to them that the buyer cannot detect during a normal inspection. This obligation arises from the prohibition against fraudulent concealment (Section 444 of the German Civil Code) and cannot be overcome by a contractually agreed warranty exclusion-defects fraudulently concealed remain actionable even in the event of an exclusion of liability.

Typical disclosure obligations of the seller:

• Water damage in the basement or exterior walls, even if “only” temporary
• Known mold problems, even after remediation (the buyer must be aware of the history)
• Pest infestation (woodworm, house longhorn beetle, termites) or identified wood damage to load-bearing structural elements
• Contaminated sites on the property, including suspected areas
• Ongoing legal disputes within the condominium association or with neighbors
• Planned or already approved special assessments by the condominium association
• Pending building permits or unauthorized additions and alterations
• Known structural damage or repair needs on major components (roof, heating system, facade)

Anyone who conceals this information risks having the purchase agreement contested on the grounds of fraudulent misrepresentation (Section 123 of the German Civil Code (BGB)) and claims for damages, which can be asserted in substantial amounts-up to and including a request for the complete rescission of the purchase agreement.

Transparency Obligations Toward Tenants and the WEG

Comprehensive transparency obligations also apply in tenancy agreements and within the WEG.

Toward Tenants: Landlords must provide operating cost statements in accordance with § 556 BGB that are transparent, complete, and submitted on time. Tenants have a statutory right to inspect receipts: They may inspect the original receipts for operating costs at the landlord’s premises to verify the statement. Landlords who refuse this inspection risk being unable to enforce the statement and losing claims for back payments.

Toward the WEG: WEG administrators are obligated to provide transparent accounting to the owners’ association-the annual statement, budget, and maintenance reserve must be fully disclosed and approved at the owners’ meeting. Owners have a comprehensive right to inspect all documents relevant to administration. The 2020 WEG Reform further strengthened the administration’s transparency obligations and enshrined the right to digital access to collections of resolutions.

Transparency as a hallmark of reputable real estate agents

At my-home.de, we view transparency as a fundamental principle of our work. An agent who acts in the best interests of all parties involved provides buyers with complete and proactive information-and advises sellers to openly communicate known issues rather than conceal them.

We provide prospective buyers with all available documents regarding the property: land registry extract, list of encumbrances, current energy performance certificate, declaration of division and community rules, WEG minutes from the last three years, collection of resolutions, annual statements, as well as any available appraisals and lease agreements. We actively point out known peculiarities-because a successful closing based on false information leads in the long term to disputes, liability risks, and reputational damage for all parties involved. Honesty from the start protects buyers, sellers, and the broker alike.

Practical Tip for Property Owners in Nuremberg and Franconia

In Nuremberg, the following documents are often underestimated or overlooked when selling real estate: WEG minutes from the last three years (showing planned renovations, ongoing disputes, and the status of the reserve fund), the extract from the WEG resolution collection, and the list of encumbrances from the Nuremberg Municipal Surveying Office (which includes easements, encumbrances, and rights of way that can significantly impact usability and value).

We prepare a comprehensive information package for sellers that provides buyers with transparent information while simultaneously minimizing the seller’s liability risks. This saves time during the sales process, reduces the risk of purchase price negotiations after the viewing (“I should have known that”), and prevents costly legal disputes after the notary appointment.

Frequently Asked Questions

What must a seller disclose?

All material hidden defects known to the seller-that is, defects that a buyer cannot detect with reasonable care during a normal inspection. These include, above all: water damage (even if already repaired, as consequential damage is possible), mold, known structural issues, contaminated sites and suspected contamination, ongoing legal disputes, and special assessments that have already been decided but not yet billed. Superficial damage visible during the inspection does not need to be communicated separately-the buyer sees it for themselves.

What are the consequences of a lack of transparency in a real estate sale?

Fraudulent concealment allows the buyer to contest the purchase agreement on the grounds of fraud (§ 123 BGB)-with the result that the transaction is fully rescinded, i.e., the seller must take back the property and refund the purchase price. Alternatively, the buyer may claim compensation corresponding to the difference in value between the actual condition and the condition assumed in the contract. Important: A warranty exclusion agreed upon in the purchase contract does not protect the seller from liability arising from fraudulent concealment-§ 444 BGB expressly declares such an exclusion invalid in such cases.

How transparent must a WEG administration be?

Under the WEG, the property manager is obligated to fully disclose the maintenance fee statements, the budget plan, the status of the maintenance reserve, and the complete collection of resolutions. Owners have a comprehensive right of inspection into all documents relevant to administration and may demand their presentation at the owners’ meeting or, if necessary, enforce this right in court. Since the 2020 WEG reform, owners can also facilitate the appointment of a new management company if the current one fails to meet its transparency obligations.

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