The spread of the coronavirus has now also led to restrictions on the right to terminate rental agreements. These apply to both private and commercial rental agreements.
If, on two consecutive occasions, a tenant falls behind on rent payments or defaults on a substantial portion of the rent, the landlord is entitled to issue extraordinary notice terminating the rental agreement. We at the commercial law firm MTR Rechtsanwälte can report that significant restrictions have since been applied to this right of termination in response to the coronavirus pandemic. These are aimed at protecting businessmen and traders, among others, in this time of crisis.
The German federal government’s aid package includes restrictions on landlords’ right of termination. It currently provides that landlords cannot terminate rental agreements in the period from April 1 until June 30 of 2020 based on rental arrears. However, this is conditional on the tenant not being able pay the rent because of the crisis surrounding the coronavirus. Possible justifications for nonpayment of rent include reduced working hours, the temporary closure of shop premises or the workplace, or a decline in the number of orders as a result of the coronavirus crisis.
Notwithstanding this, the obligation to pay rent generally continues to apply. In the case of arrears of payment from the period between April 1 and June 30 of 2020, the landlord is merely not entitled to issue notice of termination for a period of 24 months. Termination based on these rental arrears only becomes an option if the tenant is still in default of payment after June 30, 2020.
The measure is designed to prevent businesses and traders from losing their premises and land because of the crisis and thus being divested of a key component of their commercial activity. It may be extended if the period ending in June 2020 is insufficient.
This measure does not mean that landlords are generally unable to terminate rental agreements. For instance, arrears of payment from before April 1, 2020 can still justify termination. Moreover, any option to terminate a rental agreement that is based on laws or regulations and does not require a justification remains unaffected. This may be relevant, for example, in cases involving indefinite tenancies for land and commercial premises.
Landlords, on the other hand, are not protected from payment defaults due to the coronavirus, which means they themselves may be at risk of defaulting on payments and have to seek help.
Lawyers with experience in the field of commercial tenancy law can offer advice.
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