The legislative initiative of the State of NRW of September 2019 would lead to a significant defusing of the current situation.

Up to now, a violation of the written form requirement of Section 550 BGB (German Civil Code) has meant that a commercial lease agreement concluded for a longer period of time can be terminated prematurely, Section 550, 578 (2) p.1.

Up to now, a commercial lease agreement is deemed by law to have been concluded for an indefinite period of time in the event of a breach of the written form requirement, Section 550 BGB. Any contractual agreements made regarding the term of the contract no longer stand in the way of ordinary termination. The period of notice for commercial leases is, due to the quarterly calculation, between six and nine months, depending on the date of termination, see Section 580a, para. 2 BGB.

According to the explanatory memorandum to the law (Gesetzesbegründung), the provision of Section 550 BGB was originally intended to protect only the purchaser (landlord) of a real estate property as defined by the legislator. The purchaser should have the possibility to withdraw from a rental agreement that has been transferred to him, if it does not comply with the written form requirements. The landlord should thus be protected from being bound by regulations that are disadvantageous to him and of which he could not originally have been aware due to the lack of the written form.

However, after the regulation was also retained with the reform of the law of obligations (Schuldrechtsreform), the case law against this background is moving further and further away from the original justification for the law and granting extensive termination options for a large number of possible violations of the written form. For a long time in practice, this was justified by written form healing clauses to create legal certainty. The clauses for the healing of the written form always took effect when there was a violation of the written form. The parties thus committed themselves to remedy regularly existing defects of the written form by mutual consent and not to terminate the contract for this reason until the defects have been remedied. Such clauses were, however, extensively rejected by the jurisdiction of the Federal Court of Justice (BGH, XII ZR 114/16). Currently, the possibility of termination due to a lack of the written form is therefore only limited by the violation of good faith. For this reason, the purpose of the legislative initiative is that, even in the event of non-compliance with the written form, termination is only possible to the extent historically provided for in the above-mentioned law.

The legislative initiative therefore essentially provides for the following new regulations:

  • In accordance with the provisions of the legislative initiative, the possibility of termination will henceforth only exist for the purchaser of a property in the event of a breach of the written form requirement.
  • The purchaser of the property can make use of the possibility of termination three months after becoming aware of the lack of the written form.
  • The tenant is granted a right of objection.

The tenant is entitled to this right of objection insofar as he/she agrees to the agreements made in conformity with the written form by continuing the rental relationship. All other agreements made in addition to this shall cease to apply for the period of continuation of the rental relationship.

The project is particularly welcome, since a large number of terminations are actually made in order to withdraw from contracts which have become uneconomical for the terminating party due to the existing market situation. Legal certainty has been impaired by this for a long time, which has a negative impact on both landlords and tenants. However, the legislative initiative does not answer some questions. For example, it remains open what happens in the event of an objection to the termination of the lease, which is justified by the lack of the written form, if the lease contains a defect in the designation of the rental space or another similarly significant statement. It is also possible that the contract will remain in force to the detriment of both contracting parties if the provisions which were not made in writing are no longer applicable. In this context, it would be desirable if the legislative initiative, which in principle is to be evaluated positively, were to be extended in these points by a possible right of election and/or supplementary right of the parties.

According to the latest information, the federal council (Bundesrat) has already decided in its session on December 20, 2019, at the request of the state of North Rhine-Westphalia, to introduce the legislative proposal into the federal parliament (Bundestag) (BR-Drs. 469/199). In the meantime, the federal government submitted the legislative proposal to the federal parliament on 5 February 2020. However, the submission was also accompanied by a negative statement of the federal government.

The federal government argued that the legislative proposal would, among other things, apply to residential tenancy law as it stands and that, in the absence of practical problems in this area, no new regulation was necessary. Furthermore, the federal government also has doubts about the actual improvements in practice. These and other points will be part of the legislative process, so that it is to be hoped that the termination due to a violation of the written form will be defused, at least also taking into account the criticism by the federal government.

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