Between the termination of a lease and the return of the rental property by the tenant, a considerable amount of time can sometimes pass, especially if there are prolonged legal disputes between the tenant and landlord. However, once the lease agreement between the tenant and landlord is terminated, either through a termination notice or in the case of a fixed-term lease by the expiry of the lease period, the tenant is obligated to return the rental property. At this point, the tenant no longer has the right to use the property.
However, it occasionally happens that the tenant does not comply with this obligation to return the property as stipulated in Section 546(1) of the German Civil Code (BGB) and continues to use the rental property—such as by simply not moving out of the apartment. After the lease has ended, the landlord cannot legally demand rent anymore. In such cases, however, the landlord is entitled, among other things, to claim compensation for use of the rental property equivalent to the agreed rent for the duration of the unlawful retention, according to Section 546a(1) BGB.
Additionally, the landlord may also claim damages pursuant to Section 546a(2) BGB. The background to this provision is that the tenant should not be in a better position after the end of the lease than during the lease term. In this context, „compensation for use“ means nothing other than the rent that the tenant must continue to pay to the landlord.
The landlord, however, can demand compensation equal to the local customary rent for comparable premises instead of the previous rent. Therefore, the landlord can independently choose between the previously agreed rent and the local customary rent and does not need to justify this choice in the letter to the tenant (BGH ruling of July 14, 1999 – XII ZR 215/97). The regulations on rent levels set out in Sections 557 et seq. BGB do not apply here. The rent cap is also not relevant in such situations.
Requirements for Compensation for Use:
To claim compensation for use, the tenant must withhold the rental property from the landlord despite the effective termination of the lease. In simpler terms: despite the obligation to return the property, the tenant does not return the rental property to the landlord and intentionally acts against the landlord’s will (BGH ruling of January 7, 2004 – VIII ZR 103/03).
An example of such a case is when the tenant fails to completely vacate the rental property by leaving behind installations, fixtures, or alterations (OLG Brandenburg ruling of March 26, 1997 – 3 U 159/96). Another example is when the rental property is sublet by the main tenant, and the subtenant refuses to move out (BGH February 15, 1984 – VIII ZR 213/82). In such cases, it does not matter whether the tenant is at fault; even if the return is subjectively impossible due to the subtenant, it constitutes unlawful retention. Both examples only apply if the lease agreement between the landlord and (main) tenant has been successfully terminated.
Unlawful retention also occurs if the rental property is only partially returned or if the rental premises are returned without the keys (KG ruling of August 15, 2005 – 12 U 121/04).
When Is There No Unlawful Retention?
There is no unlawful retention if the tenant is prevented from returning the property due to objective impossibility—such as the complete destruction of the rental premises due to a fire. In such a case, the landlord may possibly claim damages against the tenant.
Additionally, there is no unlawful retention if the rental property is returned in a defective condition. A defective condition may exist, for example, if the tenant fails to carry out the obligatory or agreed cosmetic repairs on the rental property (OLG Düsseldorf ruling of March 27, 2003 – 10 U 64/02). In such cases, however, the landlord has separate claims against the former tenant.
Furthermore, there is no unlawful retention by the tenant if the rental property is returned unvacated because the landlord asserts a landlord’s lien (cf. Kammergericht Berlin, judgment of December 6, 2012, 8 U 220/12, para. 4).
Who Has the Burden of Proof?
The landlord has the burden of proof to demonstrate that the lease agreement was actually terminated (by termination notice or possibly by the expiration of the lease term). Otherwise, the landlord would not be entitled to claim compensation for use. Additionally, the landlord must prove the amount of the claimed compensation, i.e., the extent of the damage and the compensation for use. The landlord must be able to detail and prove that the current situation has caused them financial harm.
How Do Eviction Proceedings and Compensation for Use Work in Practice?
First, the landlord should obtain a court eviction order (judgment). In this order, the tenant is granted an eviction deadline in accordance with Section 721 of the German Code of Civil Procedure (ZPO). During this eviction period, there is no unlawful retention of the rental property within the meaning of Section 546a(1) BGB. This is because, legally, the lease is not properly terminated until the expiration of such an eviction period. During this phase, the tenant owes the landlord the agreed rent but not yet compensation for use. The right to compensation for use arises only after the expiration of the eviction period, if the tenant does not return the rental property to the landlord by the deadline. From this point on, the landlord has the right to claim compensation for use equivalent to the agreed rent or even the local customary rent for comparable premises. Therefore, the landlord has two methods for calculating compensation for use. To secure the right to future compensation for use in the event of a delayed return of the rental property after the eviction deadline, the landlord can include this claim at the same time as the eviction lawsuit and assert it accordingly (BGH November 20, 2002 – VIII ZB 66/02).
In summary, there are significant disadvantages for the tenant if they continue to use the rental property after the termination of the lease. A lack of alternative housing options does not excuse the delayed move-out or eviction. In such cases, the tenant must pay compensation for use equivalent to at least the previous rent. In most cases, the landlord will demand the local customary rent for comparable premises. Additionally, the landlord may suffer financial damage if they could have rented the vacated premises at a higher rent. In such situations, the damage is calculated based on the difference between the previous rent and the rent that could have been achieved with timely eviction. It is important in the context of compensation for use that the tenant acts against the landlord’s will. Therefore, for example, there is no loss of use under Section 546a(1) BGB if the tenant retains possession of the otherwise vacated rental property to carry out repair work at the landlord’s request (cf. BGH, judgment of July 13, 2010, VIII ZR 326/09, para. 2). In such cases, the landlord’s contributory negligence under Section 254 BGB must always be considered.
Important Note: The content of this article has been prepared to the best of our knowledge and belief. However, due to the complexity and constant evolution of the subject matter, we must exclude liability and warranty. Important Notice: The content of this contribution has been created to the best of our knowledge and understanding. However, the complexity and constant changes of the subject matter require us to exclude liability and warranty.
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