What is the principle of halving?
Since December 2020, real estate agents must comply with the so-called principle of halving when structuring their fees according to § 656c BGB. Accordingly, under certain conditions, an agent is obliged to split their commission equally between the buyer and the seller if both parties have concluded a valid agency agreement with the agent ("dual agent"). According to § 656d BGB, this also applies if the agency agreement was initially concluded with only one party. In this case, the other party may not later be obliged to pay more than half of the agent's commission ("cost-shifting agreement"). The purpose of this legal amendment was to financially relieve the buyer in real estate transactions during a tight property market, as previously the buyer often had to bear the full cost of the agent's commission.
Scope of Application
The principle of halving only applies if the buyer of the contractual property is a consumer (personal scope). Therefore, the buyer must be a natural person who is not primarily acting for self-employed professional or commercial purposes. The consumer status also applies if the acquisition is made as an investment rather than for personal use. The legal status of the seller or the agent is irrelevant. The principle of halving also applies if the property is purchased from a private individual or the agent acts only as an occasional agent.
For the material applicability of the principle of halving, the contractual property must also be a condominium or a single-family house.
Legal Consequence
Violation of the principle of halving carries a severe sanction: An agency agreement that does not split the agent's fee equally is legally invalid. The nullity then extends to both agency assignments. The agent cannot claim any commission from either the seller or the buyer.
The seller’s payment obligation cannot be circumvented by giving the property to the agent for free ("handing over"). If the agent has agreed to the free service with one party, they cannot claim any commission from the other party either.
Current BGH Jurisprudence
The Federal Court of Justice (BGH) recently dealt with the principle of halving in two decisions (rulings of March 6, 2025 - I ZR 32/24 and I ZR 138/24).
First Decision (BGH | ZR 32/24)
In the first case, a broker sued a couple who had purchased a house with her assistance. She had concluded commission agreements with both the couple and the seller's wife, which, however, stipulated different commissions. The buyer side had promised a higher commission than the seller side and ultimately refused to pay the brokerage fee. Thus, the courts had to decide.
Since the commission was indisputably unequally distributed, the broker based her claim on the following: Firstly, it was not the seller but his wife who engaged the broker. Secondly, the house included an annex with an office and garage, so the broker argued that the principle of halving did not apply because the property could be used commercially and therefore was not a single-family home.
However, the BGH ruled against the broker and declared the brokerage contract invalid. A single-family home within the meaning of the law is one that clearly serves the residential purposes of the members of a single household (relevance of intended use). Even a granny flat or other commercial use does not change this if it is of minor importance. In the case at hand, the office space was about one-fifth of the total area, which, according to the BGH, did not alter the character of a single-family home.
Also, the fact that the seller's wife engaged the broker did not change the applicability of the principle of halving. Although § 656c para. 1 BGB regulates only the case of a broker contract with the parties to the purchase contract, the provision applies correspondingly if a third party concludes the broker contract, as the purpose of the provision—to protect consumers from abuse of their weak negotiating position—remains unchanged if someone else formally concludes the contract (consumer protection rationale).
Second Decision (BGH | ZR 138/24)
In the second case, the buyers acquired a plot with a semi-detached house. The seller had engaged a broker for the sale, agreeing to pay EUR 25,000 commission. The buyers also committed to pay the full fee to the broker, which they did after notarization. In return, the purchase price was reduced by the brokerage fee. The seller, however, paid nothing. The buyers demanded their money back and finally went to court.
The BGH also ruled against the broker here: § 656d BGB applies not only to agreements between the parties to the purchase contract, but to any contractual arrangement by which a party not engaged the broker is obliged to pay the commission. This includes agreements made by the broker with the other party to the contract. The broker could not argue that the seller was still formally obliged to pay the commission, as the buyers were required to pay the full commission. Thus, the seller, as the party who concluded the broker contract, was not obliged to pay the commission under § 656d BGB. The violation resulted in complete nullity, and a reduction to half of the commission was rejected by the BGH.
Guidelines for Brokers
Both BGH decisions show a tendency that the scope of the principle of halving is interpreted broadly for consumer protection reasons:
For classification as a single-family home, the subjective purpose of acquisition of the buyer, as recognizable to the broker, is decisive. It is a single-family home if the purchase is clearly for the residential use of the members of a single household.
The principle of halving may also apply if a third party, not a contracting party, concluded the broker contract, especially in the case of close relatives (e.g., the wife) of a contracting party.
Passing-on agreements should be used with great caution. If a passing-on occurs, it must be ensured that the original contracting party of the broker contract remains at least obliged to pay half of the broker’s commission.
Failure to comply with these principles puts the broker’s entire commission claim against both parties at risk.
