• Professional News
  • 17 March 2014

Easier to terminate lease contracts in Germany

German lease contracts must be concluded in writing.  Otherwise, a buyer of a property may terminate the lease contract, according to the German Supreme Court.

According to German legislation, lease contracts must be concluded in writing and adhere to a number of formalities.

A new German Supreme Court judgment of 22 January 2014 now makes it easier for new property owners to terminate lease contracts with tenants if all formalities are not in place/adhered to.

Consequences of the judgment                      
Until today, lease contracts not complying with the legislation could contain a clause on the new lessor's remedial obligation. The clause implied that a buyer in his capacity of new lessor was bound to remedy any deficiencies in an existing lease contract. As a result, a new lessor could not terminate a lease contract on the grounds that the existing lease contract was void.

As a consequence of the judgment, the buyer of a property who is also the new lessor is not bound to remedy any deficiencies in an existing lease contract. To the contrary, the new lessor may terminate the lease contract if the notice of termination is based on deficiencies in the lease contract which have not been caused by the new lessor.

The German Supreme Court‘s judgment of 22 January 2014 here is available here.

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