Regional Court of Heidelberg, 14 November 2017, Ref.: 5 S 59/16
Pursuant to Section 573 (1) BGB, a landlord may terminate a tenancy for cause if he has a legitimate interest in doing so. A legitimate interest exists, among other things, if the landlord would be prevented from making appropriate economic use of the property by continuing the tenancy and would suffer considerable disadvantages as a result; the possibility of achieving a higher rent by renting the property elsewhere as living space is not taken into account; the landlord may also not invoke the fact that he intends to sell the rented premises in connection with the intended creation of residential property or after the property has been transferred to the tenant. It should be noted here that a significant disadvantage does not always have to be of a direct economic nature. The inability to adapt the living space to modern living conditions, with the result that subsequent lettings are prevented, can also constitute a significant disadvantage.
The landlord must demonstrate the disadvantages to be suffered by showing his financial circumstances in the proceedings at the latest.
If the ordinary termination is lawful, the landlord can demand the eviction and surrender of the flat in accordance with §§ 546, 985 BGB.
The following judgement deals with the question of whether a purely comprehensible and reasonable economic conversion consideration by the landlord, based on the greatest possible economic advantage for the landlord, outweighs the tenant's interest in continuing to hold the property.
Facts of the Case:
The parties are in dispute about the validity of a cancellation of sale in accordance with Section 573 (2) No. 3 BGB. The plaintiff purchased the listed half-timbered house in Heidelberg in 2011 and was entered as the owner in the land register on 20 June 2012. The defendant has lived in a flat on the upper floor of the apartment building since 1 November 1999 and pays EUR 483.75 including operating costs. There is also a storage room on the upper floor that is not also rented out and an unfinished attic with an uninsulated roof above this floor.
Landlady cancels flat due to renovation and conversion costs
Following a necessary repair to the roof, the plaintiff had plans drawn up for a 114.66 m² maisonette flat. The previous division of flat, storage room and loft was to be omitted for this. To this end, the plaintiff terminated the tenancy with the defendant in a letter dated 13 May 2014, citing the costs of the renovation and conversion. On 18 September 2014, the conversion was granted listed building consent and on 22 October 2014, planning permission was granted, with both notices containing conditions.
In the action, the plaintiff seeks to order the defendant to vacate and surrender the flat in dispute. To this end, she argues that if the previous floor plan is retained, a comprehensive renovation of the roof and the conversion of the pointed floor into a flat would cost at least EUR 87,526.46, whereby this plan would not result in any benefit for her. The conversion to a maisonette flat would cost EUR 276,710.70, but would then be quickly amortised by the expected basic rent of EUR 1,720.00.
Tenant objects to termination and sees intention to realise as pretextual
The defendant replied that the intention to utilise the property was merely a pretext and that the construction project could not be realised. Furthermore, the letter of cancellation did not contain sufficient justification.
The district court therefore took evidence, whereupon the defendant was sentenced as requested. The local court assumed that the plaintiff was serious about the conversion and that the official requirements were in line with the planning. In the opinion of the local court, the utilisation was therefore appropriate and the termination was not only for the purpose of increasing the rent. If the tenancy were to continue, the plaintiff would suffer considerable disadvantages.
The tenant appeals against the judgement granting eviction
The defendant is appealing against this judgement with the present appeal. In its grounds of appeal, it asserts various procedural errors. With regard to the facts of the case, it argues that the cancellation was not sufficiently justified. Furthermore, there was no serious intention to utilise the property. In particular with regard to the lack of planning permission. The maisonette flat did not constitute an appropriate "luxury modernisation".
Appeal judgement of the Regional Court of Heidelberg
The Regional Court of Heidelberg has now ruled that the appeal is admissible and well-founded. The plaintiff (defendant in the appeal) had no claim to the return of the rented property pursuant to Sections 566 (1), 546 (1) BGB.
Heidelberg Regional Court considers cancellation invalid
The notice of termination issued on 13 May 2014 did not terminate the tenancy in accordance with Section 543 (1) and (2) BGB, as the reason for termination did not exist.
Although the termination was formally effective and also contained a proper justification, the plaintiff as landlord did not suffer any significant disadvantages as a result of the continuation of the tenancy within the meaning of Section 573 (2) No. 3 BGB.
The local court was right to assume that the existence of the tenancy was an obstacle to appropriate economic utilisation and that the termination was not only for the purpose of increasing the rent. It was also a reasonable and comprehensible consideration that new and modern living space was to be created on the occasion of a renovation and energy-efficient refurbishment of the roof. In view of the documents submitted, the local court was also able to assume that the conversions - while preserving the roof truss - were legally and actually permissible and seriously planned.
No significant disadvantages for the landlord in the event of non-cancellation
However, no significant disadvantages for the plaintiff within the meaning of Section 573 (2) No. 3 BGB were to be expected if the planned realisation was prevented.
The assessment of whether the owner suffers a significant disadvantage as a result of the continuation of a tenancy agreement must be made against the background of the social obligation of ownership and the associated interest of the tenant to remain in the previous flat as the centre of his life. In this respect, ownership does not grant the landlord any right to optimise profits or to be granted precisely those possibilities of use that promise the greatest possible economic advantage. The tenant's right to possession of the rented flat is also property within the meaning of Article 14 (1) of the Basic Law and is therefore protected by the Basic Law. However, the disadvantages suffered by the landlord must not exceed by far the disadvantages that the tenant would suffer in the event of the loss of the flat (see BGH NJW-RR 2011, 1517).
Accordingly, it is not sufficient to assume that a significant disadvantage arises solely from the fact that the plaintiff cannot realise its planned conversion in the way it did while the tenancy continued. Rather, a comprehensive balancing of interests was required for this. However, the mere comprehensibility of the planned "ideal solution" could not be decisive.
Accordingly, taking into account all the circumstances of the case, the disadvantages of the other utilisation options, such as minor roof repairs only on the occasion of leaks occurring on the one hand or renewal of the entire roof while retaining the previous room layout on the other, did not weigh so heavily against the more far-reaching solution sought that they were to be regarded as "significant". Something different could only be assumed if - as in the present case - a renewal did not only appear to make economic sense, but was absolutely necessary, as otherwise a deterioration of the substance could be expected.
Therefore, when weighing up the interests, it had to be taken into account that the plaintiff was not faced with a sudden, at least unexpected deterioration of the building fabric, but had acquired the property with the flat in its current structural condition, namely with missing roof insulation, old roof covering and the known layout of the rooms. The flat itself had already been rented out at this point in time, so that the property therefore had a reduced value due to the rental from the outset (see BGH, judgement of 16.01.2008 - VIIIZR 254/06).
Minimal economic consequences for the landlord
Ultimately, the economic consequences for the plaintiff were only minimal. In particular, since even taking into account the prevention of the greatest possible economic advantage for the plaintiff, the disadvantages of the plaintiff neither individually nor jointly weigh so heavily that in the balancing of interests this would exceed the defendant's interest in continuing as a going concern and would therefore be considered significant.
Therefore, in view of the comprehensive balancing of interests and the defendant's overriding interest in the continued existence of the company, the appeal should be upheld.
Source: Heidelberg Regional Court
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