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Apr 16
NJW

Rent Reduction Due to Corona

Commercial Rent in Times of Corona – Strengthened Negotiating Position for Commercial Tenants

Rising infection rates lead to increased restrictions for commercially used rental spaces. Courts had to deal with the question of whether full rent payment can be demanded even if the use of the rental property is severely impaired. The rulings have varied greatly. It is disputed whether a rent reduction is possible under § 536 para. 1 BGB as well as whether a rent adjustment can be made through the legal concept of frustration of contract (§ 313 BGB). An overview of the current legal developments:

During the first lockdown, it was still assumed that a Corona-related closure was not grounds for a rent reduction. However, on 31.12.2020, an adjustment of pandemic-related regulations in commercial tenancy law took place. According to this, if rented (or leased) commercial premises are not usable or only usable with significant restrictions for the tenant’s business due to state measures to combat the COVID-19 pandemic, it is presumed that a circumstance within the meaning of § 313 para. 1 BGB , which has become the basis of the rental agreement, has significantly changed after the conclusion of the contract.

According to this, the presumption only applies to the so-called real characteristic of § 313 para. 1 BGB , namely that a circumstance that has become the basis of the rental agreement has significantly changed after the conclusion of the contract.

Even after the new legal regulation, a tenant must therefore demonstrate and prove that the parties would not have concluded the contract or would have concluded it with different content if they had foreseen this change, and that one party cannot reasonably be expected to adhere to the unchanged contract, taking into account all circumstances of the individual case, in particular the contractual or statutory risk distribution.

The new regulation is also not intended to change the legal consequence that a contract adjustment can only be demanded to a reasonable extent. Only the legal consequence that brings the legitimate interests of both contracting parties into an appropriate balance can be demanded. Therefore, it always depends on the individual case whether, for example, a deferral or adjustment of the rent amount, a reduction of the rented space with a simultaneous reduction of the rent, or even the termination of the contract is appropriate for the period in which a business is affected by a state measure.

The stated goal of the new regulation is to strengthen the negotiating position of commercial tenants.

The Higher Regional Court (OLG) Dresden ruled in favor of a tenant. A textile store of the chain “KiK” had been closed during the first lockdown due to general decrees of the state. The textile chain did not pay the rent for April 2020. The landlord sued and won in the first instance. On appeal, the OLG Dresden has now overturned this judgment ( Judgment of 24.2.2021, Case No. 5 U 1782/20 ).

According to the Dresden judges, there has been a disruption of the basis of the lease agreement within the meaning of § 313 para. 1 BGB. The contract should be adjusted, reducing the base rent to half for the duration of the ordered closure. Neither party had set a cause for the disruption of the basis of the contract or foreseen it. It was therefore appropriate to distribute the associated burden equally between both parties.

In a judgment of the OLG Karlsruhe (Judgment of 24.02.2021, Case No. 7 U 109/20 ) , it was also about “KiK” and the monthly rent for April 2020. In that proceeding, however, the Regional Court deciding in the first instance had ruled in favor of the plaintiff landlord, and the OLG Karlsruhe has now confirmed this.

According to the OLG Karlsruhe, a Corona-related closure order does not constitute a material defect. The condition of the rented premises still allows their use as sales and storage spaces. Tenants are only unreasonable to pay the full rent due to frustration of contract if their claim would destroy their existence or at least severely impair their economic progress, and if the landlord’s interests also allow for a contract adjustment.

At the same time, the legislator emphasizes that general and tenancy law warranty and design rights take precedence over § 313 BGB and that nothing should be changed in this regard.

Thus, public law restrictions – depending on the circumstances of the individual case and the specific contractual agreements – could also constitute a defect within the meaning of § 536 BGB.

According to § 536 para. 1 BGB, the agreed rent is reduced by law if the rented property has a defect at the time of handover to the tenant that eliminates or (significantly) reduces its suitability for contractual use, or if such a defect arises during the rental period. Public law impediments to use and restrictions can reduce the suitability for the contractual use of the commercial property and thus constitute a material defect. It is recognized that public law restrictions as legal circumstances can constitute a defect if they relate to the condition, usability or location of the property, whereby it depends on the agreed business purpose and the restriction must exist in principle ( ZVertriebsR 2021, 36 para. 23; Palandt, BGB, 2020, § 536 para. 18).

Unlike the Munich Regional Court, the Mönchengladbach Regional Court and the Bielefeld Local Court do not consider the requirements for a rent reduction to be met. They justify this by stating that the restrictions on the specifically rented property must have their cause precisely in its condition and relationship to the environment and not in the personal or business circumstances of the tenant (BGH NJW 2011, 3151 para. 9, 17; cf. BGH, Judgment of March 2, 1994 – XII ZR 175/92 -, para. 10; Schmidt-Futterer/Eisenschmid, 14th ed. 2019, BGB § 536 para. 78). The sovereign measures served to protect the population from general health hazards. They did not directly relate to the specific condition of the rented property. The reference point was the operation of the respective tenant. The measures did not focus on the specific structural conditions, but generally on the type of use and the fact that public traffic takes place in the affected areas and this promotes infections ( cf. LG Heidelberg COVuR 2020, 541 para. 27; AG Bielefeld Judgment of 20.10.2020 Case No. 404 C 56/20 ; Sittner NJW 2020, 1169, 1171; Daßbach/Bayrak, Corona Crisis and Contractual Risk Distribution, NJ 2020, 185; Leo/Götz, Cases and Solutions on the Fate of the Commercial Tenant’s Obligation to Pay Rent in COVID-19 Times, NZM 2020, 402).

This assessment would not change even though the commercial premises in dispute were rented for use as a retail store. This is because the rented property would still be suitable for this purpose in the same way as before the sovereign intervention. Only its operation was prohibited, and this was detached from questions of the condition or location of the rented property. This circumstance falls within the tenant’s risk area.

Ultimately, the courts have also decided against an exemption from the obligation to perform according to § 326 para. 1 sentence 1 BGB . According to this provision, the claim for consideration lapses if the debtor does not have to perform according to § 275 BGB. According to § 535 para. 1 sentence 2 BGB , the main performance obligation of the landlord is to provide the tenant with the rented property in a condition suitable for contractual use. In this context, § 537 para. 1 sentence 1 BGB must also be observed, according to which the tenant is not released from his obligation under § 535 para. 2 BGB if he is prevented from exercising his right of use due to a reason lying in his person. The legislator thereby makes it clear that the landlord must only provide the possibility of use. The mere risk of use of a rented property, on the other hand, is borne by the tenant ( AG Düsseldorf Judgment of 10.11.2020 – 45 C 245/20 ).

Judgments on Rent Reduction Due to Corona:

Against a Rent Reduction Due to Corona, among Others:

For a Claim to Rent Reduction / Rent Adjustment, among Others:

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