The reason for this is often Section 550 BGB, which stipulates that tenancy agreements that are concluded for a longer period than one year must be in writing. If this is not complied with, the contract is deemed to have been concluded for an indefinite period, which means that the tenancy agreement can be terminated ordinarily, i.e. without stating a reason, within the statutory period stipulated in Section 580a BGB.
This regulation represents a considerable economic risk and planning uncertainty for both contracting parties, particularly in commercial tenancy law (as tenancy agreements are not usually concluded for a fixed term in residential tenancy law). This not only affects landlords, who often incur considerable costs for construction or renovation measures that are only amortized over the entire fixed lease term, but also tenants who are dependent on long-term use of the rental property.
I. Written form according to § 550 sentence 1 BGB
The statutory written form requires that all essential contents of the rental agreement - such as the names of the contracting parties, the exact scope of the rental property, the term and the amount of rent - must be set out in writing in a single document signed by both contracting parties. The written form requirement is also met if several identical documents are included in the contract and each contracting party signs the document intended for the other party. In order to comply with the written form requirement of Section 550 sentence 1 BGB, it is sufficient if the contracting parties sign identical contractual documents; according to the case law of the Federal Court of Justice (case no. XII ZR 129/16), receipt of these documents by the respective contracting party is not required in this respect.
II Former approach: written form cure clauses
In the past, so-called written form cure clauses were (and often still are) often included in contracts in order to remedy written form deficiencies. These clauses obliged the parties to restore the written form in the event of a written form defect and to waive termination due to a breach of the written form. However, on 27.09.2017 (case no. XII ZR 114/16), the Federal Court of Justice declared such clauses invalid, as they contradict the protective purpose of Section 550 sentence 1 BGB.
III Draft of the Federal Council in 2020
At the beginning of 2020, the Bundesrat introduced a draft bill (BT-Drucksache 19/17034), which provided for the ordinary right of termination due to a breach of the written form to be restricted to the purchaser of the property, who enters into existing rental agreements by operation of law upon acquisition of ownership. In addition, to protect the tenant, the purchaser's right of termination was to be limited in time. This was to be achieved by deleting Section 550 sentence 1 BGB and creating a new paragraph 3 in Section 566 BGB. However, the federal government at the time did not consider this draft to be suitable, as there was no need for action, particularly in residential tenancy law, and rejected it.
IV. Planned amendment in 2024: RegE - Bureaucracy Relief Act IV
In March 2024, the German government presented the draft of the 4th Bureaucracy Relief Act, which envisages replacing the written form requirement in section 550 sentence 1 BGB for commercial leases with the text form. In accordance with Section 126b BGB, the text form only requires a legible declaration in which the person making the declaration is named and which is submitted on a durable medium. This can be done by email, SMS or WhatsApp message, for example. Purely verbal agreements do not fulfill the text form requirement and would - as before - lead to the invalidity of the term agreement - and thus to the ordinary terminability of the rental agreement.
V. Advantages of the planned amendment to the law
- Reduction in bureaucracy: The switch to text form reduces the administrative burden and can considerably simplify the procedures for concluding contracts. Without the need to physically sign documents and send them by post, processes are accelerated and simplified.
- Digitalization: The integration of modern means of communication promotes digitalization and makes processes more efficient. This is in line with the general trend towards digital transformation in many areas of business and administration.
- Flexibility and efficiency: Contracts can be concluded more quickly and flexibly, which is particularly advantageous in the dynamic business world.
VI Disadvantages and risks of the planned legislative amendment
- Verifiability: Amendments to contracts in text form could be more difficult to prove, which could lead to legal uncertainties. It could be more difficult to prove the authenticity and content of agreements, particularly in the event of disputes.
- Protective purpose of Section 550 BGB: The protection of information of the purchaser of the property entering into the lease could be impaired. Without written documentation, the purchaser could have difficulties in recording all contract details and checking them in good time.
- Risk of manipulation: The ease of amendment and the lack of signatures could increase the risk of manipulation. Digital documents and informal written agreements could be more susceptible to changes and forgeries.
VII Conclusion:
The planned change to the written form requirement in commercial tenancy law represents a significant step towards reducing bureaucracy and digitalization. It offers numerous advantages, such as increased flexibility and efficiency, but also entails challenges and risks. It remains to be seen how this adjustment will prove itself in practice and what further steps towards the digitalization of the legal system will follow. Until the law is passed, it is still advisable to strictly observe the written form when concluding and amending contracts in commercial tenancy law.
We will be happy to advise you on questions regarding the drafting of commercial leases and compliance with the statutory written form requirement.
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