Liability Risks for Engineers in Faulty Cost-Effectiveness Consulting for Solar Systems in Condominium Law
The economic feasibility analysis of investments in renewable energies, such as photovoltaic systems, poses complex challenges for condominium owners’ associations (COA). In practice, these associations often rely on the expertise of technical consultants. A recent ruling by the Düsseldorf Higher Regional Court (Case No.: 22 U 66/21, published on 13.01.2025) makes it clear that engineers advising on such projects can be subject to extensive liability obligations – especially when economic calculations and recommendations later prove to be faulty or incomplete.
Facts and Situation
In the case at hand, a COA commissioned an engineer to create a technical assessment to make an informed decision about the purchase and operation of a photovoltaic system on the communal building roof. The engineer’s central task was to provide a solid economic assessment, particularly regarding the profitability and long-term benefits of the solar system.
The economic expectations the owner community had tied to the system were largely based on the forecasts presented in the engineer’s report regarding power yields, self-consumption, feed-in to the grid, and expected ongoing costs. However, shortly after commissioning, it became apparent that the actual income from the system fell far short of the numbers predicted in the report.
Extent and Limits of Liability
Requirements for the Economic Report
The Düsseldorf Higher Regional Court clarified that engineers who provide economic assessments for planned investments as part of their assignment go beyond a purely technical presentation. They owe the COA advice that encompasses all aspects relevant to cost-effectiveness. This includes not only the technical feasibility and functionality of the solar system but also the realistic consideration of market prices, energy price developments, government subsidies, potential operating costs, and tax framework conditions.
In the present case, the engineer was accused of having wrongfully assessed key economic parameters. This not only resulted in the owner community having incorrect return expectations, but also suffering financial disadvantages.
Distinction between Technical and Economic Consulting
The court emphasized that an engineer explicitly tasked with an economic forecast does not act as a financial service provider, but with heightened diligence requirements. They are liable for advisory errors that can lead to misguided investment decisions (so-called protective effect in favor of third parties according to § 328 para. 1 BGB).
There is a duty to perform the financial calculations based on objective standards using all available data and realistic assessment of the market situation. If parameters – such as feed-in tariffs or operating costs – are set too optimistically and thereby a misjudgment is conveyed, this can justify the advisor’s liability to the COA.
Protective Effects in Terms of the Condominium Owners’ Association
The Düsseldorf Higher Regional Court confirmed the engineer’s liability for the financial damage incurred. It emphasized that protective obligations from the advisory contract exist not only towards the principal but also towards the individual condominium owners if their asset interests are directly affected by the accuracy and completeness of the advice.
Implications for Consulting Practice
Importance for Planning and Engineering Offices
The ruling underscores the obligation for comprehensive and substantial clarification of the opportunities and risks of renewable energies when services are not limited to purely technical information. Engineers should therefore not only obtain current market data but also incorporate the development of support regimes, price volatilities in energy markets, and regulatory changes.
The ruling criticizes particularly the assumption of blanket forecasts and recommends an individual assessment of the project location, the actual conditions, and any changes during the project duration. The required depth of consultation depends on the circumstances of the individual case.
Intertwining of Technical and Economic Issues
In projects where technology and cost-effectiveness are intertwined – as is regularly the case with solar systems – there is an increased duty to openly and in detail communicate the interactions of these systems. Errors in cost calculation or unrealistic assumptions about power production and feed-in are capable of influencing the overall decision of the community.
Limitation of liability is only possible if the advisor transparently agrees on this with the client, explicitly points out uncertainties, and the client is aware of these risks.
Legal Classification and Further Aspects
The decision of the Düsseldorf Higher Regional Court aligns with previous jurisprudence on the advisory and duty of care obligations of service providers with economic expertise in technical matters. Liability due to faulty recommendations can, depending on the facts of the case, be justified not only for direct damages but also for financial consequential damages of the community.
It remains open in comparable cases whether and to what extent the engineer’s liability insurance will cover such damages or whether coverage gaps may arise. Thus, the ruling places demands not only on advisors but also prompts principals to critically review the design of contracts and evaluation mechanisms.
Reference to Ongoing Proceedings and Transparency
The presentation is based on the decision of the Düsseldorf Higher Regional Court published on January 13, 2025 (Case No.: 22 U 66/21, accessible at https://urteile.news/OLG-Duesseldorf_22-U-6621_Ingenieur-haftet-gegenueber-Wohnungseigentuemergemeinschaft-wegen-fehlerhafter-Beratung-zur-Wirtschaftlichkeit-einer-Solaranlage~N34699). In the event of further proceedings, the presumption of innocence applies, and legal remedies remain available.
Particularly in projects at the interface of technical and economic aspects, such as the planning and implementation of photovoltaic systems in the field of condominium law, multifaceted legal questions and needs for examination arise. MTR Legal Attorneys accompany companies, investors, and affluent private individuals in detail in all matters related to real estate transactions, construction projects, and liability issues in complex contract designs. Should further clarification be required, the attorneys at MTR Legal are available as contacts.
