Bank withdraws financing commitment due to defects

I request an assessment of the following case:

The buyer wants to purchase a house. Financing offers are obtained and there are financing commitments from several banks. The best offer is selected and a financing confirmation as well as the land charge ordering documents are received.

Subsequently, the notarized purchase contract is concluded in which some defects such as damp walls and mold are listed. The purchase contract is forwarded to the bank for payment.

The bank thereby becomes aware of the existing defects and withdraws the commitment. It now needs to be clarified whether another bank might take over. However, since the payment is already due, damages, etc. are probably payable to the seller.

The property is financed to about 90%, 10% and the incidental purchase costs are to be borne by the buyer.

We are of course looking for another financing, nevertheless I would like to ask: Are there any experiences with such a case? Are there good chances of obtaining other financing? Do I have the obligation to inform a bank about defects if not asked and no appraiser is sent? Can the bank do this so easily (as it appears likely)?

The best offer is selected and a financing confirmation is issued

What does "Finanzierungsbestätigung" specifically mean? Such a confirmation is generally hardly worth the paper it is printed on. What financing volume is involved?

Subsequently, the notarial purchase contract is concluded in which some defects such as damp walls and mold are listed. The purchase contract is forwarded to the bank for payment. The bank thus becomes aware of the existing defects

This means that the bank assumed a defect-free property until this point.

and withdraws the commitment.

Which is completely legitimate in the case of a loan agreement (hence the above question about what actually exists) and is covered by the T&Cs.

The property is financed to about 90%, 10% and the incidental purchase costs are to be borne personally.

So at least 100% financing of the lending value under the assumption that the property is defect-free. This will also be reflected in the appraisal.

Am I obliged to inform a bank about defects if not asked and no expert is sent?

Let me ask differently. What would you do if you bought a defect-free property and then found out that the seller fraudulently concealed that the house has damp walls and mold? Or you buy a car where the seller fraudulently conceals that the car was in a serious accident in the past and the damages are not repaired? So yes! Of course you have to inform the bank about defects. These significantly affect the value of a property.

Can the bank do this so easily (as it seems it can)?

Digital answer: Yes

Are there good chances to get another financing?

Near-full financing of a house with damp walls and mold? Let’s put it mildly: You will not be accepted by any bank with open arms.

We are of course looking for alternative financing, yet I would like to ask: Are there any experiences in such a case? Are there good chances to obtain another financing? Do I have the obligation to inform a bank about defects if not asked and no expert is sent? Can the bank do it that easily (as it seems, they probably can)?

I will ask in a different way:

How do you specifically imagine the future situation:
Is the house worth the asking price despite the defects?
If yes, do you want to move into the defective house and leave the walls damp and live with the mold?
Or where do you want to get the money for the renovation?

Buyer wants to buy a house. Financing offers are obtained for this, and there is a financing commitment from several banks. The best offer is selected and a financing confirmation as well as the land charge ordering documents are received.

With this, the bank expresses an assessment of your creditworthiness, and how much money it would lend you for an A-rated property...

The property is financed to about 90%, 10% and the incidental purchase costs are to be borne by yourself.

... then you looked at a C-rated property – at this point a consultation would have been advisable...

Subsequently, the notarized purchase contract is concluded, in which some defects such as damp walls and mold are listed. The purchase contract is forwarded to the bank for payment purposes.

... so the bank has now recognized the value problem of the collateral (and the anticipated impairment of your repayment ability due to unexpected additional expenses) and reacted appropriately by withdrawing its commitment.

We are of course looking for another financing,

Then start looking at how you turn the property into one with appropriately less financing, i.e. contribute more equity. These preparatory tasks should be convincingly completed at the very least when you apply for a new financing. The new financer will see the withdrawn commitment in your credit report, the reason for which they will learn at the latest by querying the withdrawer. If you then look as bewildered as this with an almost brazenly naive attitude...

Am I obliged to inform a bank about defects if not asked and no expert is sent?

... this assessment by the experts...

Nearly full financing of a house with damp walls and mold? Let’s put it mildly: you will not be accepted by any bank with open arms.

... is still diplomatically phrased, and weighs the customer's personality even heavier than the defects of the collateral.

Be ashamed, learn from it and see how you get your head out of the noose. I assume that not much of your 10% will be left after you have paid for the reversal. A costly lesson, but there was also a lot of stupidity (or boldness).

Am I obliged to inform a bank about defects if not asked

I can't remember the terms and conditions of our financing… but the conditions are certainly stated there. Also in yours.

I can’t remember the terms and conditions of our financing… but surely the conditions are stated there. Also for you.

Just for five pennies, "to put yourself in the shoes of your counterpart" should require no T&C among civilized business partners.