With the decision of the Regional Court of Constance on 08.12.2020 (C 4 O 155/20, rkr.), the defendant bank was ordered to repay an early repayment penalty of € 8.233.32, as the contractual information on the calculation of the early repayment penalty was inadequate. The contractual disclosures were neither clear nor understandable in terms of the law.
The facts of the case
In 2017, the plaintiff concluded a real estate consumer loan agreement with the defendant bank. Among other things, this contains the following clause:
"In the case of early repayment (cf. Clause 7 of this Agreement) or in the event of extraordinary termination on the basis of a legitimate interest (cf. Clause 8, sentence 2 of the General Terms and Conditions for Credits and Loans), the Borrower shall compensate the Bank for the damage incurred by the Bank as a result of the early repayment. The lender will base the calculation of this loss on the asset/liability calculation method found permissible by the Federal Court of Justice, which assumes that the funds freed up by repayment are invested in mortgage Pfandbriefe with matching maturities. Thereafter, the following shall be taken into account: – The interest deterioration loss as the financial disadvantage from the early loan redemption, i.e., the difference between the contractual interest rate and the yield for mortgage Pfandbriefe with a term corresponding to the remaining term of the loan to be redeemed. The difference between the contractual interest rate of the loan to be redeemed and the mortgage Pfandbrief yield is to be reduced by appropriate amounts both for saved administrative expenses and for the eliminated risk of the loan to be redeemed. On the basis of the net interest deterioration rate calculated in this way for the remaining term of the loan to be redeemed, any interest losses are then discounted to the date of payment of the prepayment penalty. Here, too, the active reinvestment interest rate, i.e. the yield term of congruent mortgage Pfandbriefe is taken as a basis. (…)"
The decision of the LG Konstanz
According to the Regional Court of Constance, this contractual information about the calculation of the early repayment penalty was insufficient, as it was not clear and comprehensible in the sense of the law. Admittedly the BGH with judgement of 05.11.2019 (XI ZR 650/18) stated that it was not necessary to present a financial mathematical calculation formula, as this would not contribute to clarity and comprehensibility. Rather, the borrower would have to be able to understand the calculation of the compensation and reliably estimate his burden, if he decides to repay early. In order to ensure sufficient transparency and comprehensibility of the calculation method, it is sufficient for the lender to state in general terms the key parameters for calculating the early repayment penalty.
According to these standards, the Regional Court of Constance ruled that the information in the loan agreement was inadequate. Thus in the (at the beginning quoted) contract clause regarding the computation method of the early repayment penalty of it is spoken that it depends on the interest deterioration damage as the financial disadvantage from the premature loan redemption, with which the difference between the contract interest and the net yield of mortgage bonds with a running time, which corresponds to the remaining term of the loan which can be redeemed, is meant. However, this is incorrect. This is because, in the context of calculating the early repayment penalty according to the asset/liability method, the decisive factor is the point in time at which ordinary notice of termination could be given for the first time (BGH, judgment of 19.01.2016 – XI ZR 388/14). In addition, it must be taken into account whether and, if so, to what extent unscheduled repayment rights were granted. However, both of the aforementioned parameters simply do not appear at all in the information contained in this clause.
Have your loan agreement checked for this as well!
You too should seek advice on the subject of prepayment penalties. Attorney and specialist lawyer for bank and capital market right Tilmann Schellhas has for this topic area for many years an acquired expert's assessment and represents borrowers country widely to this circumstances.