Trial at the Federal Court of Justice: May shop rents be reduced for the lockdown times?
Diana Bock is a partner at the Essen law firm Kümmerlein Rechtsanwälte & Notare. Her main focus is real estate law.
For which industries is the decision of the Federal Court of Justice relevant?
The guidelines of the Federal Court of Justice are relevant for all industries that are affected by state-ordered closings / restrictions. The current case involved a retail store. The principles established by the Federal Court of Justice can be transferred to various retail sectors (e.g. perfumery, furniture retail, shoe shops, sporting goods). In addition, the decision is also groundbreaking for the hotel and restaurant industry, fitness studios, etc.
What are the consequences of the guidelines of the BGH for current contracts and outstanding claims?
In the case of ongoing contracts, it will now have to be checked in each individual case whether the parties have provided specific contractual provisions for the case of state-ordered company closings / restrictions. If this is not the case, the BGH principles are to be applied to current contracts and outstanding claims.
If tenants have paid the rent subject to reclaiming or have already made rent reductions, tenants will now have to disclose their economic situation for the disputed periods of business closures / business disruptions as part of the reasonableness test according to the principles of disruption of the business basis. After the economic situation has been presented transparently, a decision can then be made either by mutual agreement or in a dispute (in court) as to the amount of a rental discount to be granted to the tenant. In contrast to rent deferrals, which have to be repaid, rent discounts can remain with the tenant for good.
Tenants must therefore be prepared to have to disclose their economic situation if they want to enforce rental discounts. Tenants should realistically assess the extent to which declines in sales can be compensated for and not approach the landlord with excessive demands. In this way, the chance for tenants to reach an amicable solution with landlords is much higher than if the rent adjustment requirements are too high.
If tenants have not paid the rent subject to reclamation and have paid the rent in full for previous periods and have not made a rent adjustment request, a rent adjustment for previous periods with a prospect of success should no longer be enforceable. Such tenants can only consider rent adjustments for future periods (in the event of renewed government closure orders or significant operating restrictions).
Diana Bock is a partner at the Essen law firm Kümmerlein Rechtsanwälte & Notare. She has her focus on real estate law and since the beginning of the Covid-19 pandemic has provided legal advice to numerous tenants / lessees and landlords / lessors, including large retail groups, on the possibilities of contract adjustment / rent adjustment for the periods of state-ordered temporary closings / restrictions prepared legal opinions for them.