Berlin Court of Appeal, 21 November 2016, 8 U 121/15
Renting commercial spaces is one thing; operating them is another. Commercial lease agreements often contain a clause imposing an obligation to operate the business. This clause obligates the tenant to use the leased premises during specified opening hours—or at least during certain core hours—in accordance with the purpose agreed upon in the contract. This includes the tenant’s independent duty to perform, as well as the landlord’s corresponding entitlement to performance.
The rationale behind such an obligation is that certain business or service centers—particularly shopping centers—are only attractive and motivating for customers to visit if all commercial spaces are rented and actively operated whenever possible.
However, especially in shopping centers, there are many unique features in commercial lease agreements. These agreements are often overloaded with countless clauses, which can easily lead to disputes regarding the possible rights and obligations of both parties. The question also arises as to what rights a tenant in a shopping center has if the center is not opened on time, despite prior announcements.
Delayed Opening of a Shopping Center Due to Fire Safety Issues
In this case, a shopping center could not be opened by the contractually agreed opening date. A fire safety issue was a significant factor contributing to the delay. The shopping center was handed over to the tenant on 21 February 2014, while the actual opening only occurred on 27 August 2014. The tenant, who had rented the premises to operate a high-end art gallery, sued for the repayment of rent paid for the period from 21 February 2014 to 27 August 2014 due to the delay.
Decision of the Berlin Court of Appeal: No Right to Rent Reduction in the First Month
The Berlin Court of Appeal ruled that the plaintiff was not entitled to a rent reduction during the first month after the handover. Although the rental space was delivered without interior finishing—i.e., without lighting, painting, and electrical work—it was contractually agreed that the tenant was responsible for carrying out the interior finishing at their own expense.
Furthermore, according to a contractual clause, the tenant was obliged to open their business no later than one month after the handover. Since the premises were exclusively to be used for interior finishing during this period, the delayed opening of the shopping center in the first month did not impair the tenant’s contractual use. Therefore, the rent reduction for the first month was deemed unjustified.
Rent Reduction After the First Month
For the period following the expiration of the first month until the actual opening of the shopping center on 27 August 2014, the court ruled that the rent was reduced to zero. Under § 535(1) Sentence 1 of the German Civil Code (BGB), the landlord is required to provide the tenant with the leased property in a condition suitable for the contractual use and to maintain that condition throughout the lease period.
The contractually owed condition of the leased property includes its suitability for the agreed-upon use, specifically its suitability for the intended purpose as stipulated in the contract, in this case, the operation of an art gallery.
Defect in the Leased Property and Legal Basis
A defect in the leased property, within the meaning of § 536(1) BGB, exists when the actual condition deviates from the contractually agreed condition, impairing the property’s usability. This legal basis has been confirmed by the Federal Court of Justice in consistent rulings, for example, in the judgment of 15 December 2010 – XII ZR 132/09, NJW 2011.
Source: Berlin Higher Regional Court
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