On 01.01.2021, a new law came into force in which the widely discussed and controversial issue of rent adjustment of commercial premises for those rental premises that could not be used by the tenants due to an official order is now regulated. The new provision in Art. 240, § 7 of the Introductory Act to the German Civil Code (EGBGB) contains a statutory presumption on the disturbance of the basis of the contract pursuant to § 313 BGB. If the conditions are met, this can justify an adjustment of the contract or, if the latter is not possible, even grounds for termination.

The consequences of the officially ordered closures in the context of the Covid 19 pandemic were previously very contentious and handled differently. Often, the respective tenants were able to agree on amicable solutions. However, where this was not possible, the courts ruled and came to different conclusions. While the Regional Court of Heidelberg in a judgment of 30 July 2020 (Case No. 5 O 66/20) argued against an adjustment because the risk of the use of the leased property lay with the tenant, the Regional Court of Munich I in a judgment of 22 September 2020 (Case No. 3 O 4495/20) held that an adjustment of the rent was necessary and required. Some courts considered the regulations in the Covid 19 Pandemic Effects Act as final special regulations, so that the general statutory regulations would not apply. With regard to terminations of rented premises, this law provides for a twofold exclusion of the possibility of termination.

The new provision of Art. 240, § 7 EGBGB is now intended to create a basically uniform solution to this problem. Accordingly, it is legally presumed that in the case of officially ordered closures due to the Corona pandemic, which significantly restrict the use of the commercial leased premises, a circumstance within the meaning of section 313 para. 1 BGB exists, which has become the basis of the contract and has later changed seriously and unforeseeably. This allows for a legal claim to adjust the contract and thus, for example, to reduce the rent. For this purpose, it must be shown in each case that the parties would not have concluded a contract with the same content if they had been aware of these circumstances and that it would be unreasonable for them to adhere to the contract. The unreasonableness can be demonstrated, for example, by the existence of considerable turnover losses and the lack of compensation through state aid.

As a result, the contract can be adjusted and otherwise, if an adjustment is not possible, even terminated on the basis of section 313 (3) BGB. An adjustment can be made in various ways, for example, in addition to a reduction of the rent, a deferment or other arrangements left to the parties themselves. The provision also applies accordingly to lease agreements. Normally, the requirements of section 313 (1) BGB are only met in special exceptional cases – accordingly, the existence of a circumstance within the meaning of section 313 (1) BGB has been highly controversial until now.
Although the new regulation does not mean security of tenure for either tenant, the uncertainties that existed in case law have been eliminated and the negotiating positions of commercial tenants have been strengthened. In essence, however, the generally applicable principles were affected neither with regard to the disturbance of the basis of the contract nor with regard to tenancy law. Ultimately, the factual and thus the legal situation can therefore still vary in individual cases and requires a weighing of the respective interests.

For example, in a judgement of 12 February 2021 (Case No. 31 O 11516/20), the LG München I ruled that in the case of the department stores’ chain C&A there was no unreasonableness within the meaning of Section 313 of the German Civil Code (BGB), with the consequence that the full rent was to be paid despite the closure measures due to the pandemic.
According to the court, it was reasonable for the tenant “in general and also on the basis of the results from the previous three business years” to form reserves. The court came to this conclusion despite a decline in turnover at C&A of about 80 per cent. When examining the reasonableness, the court used the turnover of the specific branch as a basis for the distribution of risk, without including other branches. In addition, state aid (e.g. short-time allowance) as well as the turnover generated by the online shop should also be taken into account in the assessment. Although the prerequisites for a disturbance of the basis of the contract according to § 313 of the German Civil Code (Bürgerliches Gesetzbuch – BGB) were in principle met, the court was of the opinion that the circumstances of the individual case could not lead to an adjustment of the obligation to pay rent. Rather, “only that legal consequence may be sought which gives appropriate weight to the interests of both contracting parties worthy of protection”. Moreover, in this case there was no right to reduce the rent according to the general tenancy law, as there was no defect cancelling the contractual use in the sense of § 536 para. 1 BGB. Furthermore, there was no impossibility and the suitability of the rental object had also not ceased to exist during the period in question.

The tenant is even obliged to form reserves to an appropriate and reasonable extent, according to the LG München I in its judgement of 25 January 2021 (Case No. 31 O 7743/20). This obligation resulted from the tenant’s liability for his own solvency irrespective of fault. The circumstance of the pandemic does not change this, as it quickly depletes reserves. It is true that state aid can be lower precisely because of reserves, but this is also irrelevant, since there is no need for financial aid if there are sufficient reserves.

In view of the fact that both parties were equally exposed to the economic risk of usability, the court stated that a ratio of 50:50 was appropriate with regard to the distribution of risk. Nevertheless, the circumstances of the individual case had to be taken into account appropriately within the framework of a balancing of interests.

In this context, the newly introduced Article 240 § 7 EGBGB only had a clarification function. The claim for adjustment of the contract under section 313 BGB did not necessarily require a threat to existence. Rather, the conflicting interests must be weighed against each other, so that certain circumstances of the individual case can justify exceptions. That was the case here.

In addition, the Introductory Act to the Code of Civil Procedure (EGZPO) also contains a new regulation. Pursuant to section 44 EGZPO, there is a prohibition of priority and acceleration in proceedings concerning an adjustment of the rent for commercial rented premises based on the above-mentioned regulations. On the basis of this, the early first date should take place at the latest after the expiry of one month after service of the statement of claim.

In particular, the new regulations are also retroactively applicable to all periods from April 2020 onwards, even if there were already restrictions on the use of the tenancy at that time due to orders issued by the authorities.

The applicability to new contracts, however, is likely to be more difficult, as the parties are regularly already aware of the risk of the pandemic when concluding the contract. It is therefore advisable for landlords to include a standard “corona clause” in the contracts. This can ensure the necessary flexibility in the event of a dispute.
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