Initial situation:

Decrees of the Ministry of Labour, Health and Social Affairs NRW of 15.03./17.03. & March 18.

The following facilities, meeting places and services are to be closed or discontinued:

All bars, cafés, opera houses and concert halls (from 16 March), all trade fairs, exhibitions, leisure and animal parks and providers of leisure activities (indoors and outdoors), special markets and similar facilities, coach tours, all sports operations on and in all public and private sports facilities and all meetings in clubs (from 17 March), amusement arcades, casinos, betting shops and similar establishments (from 16 March), places of prostitution, brothels and similar establishments (from 16 March).

This is leading many companies and businesses into crisis. Uncertainty is high due to the large number of daily, outdated reports. In addition to the ongoing salaries for employees, current tax prepayments, etc., the main fixed costs of the companies include the ongoing rental payments for the commercial premises. Many entrepreneurs whose operations have been banned now wonder whether these payments should continue.

Effects on (commercial) rental agreements:

The decrees themselves have no effect on the validity of the lease agreement.

Read here: News on the written form termination of commercial leases!

IfSG decrees as defect of the rental object?

At most, one could think of a defectiveness of the rental object, which would entitle to a reduction of the rent. It would be presumptuous to make a general calculation at this point. Especially in many commercial leases, there are usually clauses that allow a reduction only in the case of recognised defects or defects that have been legally established between the parties. Conversely, this means that the tenant must first continue to pay the full rent and can (only) claim back the reduction amount.

Impossibility of use as rental property?

Many commercial lease agreements regulate in detail the purpose of renting and using the property. Should this be directed at the exercise of a – now forbidden – concrete business, it would have to be examined whether an impossibility of use due to an official order is given. For the period of the impossibility of use, the tenant would be exempted from the consideration. However, it is unclear whether the imposition of such official operating bans or restrictions is attributable to the risk sphere of the lessee or lessor. The landlord, like the tenant, cannot use the space for the duration of the official measure. Case law has merely clearly clarified that the landlord is responsible for the building law admissibility of the rental property. An official closure of the business – for example under commercial law – is on the other hand attributable to the tenant. This means that there is neither legal certainty nor short-term relief.

Negotiation between the rental parties

At present, the only practicable option is to find an individual solution to be negotiated between tenant and landlord. In addition to rent reductions for a period to be determined against e.g. extension of the rental period and (partial) deferral of rental payments, there are many other possible outcomes of such negotiations. Should a limited rental contract, if necessary have been concluded with extension options, special attention must be paid here to the written form. A significant breach of the written form of the contract makes it an open-ended contract, which can in principle be terminated with six months’ notice to the end of the quarter. We have advised many parties to rental agreements in the past – regardless of the crisis – so that we can draw on a wealth of experience.

The outlook:

According to a Spiegel report (status: 21.03.2020, 11:17 am,
there is currently a draft law from the German government which is intended to prevent termination due to late payment of rent payments if the late payment occurred in the period from April 1, 2020 to September 30, 2020. Whether the draft law distinguishes between residential and commercial leases is currently unclear. However, the rents should not be waived, but have to be paid subsequently.
In addition, further reports about the provision of new state aid to businesses and companies are sent out almost daily, and we are monitoring them closely.
For the time being, it remains the case that tenant and landlord should find a negotiated solution, which can provide for a (partial) deferral of rent payments until, for example, the first state aid money has been paid out to the tenant. At the same time, it must be checked in each individual case whether there is not reason to change individual parameters of the rental agreement (e.g. the rental period) for the future by means of a supplement.
We will keep you up to date here and are happy to advise you.

Wie können wir Ihnen helfen?

We offer you a wide range of services so that you can lead your company through the current crisis and you have the opportunity to act in your economic existence. The OVH lawyers and tax consultants are there to help you with advice and support.
In the course of this, we discuss which concrete measures come into consideration for you and develop a protection concept individually adapted to your company.
We are also happy to support you in the preparation, tax and legal review of the measures to be taken.

Finally we would like to point out that this information only contains a non-binding overview of the topic addressed. They do not replace legal or tax advice. We are always at your disposal as a contact person for this client information and for advice.

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