Mr. M. from Luxembourg wants to rent a property in Germany, which is put on the market through an real estate agent in Luxembourg. The landlord of the property lives in Germany. Who has to pay the broker’s commission? Mr. M. or the landlord who has commissioned the broker?

The answer to this question depends on whether German or Luxembourg law applies.

In Germany, the so-called “Bestellerprinzip” applies in principle to the letting of residential property. This means that the person who has commissioned the agent must pay the agent’s commission. Under Luxembourg law, the tenant can be engaged to pay the commission even if the landlord has commissioned the broker.

Since in this case the property is located in Germany, the landlord resides in Germany and the broker was commissioned by the landlord, there is a predominant reference to German law, which thus, in our opinion, applies.

In this respect, the “Bestellerprinzip” is, in our opinion, also applicable if – as in our case – Mr. M. and the broker are domiciled in Luxembourg. That is why the broker’s commission in the present case and in our opinion has to be paid by the landlord and not by Mr. M.