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ECJ strengthens consumer rights in loan agreements

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Dusseldorf From its tranquil home town of Eppelborn with 17,000 inhabitants in the heart of the Saarland, it is only 100 kilometers to Luxembourg. But for the property owner Andreas Poß it was a much further journey to the capital of the Grand Duchy – at least figuratively.

It took more than four years for the 42-year-old graduate engineer to advance to the highest body of European jurisdiction. With the attempt to pull the so-called cancellation joker and save thousands of euros in the financing of his family home.

For Poss himself, it is about a few thousand euros. Overall, however, the process has completely different dimensions. The fall of the Saarlander now gives hope to millions of consumers. All those who signed loan agreements for cars and real estate loans from June 11, 2010.

The European Court of Justice strengthened your rights today by clarifying: “Consumer credit agreements must state in a clear and concise form the modalities for calculating the cancellation period.” The judges ruled (file number C-66/19) that the agreement contained in Poss’ contract Reference “does not meet the requirement.” This reference is a standard cancellation policy, as you can find innumerable in millions of contracts.

“The fact that the ECJ is now creating legal certainty is good and important news for all consumers,” commented the Berlin lawyer Timo Gansel on the judgment, which represented Poss’ interests in the proceedings with his law firm. “With today’s judgment, the majority of all consumer credit and leasing contracts concluded since June 2010 are under scrutiny.

Banks can no longer simply rely on opaque wording in their contracts. Every consumer must be able to recognize the essential requirements for exercising the right of withdrawal, such as the start of the period, ”says Gansel.

Banks are threatened with an avalanche of withdrawal

In fact, many customers should now have good cards to cancel their contracts due to lack of instruction. A revocation avalanche could occur at banks and savings banks. For example, the Bundesbank puts the volume of mortgage lending in question at 1.2 trillion euros, plus relevant car loan and leasing contracts with a volume of several hundred billion euros.

In 2012, Poß signed a loan contract for EUR 100,000 with the Kreissparkasse Saarlouis. He recalled this in 2016 and argued that the cancellation policy that had been given to him was not intelligible. But at the Sparkasse he fell on deaf ears. Poss went to court.

Something then happened in front of the Saarbrücken district court (file number 1 O 164/18) which was not necessarily expected at this point in time. The board stayed the proceedings and put a crucial question to the European Court of Justice regarding standard cancellation policy, which can be found in almost all current credit contracts: can the average consumer use the instruction to recognize when, in his specific case, the cancellation period for a loan starts and when does it end?

Contradiction to BGH judgment

The step of the district court was unusual because the Federal Court of Justice had quasi buried the topic beforehand. In November 2016, the highest German civil court declared standard cancellation policy to be “clear and understandable” (XI ZR 434/15). Countless banks and savings banks took a deep breath. Consumers, on the other hand, now had bad cards for pulling the so-called revocation wildcard for contracts from June 2010 and getting out of expensive loans prematurely.

The entrance to the European Court of Justice

The European Court of Justice has strengthened consumer rights.


(Photo: dpa)

Specifically, the instruction regarding the possible revocation concerned the passage: “The period (for revoking the real estate loan) begins after the contract has been concluded, but only after the borrower has received all the mandatory information in accordance with Section 492 (2) BGB (…)”.

The practical consequence of the nested construction: The customer first has to find out which mandatory information is involved. Only three of these are mentioned as examples in numerous revocation instructions (for example, information on the type of loan, information on the net loan amount, information on the contract term).

Experts call this a cascade reference – some also a little more flippant than “scavenger hunt to understand the key data of the right of withdrawal”.

ECJ wipes off highest German civil judges

The CJEU has now clearly stopped this and also cleared the BGH. “In the event of such a cascade referral, the consumer could neither” determine the scope of his contractual obligation nor check whether the contract he had entered contained all the necessary information, and certainly not whether the revocation period that he had at his disposal was to run for him started, ”said the judges.

According to Gansel, the situation should now be clear in the case of car loans and leasing contracts. Here, “the vehicle can be returned against reimbursement of all the installments already paid.” From the lawyer’s perspective, the chances of a rescheduling of lower borrowing rates or of early repayment of the financing without – or against payment of a greatly reduced – prepayment penalty also increase for current real estate loan contracts.

Resistance could still threaten at this point from the BGH, which has now been put in its place. Finally, the Karlsruhe court has so far held the view that EU law is not applicable to revocation questions for real estate financing.

However, here too Gansel is confident for customers: “According to the will of the German legislator, the requirements of EU law also apply expressly to real estate financing. Consumers would therefore have a good chance of getting their loans back. There is also another point: Banks are likely to be more willing to talk and willing to agree on the verdict.

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