retention of title

noun · Eigentumsvorbehalt

Retention of title is the Eigentumsvorbehalt of § 449 BGB: where the seller of movable goods reserves ownership until payment, ownership passes under the condition precedent of full payment. The seller can demand the goods back only after withdrawing from the contract, a reservation tied to a third party’s claims is void, and in the buyer’s insolvency the clause is what separates an owner from an ordinary creditor.

Which translation, when

einfacher Eigentumsvorbehaltthe basic form: under § 449 Abs. 1 BGB a reservation of ownership until payment of the price is, in case of doubt, a transfer under the condition precedent of full payment, so the buyer holds possession and an Anwartschaftsrecht while ownership stays with the seller; Abs. 2 adds the practical trap, the seller may demand the goods back only if he has withdrawn from the contract, and Abs. 3 voids any clause tying the passing of ownership to the buyer meeting claims of a third party, an affiliated company of the seller being the statutory example.

verlängert und erweitertthe extended forms: the verlängerter Eigentumsvorbehalt lets the buyer resell in the ordinary course, § 185 Abs. 1 BGB, against an advance assignment of the resale claim, and a Verarbeitungsklausel keeps the seller’s position where processing would otherwise create ownership in the buyer, § 950 BGB; the erweiterter Eigentumsvorbehalt extends the condition to further claims of the same seller from the running account, and these clauses sit in standard terms, so the fairness review of the standard terms entry applies to them.

Insolvenz und Wortwahlwhy it is drafted: goods under a valid reservation do not fall into the estate, the seller claiming separation under § 47 InsO, whereas the extended forms leave him only a right to preferential satisfaction, § 51 Nr. 1 InsO, out of the assigned claim or the processed goods, while the administrator may still elect performance under § 103 InsO, which is the whole commercial point of the clause; the German name is fixed, Eigentumsvorbehalt, and anything built from Titel points at enforcement law instead, a trap the title entry holds.

Why

Retention of title has one German name, the Eigentumsvorbehalt of § 449 BGB, and the institute is more precisely cut than the English phrase suggests. Under Abs. 1, where the seller of a movable thing has reserved ownership until payment of the price, the doubt is resolved in favour of a transfer under the condition precedent of full payment: the buyer receives possession and an expectant right, the Anwartschaftsrecht, ownership passing automatically when the last instalment lands. Two limits follow immediately. Abs. 2 says the seller may reclaim the goods only after withdrawing from the contract, so a clause promising immediate repossession on default overstates the position; and Abs. 3 voids any clause making the passing of ownership depend on the buyer meeting claims of a third party, an affiliated company of the seller being the statutory example, which is exactly what many international supply forms attempt. Commercial practice then builds upward. The verlängerter Eigentumsvorbehalt authorises resale in the ordinary course, § 185 Abs. 1 BGB, and takes the resale claim by advance assignment, usually leaving the buyer to collect until default; a Verarbeitungsklausel answers § 950 BGB, under which processing would make the buyer owner of the new thing; and the erweiterter Eigentumsvorbehalt ties release to all claims from the running business relationship. Because these clauses live in standard terms, they run the fairness review the standard terms entry holds, and over-collateralisation is where they typically fail. The reason for all this drafting shows in insolvency: goods under a simple reservation stay outside the estate and the seller claims separation, § 47 InsO, while the extended and prolonged forms, economically security rights, give only preferential satisfaction out of the assigned claim or the processed goods, § 51 Nr. 1 InsO, and the administrator may in either case elect performance under § 103 InsO. For the translator the naming discipline matters as much as the mechanics, the term is Eigentumsvorbehalt, and constructions around Titel land in enforcement law.

Typical mistakes

The seller may reclaim the goods only after withdrawing from the contract, § 449 Abs. 2 BGB, so a clause promising immediate repossession on default misstates the remedy.
A reservation making ownership depend on claims of a third party is void, § 449 Abs. 3 BGB, so group-wide wording from an international supply form does not survive translation intact.
Extended and prolonged reservations sit in standard terms and face the fairness review, so treating them as automatically effective overlooks where they usually fail.

What matters

Adapting supply conditions for a German buyer: the clause should read Eigentumsvorbehalt, tie release to full payment of the price, avoid the void group reservation, and state the resale authority and advance assignment expressly where an extended reservation is intended.

Authority

§ 449 BGB
§ 47 InsO

What the machine misses

Automatic translation of retention of title assembles phrases around Titel and Beibehaltung, and German law has one fixed name for the clause, the Eigentumsvorbehalt of § 449 BGB, ownership passing under the condition precedent of full payment; the invented wording loses the statutory institute and, with it, the separation right the clause buys in the buyer’s insolvency.

See what the machine does with this clause →

Examples

retention of title	Eigentumsvorbehalt
title is retained until payment in full	das Eigentum bleibt bis zur vollständigen Zahlung vorbehalten
extended retention of title	verlängerter Eigentumsvorbehalt
the goods are subject to retention of title	die Ware steht unter Eigentumsvorbehalt

More notes on these sections

trust Treuhand

title Eigentum

constructive trust Bereicherungsanspruch