Federal Court of Justice, 15 February 2012, Ref.: XIII ZR 197/11
In a graduated rental agreement, the contracting parties (tenant and landlord) determine the amount of rent for a specific period.
This contractual constellation is particularly interesting for landlords, as rent increases are only possible under strict conditions in "normal tenancy agreements".
Graduated rental agreements can be agreed for both price-free flats and price-restricted flats (e.g. social housing).
Graduated rent is regulated by law in Section 557a BGB:
(1) The rent may be agreed in writing at different levels for specific periods; the agreement shall specify the respective rent or the respective increase in a monetary amount (graduated rent).
(2) The rent must remain unchanged for at least one year in each case. During the term of a graduated rent, an increase in accordance with sections 558 to 559b is excluded.
(3) The tenant's right of cancellation may be excluded for a maximum of four years from the conclusion of the graduated rental agreement. Cancellation is permitted at the earliest at the end of this period.
(4) Any deviating agreement to the detriment of the tenant is invalid.
Section 557a (1) of the German Civil Code (BGB) in particular is repeatedly the subject of legal disputes as contracting parties often fail to properly implement the statutory requirement that the respective increase must be shown in the rental agreement as a monetary amount.
In the above-mentioned case, the Federal Court of Justice had to decide whether a clause that only stated a percentage increase for the continuation of a rental period was valid.
Facts of the Case The plaintiff (landlord) agreed a graduated rental agreement with the defendants (tenants) for residential space, in which the following clause was agreed: "A graduated rent is agreed, the rent is staggered annually by 3 %, see back of the house rules."
On the back of these house rules, a table for the first ten years of the tenancy showed a monetary amount for the annually staggered rent.
This statement was followed by a further agreement: "If the tenancy continues after 31 August 2013, the rent will continue to be staggered by 3 % per year."
As the tenants refused to pay the rent increases under the graduated rental agreement, the landlord sued for outstanding rent claims and invoked the graduated rental agreement.
The local court initially seised only partially upheld the claim. On appeal, the regional court ruled that the agreement of the graduated rent in the tenancy agreement was effective for the first ten years and therefore obliged the defendants to pay.
The defendants appealed against this judgement to the Federal Court of Justice on the grounds that the graduated rental agreement was void as a whole due to the inadmissible agreement of a percentage rate after the first ten years.
Federal Court of Justice: The BGH did not follow this view and dismissed the appeal of the defendant tenants.
The judges ruled that there had been a breach of Section 557a (1) BGB, as the respective rent increase after the first 10 years was shown as a percentage and not as a monetary amount, contrary to Section 557a (1) BGB.
However, the resulting partial invalidity of the rental agreement in this case did not simultaneously result in the invalidity of the entire graduated rental agreement.
In principle, it was to be assumed here that the parties had not refrained from an annual graduation as a whole.
Source: Federal Court of Justice
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