For many investors, acquiring a condominium is considered a solid form of wealth accumulation and retirement provision. Listed properties in particular are often advertised with tax advantages, long-term rental income and supposedly secure value appreciation. But what applies if the promised advantages are based on an inadequate review of the property and buyers are not informed about material risks?
In its judgment of 15 January 2026 (Az. 34 U 103/24 (case no.)), the Oberlandesgericht Hamm (OLG Hamm, Higher Regional Court of Hamm) issued a far-reaching decision on liability for incorrect investment advice in connection with the acquisition of a condominium.
The court made clear that the purchase of real estate can also be the subject of an investment advisory agreement and that investment advisers may be liable for incorrect statements about the property itself, as well as for insufficient information about the experience and reliability of the property developer.
The judgment is therefore of considerable importance for the liability of real estate agents and for buyers’ claims for damages due to incorrect investment advice.
Condominium acquired as a capital investment
The claimants acquired a condominium in a former indoor swimming pool by notarised purchase agreement dated 28 December 2020. The property was located in a listed building and was marketed as part of a property development project.
Specifically, it concerned a listed former swimming pool in which high-quality apartments were to be created and the existing pool was to be converted into an orangery.
In fact, the project remained unfinished. The building permit for the property has since expired.
The property was presented to the buyers as a capital investment with tax advantages. The advice focused in particular on a real estate concept for listed properties. According to the findings of the Senate, the claimants had no relevant prior experience with real estate investments.
The defendant was involved in the distribution. The advisory meetings were conducted by persons acting for it. According to the claimants’ submissions, they were given the impression that the property developer had many years of experience, was known for quality and had sufficient financial capacity.
Damages claimed due to incorrect investment advice
It was precisely these statements that, in the Senate’s assessment, proved decisive from a liability perspective. The claimants argued that they had not been correctly informed about the property developer’s actual experience and financial strength. Rather, its reliability had been presented positively during the advisory meeting, although there was no sufficient basis for doing so.
The claimants therefore sought damages and the economic unwinding of their investment.
The defendant had argued that the acquisition of a condominium for letting to third parties and tax savings was not to be equated with the acquisition of a capital investment; it also pointed out that only a broker’s invoice paid by the claimants had been submitted. The Landgericht Essen (Regional Court of Essen) had still followed this view at first instance and initially dismissed the action (Az. 6 O 33/24 (case no.)). The claimants appealed against this.
OLG Hamm largely upholds the claim
The OLG Hamm amended the first-instance judgment and ordered the defendant to pay extensive damages; according to the current state of knowledge, it is not known whether this decision has already become final.
The defendant must pay the claimants EUR 285,009.41 plus interest at five percentage points above the base interest rate since 14 February 2024.
In addition, the court held that the defendant must indemnify the claimants against outstanding purchase price instalments in the amount of EUR 94,569.16. An obligation to indemnify was also established with regard to certain future interest charges arising from the financing loans. In each case, the obligations exist concurrently against the assignment of claims specified in more detail in the judgment and the retransfer of the legal positions obtained.
Furthermore, the defendant must compensate the claimants for future losses arising from the acquisition of the property and the associated rights. The Senate awarded a further EUR 7,321.59 for pre-litigation legal fees.
For the rest, the OLG dismissed the claimants’ further appeal.
Investment advice despite brokerage agreement
A central point of the decision concerns the legal classification of the defendant’s activity.
In the view of the OLG Hamm, an investment advisory agreement may be concluded impliedly alongside a brokerage agreement. What is decisive is not solely the formal designation of the activity, but how the intermediaries actually present themselves to the customers and which services they provide.
In the specific case, the activity was not limited to merely identifying an acquisition opportunity. Rather, the tax advantages and the suitability of the property as a capital investment were actively explained. The defendant therefore could not successfully argue that it had merely brokered a condominium.
At the same time, the Senate made clear that the brokerage of a property does not automatically constitute investment advice merely because the buyer wishes to use the property as a capital investment. Instead, the specific circumstances of the advice were decisive.
Duty to provide information about the property developer’s experience and financial strength
The investment advisory agreement gives rise to special duties of disclosure and advice. The adviser must disclose those circumstances that are material to the investment decision.
In the court’s view, this included the property developer’s actual experience. In the case of an investment in a property that has yet to be built or extensively renovated, the property developer’s ability to implement the project properly and successfully from an economic perspective may be decisive for the intrinsic value of the investment.
If many years of experience, quality and financial strength are emphasised positively even though these qualities do not in fact exist, this may constitute incorrect advice giving rise to liability.
The court based its assessment, among other things, on the advisory documentation and witness testimony. In the Senate’s assessment, the statements of one witness involved were not capable of refuting the claimants’ submissions. In particular, his statements partially contradicted the documentation he had prepared himself.
Attribution of the adviser’s conduct
The defendant had to accept attribution of the conduct of the intermediaries it used. The Senate based this in particular on § 278 BGB (German Civil Code) and on the rules of agency under §§ 164 et seq. BGB (German Civil Code).
Companies therefore cannot readily evade responsibility simply because advisory meetings are conducted by distribution partners or other persons engaged. The decisive issue is whether these persons act within the company’s sphere of duties and whether their conduct is legally attributable to it.
When do investors have a claim for damages in real estate investments?
Not every disappointing real estate investment automatically gives rise to a claim for damages. Falling property prices, lower rental income than expected or unfavourable economic developments are generally not sufficient in themselves. Rather, the decisive issue is whether the seller, intermediary or adviser breached a duty incumbent upon them and whether that breach of duty caused the loss incurred.
A claim for damages may be considered in particular in the following situations:
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Incorrect investment advice
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Incorrect statements about the property developer
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Concealment of material investment risks
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Inadequate review of the investment concept
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Breach of pre-contractual disclosure duties by the seller
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Attributable misconduct by intermediaries engaged
For a successful claim for damages, the investor must generally demonstrate a breach of duty, loss caused thereby and the legal attribution of the loss.
Conclusion and practical significance
The judgment of the OLG Hamm demonstrates that real estate agents may be exposed to considerable liability risks when marketing investment properties in an advisory capacity. A brokerage agreement does not exclude an additional investment advisory agreement. If tax advantages are explained to customers and the property is presented as a suitable capital investment, more extensive disclosure duties may arise.
Frequently asked questions on damages for real estate as a capital investment
When do I have a claim for damages in relation to real estate as a capital investment?
A claim for damages may be considered in particular if the investment adviser, real estate intermediary, seller or property developer has breached contractual or statutory duties. This may be the case, for example, if material risks were concealed, incorrect statements were made about the financial capacity or experience of the property developer, or unrealistic return expectations were conveyed. As a rule, the breach of duty must have caused the loss incurred. Whether a claim exists depends on the circumstances of the individual case and the relevant basis of claim.
Are real estate agents also liable for incorrect investment advice?
Yes, under certain conditions. In addition to the brokerage agreement, a real estate agent may also conclude an investment advisory agreement with the customer. This may be considered in particular if the agent not only identifies or brokers a property, but actively advises the customer on the suitability of the property as a capital investment. Such an advisory agreement may give rise to special duties of disclosure and advice. If these are breached, the agent may be obliged to pay damages pursuant to § 280 para. 1 BGB (German Civil Code). Whether investment advice exists depends on the specific circumstances and the actual content of the discussions.
What losses can investors claim in the event of incorrect real estate advice?
Depending on the facts, the claim for damages may be aimed at an economic unwinding of the investment. This may include, for example, reimbursement of purchase price payments made, certain ancillary acquisition costs and demonstrable financing losses. Indemnification against outstanding payment obligations may also be demanded if the statutory requirements are met. In return, investors must regularly surrender or transfer the asset positions obtained in connection with the investment. Which items of loss are actually recoverable depends in particular on the basis of claim, causation and the specific financial circumstances.
Which limitation periods apply to claims for damages relating to real estate as a capital investment?
Contractual claims for damages are often subject to the standard limitation period of three years pursuant to §§ 195, 199 BGB (German Civil Code). As a rule, it begins at the end of the year in which the claim arose and the investor obtained knowledge of the circumstances giving rise to the claim and of the identity of the debtor, or would have obtained such knowledge without gross negligence. Depending on the basis of claim, however, other periods or maximum periods independent of knowledge may apply. Since determining the commencement of the limitation period can be difficult in individual cases, investors should have possible claims legally reviewed at an early stage.
How can investors prove incorrect advice in relation to real estate as a capital investment?
Anyone wishing to claim damages due to incorrect advice when acquiring real estate as a capital investment is often faced with the challenge of proving the content of the advisory discussions at the time. Especially in real estate investments, several years may sometimes pass between the advisory discussion, the conclusion of the notarised purchase agreement and the emergence of economic difficulties. It is therefore all the more important to secure all available documents and evidence at an early stage.
What evidence is important in the case of incorrect real estate advice?
Of particular importance are initially the documents handed over to the investor before the acquisition. These include in particular sales prospectuses, exposés, profitability calculations, financing models, tax calculations and written investment recommendations. Emails, letters and other messages between the investor and the intermediary may also provide information about which characteristics of the property were emphasised and which risks were addressed or concealed.
In addition, advisory records and meeting notes may play an important role. Ideally, they document what information the investor received and the basis on which the investment decision was made. It should be noted that written documentation does not necessarily prove that all information contained therein is actually correct or that it fully reflects the advisory discussion. Contradictions between documentation and the statements of persons involved can play a significant role in proceedings.
Witnesses may also be considered as evidence. If, for example, spouses, relatives or other persons attended advisory meetings, they may be able to provide information about the content of the discussion. The same applies to former employees or other persons involved in the distribution of the property.
Who has to prove the incorrect advice?
The burden of proof depends on the respective basis of claim and the specific breach of duty. In principle, the investor must set out the requirements of their claim for damages. These include in particular the existence of a relevant duty, its breach and the loss caused thereby. However, different burden-of-proof rules apply to certain objections. Thus, the party obliged to provide disclosure must generally prove that the investor waived a disclosure owed.
A careful assessment of the individual case is therefore decisive. Not every unfavourable development of the property proves incorrect advice. Rather, it must be examined whether incorrect or incomplete information was already present at the time of the investment decision or whether material risks were wrongfully not disclosed.
What is the significance of the OLG Hamm judgment of 15 January 2026?
The judgment of the OLG Hamm (Az. 34 U 103/24 (case no.)) demonstrates how important the assessment of advisory documentation and witness testimony can be. In assessing the alleged breaches of duty, the Senate considered, among other things, the available documentation and the statements of a witness involved in the advice. According to the court’s assessment, his statements were not capable of refuting the claimants’ submissions; in some instances, there were contradictions with the documents he had prepared himself.
For affected investors, it follows that they should not prematurely assume that incorrect advice can no longer be proven after several years. Even older documents may be valuable evidence. Conversely, intermediaries and advisory companies should ensure that their documentation is complete, comprehensible and factually accurate.
What should investors specifically do?
Anyone who suspects incorrect advice should collect all documents relating to the real estate acquisition and arrange them chronologically. This also includes documents that only came into existence after the purchase, such as letters concerning delays in completion, defects, rental losses or financial difficulties of the property developer. It should then be examined which statements were made before the purchase, whether they were accurate and whether the missing or incorrect information was significant for the investment decision.
An early legal review is advisable in particular because, in addition to the evidentiary situation, possible limitation periods must also be taken into account.
Can investors still claim damages and economically unwind the contract after the real estate purchase?
Yes. The conclusion of the notarised purchase agreement does not in principle exclude claims for damages due to incorrect investment advice or another breach of duty. Even if the property has already been acquired, investors may, under certain conditions, claim compensation for the financial loss incurred. Whether an economic unwinding is possible depends, however, on the respective basis of claim and the circumstances of the individual case.
What requirements must be met?
In principle, there must be a breach of duty giving rise to liability that caused the investment decision and the resulting loss. Such a case may exist, for example, if an intermediary presents the property as a particularly secure capital investment, even though material risks are known or would have had to be identified upon proper review. Incorrect statements about the property developer’s experience and financial capacity may likewise be relevant.
It is not solely decisive whether the investment proved economically disadvantageous in hindsight. A property can lose value despite proper advice. Conversely, a breach of duty may exist even if not all advertised risks actually materialised. The decisive issue is whether, at the time of the investment decision, the advice met the legal requirements and whether the breach of duty caused the loss claimed.
What does economic unwinding mean?
The purpose of damages may be to put the investor in the financial position they would have been in without the advice given in breach of duty. Depending on the facts, the purchase price paid, ancillary acquisition costs and certain financing costs may therefore have to be taken into account. Indemnification against outstanding purchase price liabilities or certain further burdens may also be considered.
However, complete unwinding does not mean that the investor can keep the property while also demanding reimbursement of all expenses. As a rule, they must surrender or transfer the asset positions obtained in connection with the investment. In addition, economic benefits that the investor has derived from the property may have to be taken into account when calculating damages. These may include, for example, rental income received or other pecuniary benefits. Which items must be credited in detail depends on the specific basis of claim and the circumstances of the case.
What is the significance of the OLG Hamm decision?
In its judgment of 15 January 2026 (Az. 34 U 103/24 (case no.)), the OLG Hamm demonstrated the practical significance of these principles. The Senate awarded damages to the claimant investors and also ruled on indemnification against outstanding purchase price instalments and on further financing-related burdens. The obligations were linked to the requirements specified in more detail in the judgment, in particular to the transfer of certain legal positions obtained from the investment.
The decision shows that claims for damages do not have to be limited to a lump-sum monetary amount. Depending on the structure of the case, indemnification claims and a declaration of an obligation to compensate future losses may also be relevant. The latter may be of particular importance if the economic consequences of the investment have not yet been finally determined.
MTR Legal Rechtsanwälte advises investors in legal advice in capital markets law on possible courses of action and on the enforcement or defence of claims.
