03. Nov 22

Court finds warning letter a prerequisite for summarily terminating a commercial lease agreement

A warning letter must have been issued prior to summarily terminating a lease agreement for commercial premises on account of defects. That was the verdict of the Higher Regional Court of Brandenburg, the Oberlandesgericht (OLG) Brandenburg (case ref.: 3 U 82/19).

Open-ended commercial lease agreements can be terminated by giving due notice. If the parties do not specify a notice period in the agreement, the statutory notice period of 6 months applies in accordance with Section 580(a) of the German Civil Code (BGB). It is also possible, subject to certain conditions, for a commercial lease agreement to be terminated with immediate effect. One of the grounds that can potentially justify the tenant terminating the agreement in this manner is recurring defects affecting the leased property. We at the commercial law firm MTR Rechtsanwälte note, however, that in most cases it is necessary for a written warning to have been issued previously for the termination to be effective.

One such case that illustrates this is a ruling of the OLG Brandenburg from July 7, 2020 (case ref.: 3 U 82/19). The tenant had summarily terminated their commercial lease agreement with immediate effect due to defects that kept cropping up in the leased property. Water had entered the premises a total of seven times over a period of around twelve years, and on each occasion the landlords had responded to the damage by arranging for repairs and cleaning work to be carried out.

With these measures apparently failing to remedy the defects, the tenant reacted to the next water incursion by terminating the tenancy with immediate effect and without having previously issued a warning letter.

The landlords did not accept this summary termination and instead sued for payment of the outstanding rent. Their claim was successful. Like the Landgericht Cottbus before it, the Oberlandesgericht Brandenburg ruled on appeal that the summary termination was invalid because of the failure to issue a warning letter prior to this.

The OLG Brandenburg held that the frequently occurring nature of the water damage did not mean that a warning letter was expendable. Indeed, it could not be assumed that such a letter would not have been successful given that the landlords had previously responded to each damage report by organizing repair work. Consequently, they had not definitively refused to remedy the defects. The court went on to state that the extent and impact of the damage had not been so significant that the tenant could not reasonably have been expected to wait any longer – at least for a short time – after setting a deadline.

Lawyers versed in the field of commercial tenancy law can provide counsel.

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