Tenant’s claim for reduction of rent due to Corona lockdown?

The tenant’s business premises invokes a reduction of the rent due to Corona lockdown issues in the individual case

The tenant’s business premises invokes a reduction of the rent due to Corona lockdown issues in the individual case

No income but rental costs during Corona lockdown:

At the beginning of the corona pandemic, stores in Saxony had to close for several weeks in the spring of 2020. Among other textile discounts, KiK was affected by the corresponding general executive order. When he lost his income due to lack of customers, KiK paid no rent during the lockdown. The landlord, on the other hand, demanded the full rent and sued the court.

Judge from courts in lower instances: full store rent despite lockdown or half store rent

While the city court of Chemnitz in the first instance ordered KiK to pay the full rent, the Dresden Higher Regional Court ruled that KiK should pay only about half of the agreed rent.

The High Court justified this decision on the grounds that there would be a so-called disruption of the business basis. Neither tenants nor landlords could have foreseen this. It is not fair that only the tenant should bear the consequences. On the contrary, both contracting parties will have to bear the consequences equally.

Both parties then appealed the judgment of the Higher Regional Court to the Federal Court of Justice (BGH).

BGH, judgment of 12 January 2022, Az .: XII ZR 8/21: Claim for reduction of rent and scope Questions in the individual case:

BGH has now decided that tenants of commercial premises may be entitled to an adjustment of the rent in the event of closure. However, the verdict from OLG Dresden with a general reduction to half was too general for them.

Disruption of the business basis and right to regulation (reduction) rent:

According to BGH, in the event of a business closure due to a corona-related government order, tenants of commercially used premises may in principle be entitled to an adjustment of the rent due to a disturbance of the business basis.

This is a termination of the contract basis if the relevant circumstances have changed significantly after the conclusion of the lease, and the tenant and landlord would not have entered into the lease if they had foreseen this – in this case the corona pandemic and its consequences. An additional requirement is that it is unreasonable for the contract partner in question to adhere to the contract entered into. In doing so, all factors in the individual case must be taken into account, especially the contractual or legal risk distribution.

In this particular case, the tenant was unable to achieve the expected profit due to extensive government intervention in the economic and social life to combat the corona pandemic. This has created a general danger to life, which in principle can not be attributed to any party to the agreement alone.

In the meantime, the law also stipulates that it is assumed that the relevant circumstances have changed significantly after the conclusion of the lease agreement, if the tenant can not use the leased premises for his business as a result of government measures to combat the corona pandemic or possibly. use them only with significant restrictions.

Whether it is unreasonable for the tenant to adhere to the unchanged contract must be checked in each individual case by an overall assessment. All the circumstances of the individual case must be taken into account. A fixed reduction of the rent by half is excluded. Particular account must be taken of the disadvantages that the tenant has as a result of the business closure and its duration, as well as economic benefits such as government benefits and benefits from business insurance. It is also relevant what measures the tenant has taken or at least could have taken to at least reduce the losses (eg setting up a delivery service, click & collect or online trading). According to the judges, a real threat to the tenant’s economic existence is not necessary. The interests of the landlord must also be taken into account.

Relevant criteria for scope regulation (reduction) rent:

According to BGH, a comprehensive investigation of all the circumstances in the individual case is necessary. In particular, it should be considered

  • what sales losses were in the specific branch,
  • whether there was state aid and
  • whether there were insurance benefits.

Both landlords and tenants are burdened by government action in the fight against the corona pandemic. Neither party is guilty and neither party was able to anticipate this when the contract was entered into. Therefore, the consequences must be borne by both parties to the agreement. However, a general 50:50 division of the originally agreed rent is too general.

As OLG Dresden did not investigate the specific circumstances, BGH did not reach a final decision in the case, but referred the matter back to OLG Dresden for further investigation.

Relationship between adaptation of rent to defect or rent reduction and special corona regulation to limit the landlord’s right to terminate due to tenant’s default:

It is BGH’s view that the tenancy law provisions (especially on defects and rent reduction) and the general contract provisions are applicable despite a special regulation in the Corona Act. For the period 1 April 2020 to 30 June 2020, the EGBGB regulated that a landlord may not terminate the lease solely for the reason that a tenant has not paid the rent on time during the said period, provided that this is due to the effects of the Corona pandemic Is based. According to the unambiguous wording, this provision only refers to a limitation of the landlord’s possibility of termination due to the tenant’s default, but does not contain any regulation on the amount of the rent to be paid.

no defect in the rental property:

According to BGH, the state closure order did not lead to a defect in the leased property. The tenant is therefore not entitled to a reduction of the rent. A defect exists only if the restriction of use is directly related to the special character, condition or location of the rented property. But that is not the case here. The officially mandated company closure only regulates access to public transport, but not the other use of the rented premises. They could continue to be used for online trading, inventory and accounting.

Nothing else follows from the rental purpose agreed in the specific rental agreement “Use as a sales and storage space for retail for textiles of all kinds as well as goods for daily use and consumption”. The tenant could see that the landlord did not want to guarantee a similar use.

Implications for future corona-related restrictions on commercially used leased premises:

BGH has now clarified that tenants of commercially used premises may be entitled to a regulation of the rent for times with corona-related closure or corona-related restrictions on the possibility of use. However, as regards the extent of the reduction and the amount of the rent to be paid, the court has not issued any general rules and thus has not ensured legal certainty. In order to avoid prolonged litigation over several instances and several years, as in this case, an amicable solution is recommended. Tenants and landlords should get together and strive for a deal that is fair to both parties.

Recommendation:

If you have questions about a commercial lease – whether as a tenant or landlord – or about another contract (purchase contract, ticket concert or event, training, travel, gym, etc.) and the effect of corona-related measures on this contract ( termination, cancellation, cancellation costs, extension of the deadline, alternative date, voucher, etc.), simply call us or send an e-mail and book an appointment for an individual consultation – whether it is at our office in Stuttgart, by phone, via Zoom or MS Teams or via email.

0711/7 22 34 39 0

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https://anwaltskanzlei-fuss.de

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Stuttgart (city center)

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