Brokerage Fee Reloaded – Supreme Court: No Claim Despite Mediation!

The decision of the Austrian Supreme Court (OGH) with reference number 4 Ob 182/23b from April 26, 2024, is causing a stir in the real estate broker industry. In this blog post, we will examine the background and the far-reaching consequences of this ruling.

The Case

A real estate agent was hired by her client to facilitate the purchase of a residential apartment. Instead, the agent offered her client a property designated as an office and informed her about this designation. The client eventually signed a purchase offer for the office, but the transaction ultimately did not proceed. The agent then sued the client for a commission of three percent of the purchase price, which amounted to approximately €140,000.

The Supreme Court's Decision

While the lower court partially upheld the claim, the Supreme Court dismissed it entirely. The central question in this case was whether the agent had a commission claim even though she mediated an office instead of a residential apartment.

The Supreme Court clarified that an agent's commission claim depends on the successful conclusion of the business specified in the contract through the agent's diligent efforts, or at least a business that is economically equivalent to the specified business. Simply put, did the agent fulfill the contract or at least facilitate a purpose-equivalent transaction?

Contractual Performance and Purpose Equivalence

In this case, the parties agreed that the agent was to mediate the purchase of a residential apartment. There was no subsequent amendment to the contract allowing the agent to mediate an office. There was no behavior from the client indicating that her interest in purchasing a residential apartment had changed.

Since the agent mediated a property designated as an office, she did not act in accordance with the contract. The Supreme Court also determined that there was no purpose equivalence, as the office could only be used as a residential apartment after a successful rezoning and building permit. The court made it clear that an agent's diligent efforts do not establish a commission claim if they do not lead to the conclusion of the specified business or a purpose-equivalent business. Therefore, the agent could not claim a commission.

Key Takeaways for Real Estate Agents

It is also noteworthy that the Supreme Court found that the contract was not implicitly amended when the agent informed the client that the property was designated as an office and the client did not respond.

In summary, this decision underscores the importance of clearly and explicitly formulated real estate contracts. Agents are advised to either broadly define the business to be mediated from the outset or formally amend the contract when changes occur.