Higher Regional Court of Cologne, September 18, 2015, Az.: 1 U 28/15
In many legal disputes concerning commercial tenancy law, the requirement of written form for rental agreements lasting more than one year, as stipulated in § 550 of the German Civil Code (BGB), is a subject of prolonged discussions.
In principle, § 550 BGB regulates the formal requirements that a rental agreement must meet to be limited to a duration longer than one year.
It should be noted that § 550 BGB is not a condition for the validity of the contract itself. This means that rental agreements that do not comply with the written form are still binding on the parties, albeit for a shorter duration.
In practice, the regulation in § 550 BGB leads some parties to attempt to „convert“ a limited-term rental agreement into an indefinite one to gain corresponding advantages. The case discussed here by the Higher Regional Court of Cologne is an example of such a situation.
Introduction: The Case of a Commercial Lease
The defendant 1) entered into a lease agreement for commercial premises on the ground and basement floors of a multi-family house on October 15, 2010. The contract was limited to five years and could be extended for an additional five years. A rent of €4,165.00 plus additional costs was agreed upon. Furthermore, there was a clause that excluded subletting.
In 2011, the plaintiff acquired the property. Shortly thereafter, the defendant requested permission for subletting, which the plaintiff granted under certain conditions. Consequently, a sublease agreement was made with S Tanz GmbH, which paid the rent directly to the plaintiff.
Dispute over Rental Agreement and Subletting
In 2014, the defendant retroactively reduced the rent, and the plaintiff urged her not to exercise the option to extend the lease. Nevertheless, the defendant extended the lease until 2020. The plaintiff then terminated the lease both regularly and extraordinarily.
The plaintiff argued that the rental agreement had been converted into an indefinite lease due to the subletting based on a violation of the written form and was therefore subject to statutory termination. Additionally, he had only consented to subletting to natural persons, not to the GmbH.
Court Rulings: Regional Court and Higher Regional Court
The Regional Court ruled in favor of the plaintiff in the first instance and ordered the defendants to vacate the premises. The defendants appealed, which the Higher Regional Court of Cologne allowed. The OLG ruled in favor of the defendants and decided that the rental agreement remained valid until 2020 due to the exercised extension option. Thus, a termination was not legally permissible.
Significance of Written Form in Tenancy Law
The OLG stated that the provisions regarding written form under § 550 BGB did not apply, as the approval of the subletting was merely a unilateral declaration of intent by the plaintiff that did not change any substantial contractual content. Therefore, there was no violation of the written form. Furthermore, it would be contrary to good faith for the plaintiff to assert a written form violation without giving the defendant the opportunity to rectify the situation.
Conclusion: Continuation of the Rental Agreement
The OLG decided that the lease remains valid until 2020 and that a termination by the plaintiff is invalid. The prerequisites for an extraordinary termination were also not met, as the necessary warning was lacking.
This decision highlights the importance of the written form in tenancy law and the protection of the parties from hasty terminations in long-term rental agreements.
Source: Higher Regional Court of Cologne
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