Since many retail shops had to close to the public in spring 2020 due to the pandemic-related official orders, the question of whether commercial tenants are entitled to a reduction in rent (Minderung) due to the closure has been discussed extensively.
During the pandamic commercial tenants were mostly unable to record any turnover, but still had to continue paying rent. Many tenants were therefore of the opinion that they were not obliged to pay the (full) rent for this period. In the legal literature, solutions on the right to reduce the rent and on the adjustment after the so-called cessation of the basis of the transaction were extensively discussed.
PREDOMINANT VIEWS IN CASE LAW: OBLIGATION TO PAY RENT REMAINS IN FULL FORCE AND EFFECT
Now several courts have ruled that commercial tenants must pay the rent in full despite the closure orders and are not entitled to reduce the rent. Even if the tenant cannot continue his business due to the closure orders or only makes losses, he is in principle still obliged to pay rent and ancillary costs. The economic risk is borne by the tenant.
REGIONAL COURT OF ZWEIBRÜCKEN: NO RIGHT TO NON-PAYMENT OR REDUCTION OF RENT
The Regional Court of Zweibrücken ruled in September 2020 (AZ: HK O 17/20) that the temporary closure of commercial rental space due to an official ban on operations as a result of the Corona pandemic does not constitute a right to non-payment or reduction of rent for the commercial tenant (a retail company).
A reduction can only be considered in the event of a defect in the rental object within the meaning of § 536 BGB. However, the tenant’s loss of turnover in particular does not constitute a defect in the rented property. The same applies to restrictions under public law that do not have their cause in the rented object.
Thus, the pandemic-related closure orders were – according to the Regional Court – business-related and therefore did not justify a claim for a reduction of the rent. In particular, the landlord fulfilled his main contractual obligation to provide the property for use. Something else could apply if, for example, special rules were made for visiting shopping centers. In such cases, the location of the rented property in a shopping centre was the decisive factor. The official prohibition then refers to a circumstance that affects the rented property made available by the landlord. If the complete closure of a shopping center is ordered by the authorities, a partial rent reduction is conceivable.
NO DISTURBANCE OF THE BASIS OF THE CONTRACT
As a rule, a claim for adjustment of the contract due to a disturbance of the basis of the contract pursuant to Section 313 of the German Civil Code (Bürgerliches Gesetzbuch – BGB) and an accompanying reduction of the rent is also out of the question. The provision of § 313 BGB is applied very restrictively. It is true that the business basis of the tenancy agreement ceased to exist due to the pandemic-related prohibition of operation. However, it was reasonable for the tenant to adhere to the contract, as the tenant generally bears the risk of use of the rented property. In particular, the commercial tenant bears the risk of being able to make a profit with the leased property.
In addition, the rented property could in most cases continue to be used for storage purposes and as an office during the lockdown.
At most, if sticking to the contract would lead to unacceptable results, in particular to a threat to the tenant’s existence, a contract adjustment could be made. In addition, the risk of termination without notice by the landlord due to arrears of payment would be temporarily absorbed under the conditions of Article 240 § 2 EGBGB.
Impossibility within the meaning of sections 275 and 326 of the German Civil Code (Bürgerliches Gesetzbuch – BGB) was also out of the question, as the closure order issued by the authorities was only valid for a certain period of time and there was no (permanent) obstacle to performance.
REGIONAL COURT FRANKFURT/MAIN: RISK OF USE WITH THE TENANT – NO RIGHT TO REDUCtion of RENT
The Regional Court of Frankfurt/Main decided on 08.08.2020 (AZ: 2-05 O 160/20) that the termination barrier of Art. 240 § 2 EGBGB does not affect the tenant’s obligation to pay. In principle, the risk of use was with the tenant. In the case of commercial leases, this distribution of risk was established by settled case-law. Loss of turnover is therefore always at the sole risk of the tenant. The prohibition of termination does not contradict this, as it only aims at protecting the commercial tenant from “homelessness”. A right to reduce the rent would not exist in favour of the defendant tenant (a retail chain).
MUNICH REGIONAL COURT: RESTRICTIONS AS A RESULT OF THE CORONA PANDEMIC ENTITLE THE TENANT TO A RENT REDUCTION
While courts predominantly deny the possibility of reduced rent payments, the Regional Court of Munich (LG München I, final judgment of 22.09.2020 – 3 O 4495/20) is of the opinion that this may be possible.
Since it has been recognised since the early days of the application of the German Civil Code that a prohibition on the opening of retail or hospitality outlets can be a defect within the meaning of section 536(1) sentence 1 of the German Civil Code, the restrictions in the Corona pandemic on the letting of a business premises for the operation of a retail business also constitute a defect; according to the leading sentence of the ruling.
NEW LAW PROVIDES PRESUMPTION OF DISTURBANCE OF THE BASIS OF THE CONTRACT
The legislator is now trying to counteract this legal uncertainty with a new law of 17.12.2020 (BT Drucksache 761/20):
Art. 240 EGBGB § 7
Disturbance of the Basis of Tenancy and Lease Agreements
(1) If, as a result of government measures to combat the COVID-19 pandemic, leased land or leased premises that are not residential pandemic are not usable for the tenant’s business or are usable only with considerable restrictions, it is it shall be presumed that a circumstance within the meaning of section 313, paragraph 1 of the Civil Code, which has become the basis of the tenancy agreement, has changed seriously after the conclusion of the agreement.
(2) Paragraph 1 shall apply mutatis mutandis to lease agreements.
According to the legislator’s justification, the new regulation is intended to relieve the following service providers in particular:
- Service businesses in the field of personal care – for example hairdressers, cosmetic studios and massage practices,
- Commercial overnight accommodation
- Retail shops
- Theatres, concert halls, cinemas and other cultural institutions
- Swimming pools and fitness studios
- Catering establishments as well as bars, clubs, discotheques, pubs and similar establishments
- Premises used for recreational purposes
On the one hand, the law is intended to eliminate the uncertainties that sometimes exist in practice. On the other hand, the negotiating position of commercial tenants is to be strengthened. The regulation should clarify that § 313 BGB (disturbance of the basis of the contract) applies in principle and thus appeals to the willingness of the contracting parties to negotiate. General and tenancy law warranty and structuring rights would continue to take precedence over section 313 BGB.
For cases in which a court decision is necessary, [with § 44 EGZPO] an accompanying procedural regulation is made to accelerate the court proceedings so that legal certainty can be achieved more quickly.
§ SECTION 44 EGZPO
Priority and acceleration requirement
(1) Proceedings concerning the adjustment of the rent or lease of land or premises other than residential premises because of government measures to combat the COVID 19 pandemic shall be given priority and expedited.
(2) In proceedings under subsection (1), an early first hearing shall be held not later than one month after service of the
of service of the statement of claim.
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