Term and General Definition of Revaluation
The term “revaluation” is used in German law in various contexts and essentially describes an increase in value or an improvement in the status of an object, a right, an asset, or a legal position. Revaluation can relate to things, real estate, currencies, as well as to contractual elements or corporate law positions. The legal relevance of revaluations lies particularly in their impact on claims, tax valuations, procedural actions, and the structuring of legal relationships.
Revaluation of Real Estate and Land
Increase in Land Value and Its Legal Consequences
A classic form of revaluation occurs in the area of real estate and land law. If the land value of a property increases, for example due to a change in permissible use as a result of a zoning plan, this is regarded as a revaluation of the land. Such an increase in land value can have various legal consequences, for instance in compensation for expropriation, calculation of real estate tax values, or as a valuation criterion for surcharges or deductions from the market value.
Modernization and Repairs as Revaluation
In tenancy law, an increase in living value resulting from modernization measures is referred to as revaluation. Measures to increase the utility value or to reduce energy consumption result in the apartment or property obtaining a higher position in the housing market. This has implications for the apportionability of the costs incurred and for the entitlement to increase the rent in accordance with statutory provisions (§§ 555b, 559 BGB).
Revaluation in Currency and Economic Law
Revaluation under Currency Law
As a result of exchange rate changes, the revaluation of a currency refers to an increase in its external value compared to other currencies. This has various implications under economic law, for example in foreign trade, international contracts, or the accounting of foreign currency positions. In tax and commercial law, a currency revaluation can affect the valuation of assets and liabilities (§§ 256a HGB, § 4g EStG).
Revaluation in Corporate Law
In corporate law, revaluation refers to an increase in the nominal or book value of company shares. Such a measure is possible, for example, in the context of a capital increase from company funds (§§ 207 ff. AktG). The revaluation of equity items is subject to strict legal requirements, particularly regarding creditor protection and transparency obligations.
Tax Law Provisions on Revaluation
Valuation and Reallocation
A revaluation that is relevant under tax law occurs when assets are revalued in monetary terms. This can occur, for example, in the context of company reorganizations, mergers, demergers, or contributions according to the Transformation Tax Act (UmwStG). Revaluation of assets also plays a role in tax audits, especially in relation to international transfer pricing. Tax treatment follows the principles regarding the primacy of the commercial balance sheet for the tax balance sheet (§ 5 EStG) and the valuation principles of the Valuation Act (BewG).
Hidden Reserves and Their Disclosure
A revaluation for tax purposes can lead to so-called disclosure of hidden reserves, which results in taxable profit. This happens, for example, when the book values of fixed assets are increased without an actual sale occurring. The special treatment of hidden reserves is subject to various exceptions and tax options.
Revaluation in Administrative and Public Law
Urban Development Revaluation
In the area of urban development law, revaluation is a commonly used term in connection with redevelopment and development measures. Municipal administrative acts for area development regularly lead to an increase in land value and entail public charges, such as the collection of equalization payments under § 154 Building Code (BauGB).
Interventions by Acts of Sovereignty
Legal changes induced by revaluation can also occur through administrative acts, for example in the case of the re-zoning of areas or revaluation of government services. The associated improvement of the legal position of those affected is regularly subject to judicial review by administrative courts.
Revaluation in Labor Law
Company Position and Status
In labor law, the revaluation of a job or function is referred to when the scope of duties or job classification is improved. This can affect remuneration, workplace co-determination rights, and contractual adjustments (§ 99 BetrVG, classification guidelines).
International Aspects of Revaluation
European and International Legal References
Within the framework of European law and international private law, revaluation is significant in the recognition and enforcement of decisions, in asset shifts due to changes in law or currency fluctuations. International agreements contain special regulations on the accounting and valuation of assets, whose revaluation has cross-border tax and civil law effects.
Legal Consequences and Remedies in Case of Revaluation
Enforcement of Claims and Protective Rights
Legal revaluation can affect the basis for claims and often necessitates adjustments to contracts and legal relationships. Depending on the area of law, those affected can contest the revaluation or assert rights in court. For tax or other administrative acts that result in revaluation, objection and appeal procedures are generally available.
Liability and Compensation Issues
Revaluations are often relevant in the context of liability issues, for instance in cases of incorrect valuation or deficient advice in transactions, expert opinions, or contract formation. This can give rise to tortious or contractual claims for damages, whose legal enforcement is subject to specific limitation periods and standards of proof.
Significance and Summary
Revaluation is a complex legal phenomenon that plays a role in almost all areas of law and influences a wide variety of claim positions, valuation principles, and procedural courses. To determine the legal consequences in each individual case, it is always necessary to consider the underlying facts, the relevant statutory provisions, and current case law.
Further information and current developments on the subject of revaluation can be found in the relevant statutory texts, specialist literature, and legal databases.
Frequently Asked Questions
What legal requirements must be met for a revaluation in German tenancy law?
In German tenancy law, a revaluation is seen in the context of modernization measures and their legal consequences for tenancy. The legal basis is, in particular, § 559 BGB (“Rent increase after modernization measures”). According to this, the landlord must carry out structural measures that permanently increase the utility value of the rental property, permanently improve the general living conditions, or result in sustainable energy or water savings. Legally, it should be noted that the landlord must inform the tenant in text form about the type of modernization, expected scope, start, duration, and expected rent increase in good time—at least three months before work begins (§ 555c BGB). In addition, the revaluation must actually constitute a modernization within the meaning of the law, and not merely maintenance or repair. A revaluation that merely serves to offset the current value or to remedy damage does not entitle the landlord to a rent increase. Another legal requirement is that the landlord must observe certain hardship provisions under § 559 (4) BGB, which benefit the tenant.
What legal restrictions apply to the allocation of revaluation costs to the rent?
Following revaluation through modernization, the landlord may only increase the annual rent by 8% of the costs incurred for the apartment (§ 559 (1) BGB). However, there is a cap according to § 559 (3a) BGB: The monthly rent increase may generally not exceed three euros per square meter within six years, or for apartments with a rent below seven euros per square meter, not more than two euros. Costs incurred purely for maintenance or repair work are not eligible for apportionment; these must be deducted from the revaluation-related costs. Furthermore, the allocation requires that all statutory formal requirements—especially timely notification—have been met.
How can a tenant legally oppose a planned revaluation?
Tenants have various legal remedies against revaluation. After receiving the modernization announcement, the tenant can object to modernization measures under § 555d BGB if they represent unreasonable hardship for the tenant, their family, or another member of the household (hardship defense). If the tenant does not object in due time, consent to the measure is deemed granted. Regardless of this, the tenant can have examined whether the measures actually constitute modernization within the meaning of the law or whether they exceed the permissible scope. In the event of disputes, the tenant can seek judicial clarification. In addition, if there is a subsequent rent increase, it must be verified whether the costs have been correctly assigned, reported in due time, and calculated properly; errors can lead to the invalidity of the rent increase.
What are the landlord’s legal information obligations before carrying out a revaluation?
Before carrying out a revaluation, the landlord must inform the tenant in text form and at least three months before the start of the measure about the intended modernization (§ 555c BGB). The statutory minimum information includes the type and expected scope of the modernization, the planned start and anticipated duration of the work, as well as the expected rent increase. The announcement must be sufficiently specific, clear, and complete to enable the tenant to properly assess the impact on their use of the apartment. If proper notification is omitted, this can render subsequent rent increases invalid and may entitle the tenant to withhold consent to the building works.
What legal consequences arise for the tenancy if a revaluation is not properly carried out?
If a revaluation is not carried out in accordance with the law or without the required advance notice, this can have several consequences: First, the tenant is not obliged to tolerate the measures as long as the statutory requirements are not met. If unauthorized construction work is carried out, the tenant may assert claims for damages or compensation under § 536a BGB. Furthermore, costs associated with an incorrectly notified or inadequately justified modernization may not be allocated to the rent. In such cases, tenants can successfully challenge the rent increase and, under certain circumstances, claim back overpaid amounts. In addition, a significant breach of notification obligations by the landlord may justify the tenant’s extraordinary termination.
What role do public law permits play in the revaluation of a property?
For certain revaluation measures, especially if they involve changes to the legal status of a property, public-law permits—such as building permits under the respective state building code—are required. If these permits are lacking, the measures may be illegal and, in the worst case, demolition may be ordered. In tenancy law, this means that the landlord may not allocate resulting costs to the tenant and cannot claim a modernization rent increase. The tenant is also not obliged to tolerate construction projects that violate building law. Moreover, lacking permits may constitute a regulatory offense or unauthorized construction, which may have additional legal consequences for the landlord.
To what extent is revaluation of listed properties legally regulated?
For listed properties, revaluation is subject to strict legal requirements, especially the respective state monument protection laws. Any modernization or refurbishment measure that affects the substance, appearance, or use of a monument generally requires approval from the monument protection authority. Without this approval, no measures may be carried out. In terms of tenancy law, the obligation of the tenant to tolerate modernization exists only if all necessary public-law (in this case, monument law) permits are obtained. The eligibility to apportion modernization costs to the rent also depends on the legality of the measures. Furthermore, there may be special tax implications, for example under §§ 7i, 10f, 11b EStG, which, however, have no direct contractual relevance to the lease but may be economically significant for the owner.
