Period of limitation for claims for defects in rooftop photovoltaic installations

In a nutshell: 

According to a brand-new ruling of the seventh Senate of the German Federal Supreme Court [BGH], a photovoltaic installation erected on a building is part of that building, and thus, the period of limitation for claims for defects in such installations is five years, and not two years, which according to the ruling issued in 2013 by the eighth Senate of BGH was the applicable period of limitation.

However, there is only an apparent inconsistency in the opinions of the German Supreme Court on this contentious issue that frequently rivets the attention of the Higher Regional Courts [OLG] across all federal states. Crucial for the differences in the judgements are the facts and circumstances that the court takes as a basis in each case, more specifically, the question of whether the installation is a part of the building on whose rooftop it was built.

The question of when claims for defects in rooftop photovoltaic installations become time-barred has for years been the subject of various rulings issued by the Higher Regional Courts (OLGs) and, recently also even by the BGH. The large number of the rulings issued in this matter suggests that there is no single and clear answer to this question. Neither does the most recent judgement of the BGH mark any change, be it only because it is apparently in conflict with the ruling issued by it in 2013. The conflict between the judgements is only apparent because the facts and circumstances of the two cases differ considerably and should also be differently assessed from the legal perspective. Nevertheless, in my opinion, the new ruling of BGH of June 2016 leaves a lot of room for discussion, which means that it is not very easy to understand.

The answer depends first of all on whether the installation is an independent structure or a part of a structure or building. It is what determines the period of limitation for the defect claims.

According to consistent case law of the BGH, the five-year period of limitation applies if a structure, specifically a photovoltaic installation, has been fitted into a building and serves the building-related purposes. However, whereas the feature of being “firmly fitted into the building” is relatively easy to determine, it is much harder to assess whether the structure concerned serves the building-related purposes. And this is exactly the issue where the judgement of the seventh Senate of June 2016 seems to be needing some explanation.

 Figure 1:  legal basis

 (Click to enlarge)

The judgement was based on the following facts and circumstances: ¹

In the case law, the feature of “serving the purpose of the building” was confirmed when the installation served a function relevant to the building itself, when it could be assumed that at least part of the power was supplied to the tennis hall from the rooftop installation. This was exactly the reason that the eighth Senate of the BGH gave to substantiate its decision to apply the shorter period of limitation, which refers to structures that do not form a part of and do not serve the purpose of another structure or building. In the case examined by the eighth Senate, the installation was mounted on a barn roof and the power generated by that installation was fed into the public grid for a fee. According to the judge’s opinion “the solar installation served its own independent purpose because it was supposed to generate power and thus to be an additional source of income for the farmer S; the installation would also have met this purpose if it had been mounted on any other building. Therefore, the photovoltaic installation does not perform any function relevant to the building (barn) itself. It was mounted there only because the farmer considered this appropriate for his purposes”. The court goes on to hold that: “Even if a part of the power generated by the solar installation were used to supply power to the barn, this would not result, in the case of a dispute, in the applicability of the five-year period of limitation. This is because also then the main purpose of mounting the installation would be to create an additional source of income for the claimant, and therefore also in such a situation the installation would not serve the building-related purposes.” 

In its current ruling, the seventh Senate clearly does not share this opinion. In the seventh Senate’s opinion what is relevant is not whether the PV installation performs a function for the building, but only whether it serves the purpose of a fundamental renovation of the building. Thus, the feature of “serving the purpose of the building” has been interpreted entirely differently in this case. According to the seventh Senate, what counts is whether the mounting of the installation on the roof would have been classified as work on a structure or building if it had taken place during the construction of the hall. The seventh Senate answered this in the affirmative by presenting the following argument: “… since the building, regardless of its other purposes, would have also been used as a carrying structure for a photovoltaic installation anyway.” This should apply also in cases where the work carried out on the roof is equal to the construction of a new building. The mounting of the installation required major changes in the roof panel and the building structure, and therefore, in the opinion of the BGH, it must be seen as a fundamental renovation of the tennis hall.

Thus, the legal situation of owners and operators of rooftop photovoltaic installations is not much clearer than before the judgement. Therefore, we recommend that all those who accepted their installation maximally two years ago should check it for defects in time and file a claim for defects in court before the end of the two-year time limit.

The judgement of the BGH of 02 June 2016 has not yet shattered the hopes of all those who accepted the installation within the five-year period; what they have to do now is demonstrate to the court that the building underwent comprehensive changes and convince it that their case is comparable to that examined and decided by the seventh Senate.   

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¹ BGH Press Office Notification No. 95/2016 of 2 June 2016.