In the event that bankruptcy proceedings are opened over the property developer’s assets, Section 16 BTVG provides for the protection of the purchaser that the purchaser can demand the assignment of claims for damages and warranty claims to which the property developer is entitled against third parties (the executing companies).

In some cases, case law places strict requirements on the validity of such a declaration of intent with regard to this purchaser protection provision.

• 16 BTVG grants the purchaser a right of action, because according to the wording of the law, the warranty and compensation claims are transferred upon receipt of the purchaser’s declaration of intent. No action or acceptance on the part of the property developer or insolvency administrator is required. “As soon as the purchaser exercises this right, the warranty claims and claims for damages are excluded from the “debit estate” in the event of bankruptcy, which results in a separation.” [1]

As a result of the right granted to the purchaser, a number of questions now arise, such as who is authorized to exercise this granted right and what content requirements must this declaration of intent satisfy?

According to § 16 BTVG and the legal definition of § 2 Para. 3 BTVG, only the purchaser, i.e. the contractual partner of the developer, is entitled to the right of formation and therefore not the second purchaser (=single right successor). An analogous application of § 16 BTVG to the sole legal successor of the first purchaser fails due to a necessary loophole, because this would go beyond the intentions of the legislator, which he pursued with the Property Developer Contract Act (BTVG). The legislator wanted to counteract certain risks, in particular the purchaser’s obligation to make advance payments and the difficult-to-calculate risk of large construction projects. Nevertheless, there is still the possibility that the first purchaser may assign his right to design to his legal successor.

With regard to the designation of the subject matter of the right to formulate a contract in accordance with § 16 BTVG, some case law sets strict requirements. Accordingly, the specific defects and claims must be specified when exercising the right to form. According to the case law and doctrine on assignment declarations and their interpretation pursuant to § 914 ABGB, a generous approach can be seen. Accordingly, the wording “assignment of all claims from deliveries of goods or services of a specific business” is sufficient, even if the creditor’s debtor is not yet known. Consequently, the wording “all warranty claims and claims for damages due from the companies carrying out the construction project […]” should suffice.[2] The specific naming of the third party or the executing company is also not necessary because the creditor is often not yet known even in the case of the assignment of future claims. However, in the opinion of the Supreme Court, the designation of the assignment of claims against “the third party” or “the professional” is not sufficient. However, this contradicts the above-mentioned practice and doctrine.

According to the wording of the law, the declaration of intent must be made in writing, which means that a signature must be placed under the declaration of intent. “The legislator wanted the purchaser to send a sufficiently precise letter to the property developer or its insolvency administrator. The purpose of the formal requirement is therefore the preservation of evidence, i.e. clear documentation of the legal relationship between the purchaser, the developer and the executing company.”[3]