Protection against termination of lease agreements as a reaction to the COVID-19 pandemic

24. March 2020

The German Federal Government’s draft law, on which the German Bundestag will decide on Wednesday and the German Bundesrat on Friday, also concerns rental law:

It stipulates a temporary exclusion of the lessor’s termination right due to rent arrears if they are based on the COVID—19 pandemic. This termination ban will apply to all tenancy agreements and usufructuary leases for premises and land, so it will affect lease agreements for both living spaces and commercial premises. It intends to protect tenants who are unable to pay their rent due to the pandemic from losing their living or business spaces.

No termination of lease due to rent arrears from April to June 2020

Thus, rent arrears accumulated between 1 April 2020 and 30 June 2020 due to the pandemic do not give the lessor the right to termination for cause. If necessary, this provision can be prolonged, initially until 30 September 2020.

The tenant bears the burden of proof that he cannot pay the rent due to the pandemic (and not for other reasons). For instance, tenants of living spaces can prove this with an affidavit and a certification of the loss of earnings issued by the employer or the Employment Agency. Tenants of business spaces could consider submitting the official order for the operating ban or restriction.

A termination for other reasons will still be possible, for example due to previously accumulated rent arrears or because the lessor requires the housing for his own use. Ordinary terminations that are permissible in cases of lease agreements for commercial spaces without a fixed term or at the end of the fixed term will not be excluded.

Payment obligations remain

However, the obligation for the timely payment of rent is not suspended, so rent arrears will still incur default interest, which currently amounts to 8.12 % per year for lease agreements between companies and 4.12 % per year for lease agreements with consumers.

Furthermore, the protection against termination is finite: A termination due to rent arrears is excluded for 24 months – that is until 30 June 2022 as things stand. If there is still rent payable for the months of the crisis after that time, the lessor may still give notice of termination if the unpaid rent amounts to a total of two month’s rent or to at least one month’s rent from two successive due dates.

Should you have any questions, please do not hesitate to contact us.

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Dr. Ulrich Lienhard, Partner
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