Court rules Volksbank must refund early repayment fee

Bonn District Court has ruled that a Volksbank must refund an early repayment fee to a customer because the loan agreement's terms did not meet legal requirements for clarity. The decision, dated December 22, 2022, could impact numerous German banks that have utilized similar standard contractual forms from DG Verlag.

The case involved clients who received real estate financing from the defendant Volksbank in 2019. When they sold the financed property in mid-2021, they paid an early repayment fee of €15,121.50. The fee was charged because the loan's fixed interest period extended until August 2029.

The court determined that the bank failed to adequately inform the borrowers about the conditions and calculation method for the early repayment fee. According to the ruling, the contractual clauses were insufficient because they did not clearly explain that the calculation of the interest shortfall for the bank depended on the period of secured interest rate expectation, not the remaining loan term. Lawyers at HAHN Rechtsanwälte, who represented the plaintiffs, stated that the legal principles from this judgment are transferable to cases involving other cooperative banks.

Hahn Rechtsanwälte is offering a free initial assessment to consumers to determine if their demanded early repayment fees are valid or if previously paid fees can be reclaimed. The ruling applies to loan agreements concluded after March 21, 2016, and similar cases have been addressed by higher courts.