Social housing: Federal court prohibits permanent bail

An eternal social bond of state-subsidized housing is not effective. A corresponding obligation of homeowners to cheaply rent social housing can not be unlimited. This verdict was announced by the Federal Court of Justice (BGH). On the contrary, when the financial benefits are exhausted, the bond usually ends after 15 years.

In this particular case, the city of Langenhagen near Hanover sold a property to a construction company in 1995 and provided favorable loans. In return, 52 social housing units were built. The city was contractually assured that the social bond of dwellings is undetermined and the apartments are only rented to tenants with a certificate of entitlement.

When a housing company bought the building, it wanted to distance itself from this permanent bond and complained about the ineffectiveness of the agreement. For the Hanover district court and in the second instance for the Oberlandesgericht (OLG) in Celle, the action remained unsuccessful.

The federal court has annulled this verdict. The indefinite notarial agreement was not effective. The fact that the city not only sold cheap loans, but also the property to the company, could justify an extension of the bond, but nothing more.

The BGH referred to the Housing Act, which provides for a time limit. The end no later than the benefits granted by the state have been exhausted. How high these should be evaluated in the specific case should now determine the higher regional court Celle. It depends on whether the social obligation actually falls in this case. The case was therefore referred back to the OLG Celle by the Federal Court of Justice.

Reference number: V ZR 176/17

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