Lease Agreement Activities

As a general rule, under section 451 of the BGB, a substantial change in the circumstances for which the parties exited at the conclusion of the contract is a reason to amend or terminate it, unless the agreement provides for something else. In order to determine whether section 451 of the BGB applies to the lease, you must first ensure that there is no provision in the contract directly excluding the possibility of modifying or terminating the lease in the event of a substantial change in the circumstances. It should also be noted that the temporary expiry does not only apply to leases, but also to leases and similar agreements that provide commercial space for use. In addition, this regime applies not only to the rental of premises, but also to commercial areas (including stalls). The concept of a substantial change in circumstances offers a possibility for both the amendment and termination of the contract. In light of the above practice, the possibility of a reduction by the court of rent payment on the basis of section 451 of the BGB for companies whose activity is not officially suspended is contentious if the tenant refuses to voluntarily change the tenancy agreement. Presumably, at least some of the tenants most affected by the epidemic may prove undue hardship or gross losses and may be able to obtain temporary rental facilities or reduced rent. It seems that this possibility can be invoked in particular by tenants whose activity has been prohibited or significantly restricted by the rules introduced under COVID-19. The law specifies that the expiry procedure applies ”for the duration of the ban on activity.” Therefore, we believe that the scope of the provision should be related to the scope of the prohibition and that the temporary expiry of the obligations should apply only to leases relating to the premises covered by the prohibition. The Civil Code does not contain explicit rules for this type of situation. We assume that Parliament`s intention was to allow the parties to a lease agreement to invoke, for example, the clause of an exceptional relationship change or the inability to provide a no-fault service of its own. We see reasonable arguments on both sides. Nevertheless, we believe that we should not forget the broader context of the current situation and the time following the COVID 19 epidemic, especially as leases are concluded for an extended period of time.

It is in the interest of owners and tenants to return to the normal operation of retail, office, production and logistics equipment. Cash losses and radical measures can disrupt the return to balance. The ban on certain types of activities stems from regulations issued by the Minister of Health (March 13-20 this year) and the Council of Ministers (March 31 this year), and its scope extends to the evolution of the epidemic. Therefore, the expiry period varies depending on the type of activity carried out by the tenant and applies during the period during which the activity is covered by the prohibition. If the expiry were to apply to all rental contracts in shopping centres, the extent of the temporary expiry would not be clear to tenants whose activity is not prohibited.