The starting point for this decision was – unsurprisingly – a legal dispute in Berlin.
For notarial practice, this decision serves as an important guide: it concerns legal certainty in land registry proceedings as well as the avoidance of subsequent disputes.
The case in question: ‘Arbitrary’ amendment of the declaration of division
In the case in question, a property developer had planned a block of flats comprising various sub-communities (including accommodation facilities and commercial units). The purchasers of a commercial unit granted, in the property development contract, a comprehensive, standard-form power of attorney which allowed the developer to ‘amend the declaration of division and the community rules retrospectively as they saw fit’, and at the same time undertook to consent to such amendments. Subsequently, addenda were notarised which, in particular, significantly increased the number of accommodation units. Following the revocation of the power of attorney, the Land Registry refused to register the documents; the developer brought legal proceedings seeking approval – unsuccessfully, right up to the Federal Court of Justice.
Section 308(4) of the German Civil Code (BGB): Obligation to consent as a clause modifying the subject-matter of the contract
The Federal Court of Justice (BGH) classifies the standard-form obligation to consent as a clause modifying the subject-matter of the contract within the meaning of Section 308(4) of the German Civil Code (BGB) and emphasises, first of all, the purchasers’ status as consumers: anyone who acquires a unit for letting as part of private asset management generally acts as a consumer under civil law – even if they are registered as a trader for VAT purposes. The consequence is that the power to amend and the consent clause are subject to full scrutiny under the rules governing standard terms and conditions.
Of particular importance is the broad interpretation of Section 308(4) of the German Civil Code (BGB): the provision covers not only unilateral rights to make amendments, but also clauses which, by requiring the consent of the contracting party, effectively grant the user a right to make amendments. Powers of attorney granted to property developers and obligations to consent to amendments to the declaration of division are thus subject to the same strict scrutiny.
Valid reasons as a mandatory prerequisite
The Senate builds on its established case law regarding clauses on changes to performance and requires that changes remain foreseeable for the contracting party and that their interests are given due consideration. It is not sufficient to limit changes in abstract terms or merely in negative terms (‘no material detriment’). The Federal Court of Justice (BGH) expressly requires:
- The clause must make it clear that amendments are only permitted where there are valid reasons.
- These valid reasons must be specifically set out in the contract (such as regulatory requirements, development issues, the rectification of planning deficiencies or clearly defined special requests from other purchasers).
- Amendments to the declaration of division must not serve to retrospectively alter the contractual balance of equivalence to the detriment of the purchaser.
The clause used in the case in question (‘arbitrary’ amendments, without a list of valid reasons) does not meet this standard and is invalid in its entirety – with the consequence that the developer has no right to have the amendments approved.
Section 242 of the German Civil Code (BGB) as a ‘lifeline’? Prohibition of reduction to preserve validity
Another key point: the Federal Court of Justice (BGH) rejects recourse to Section 242 of the German Civil Code (BGB). An invalid clause in general terms and conditions may not be replaced, in accordance with the principles of good faith, by an obligation similar in substance. This would constitute an impermissible reduction to preserve validity, which would enable the drafter to initially formulate the clause in ‘broad’ terms and, in the event of a dispute, to fall back on the supposedly permissible core provision. The Senate clearly states: the property developer must bear the consequences of the way it has drafted its terms; an independent obligation to consent under Section 242 of the German Civil Code (BGB) may only be considered in exceptional cases – and certainly not in this instance.
Conclusion
BGH V ZR 91/25 sets out clear guidelines: powers of attorney for property developers and consent clauses regarding amendments to the declaration of division must be based on valid, specifically stated reasons; broad, undefined powers to make amendments are generally invalid in relation to consumers. The judgement sharpens the focus on the principle of equivalence in property development contracts and confirms that invalid standard terms and conditions cannot be ‘saved’ under Section 242 of the German Civil Code (BGB). For property developers, purchasers and advisers, it is worth investing in careful, project-specific contract drafting – this avoids enforcement problems, reduces the potential for disputes and creates legal clarity.
- Powers of attorney granted to property developers and obligations to consent to amendments to the division of ownership are subject to strict scrutiny of general terms and conditions under Section 308(4) of the German Civil Code (BGB).
- Valid reasons must be clearly specified in the contract and established as a prerequisite for any amendment.
- Precise drafting by a notary ensures project flexibility, protection for purchasers and smooth registration in the land register.
Key points in brief
- Federal Court of Justice (BGH) Case V ZR 91/25 requires clearly specified valid grounds for standard-form powers of attorney for amendments and consent clauses relating to the declaration of division.
- Broad ‘blank powers of attorney’ are generally invalid when granted by consumers; recourse to Section 242 of the German Civil Code (BGB) is generally ruled out.
- Notaries should limit the scope of developers’ powers of attorney, define valid reasons and adapt model clauses to the new case law.
