Decision of the Dresden Higher Regional Court (OLG) of February 27, 2024 – Ref. 5 U 2077/23
In commercial lease agreements, it is essential to comply with formal requirements. For instance, a violation of the written form requirement may result in agreed-upon terms being unenforceable. This can mean that agreed notice periods may be invalid, allowing a commercial lease to be terminated within statutory timeframes. This was underscored by a decision from the Dresden Higher Regional Court (OLG) dated February 27, 2024 (Ref.: 5 U 2077/23).
Commercial leasing law differs in significant ways from residential leasing law. In commercial leasing, there is broad contractual freedom. Therefore, it is crucial to anchor all essential agreements in writing in the lease contract. Key elements include, in particular, the term of the lease for commercial premises and notice periods for indefinite-term agreements, if they deviate from statutory regulations. If these notice periods have not been agreed upon in writing, they may be deemed invalid, according to the commercial law firm MTR Legal Rechtsanwälte, which provides counsel in real estate law, including commercial leasing law.
Notice Periods Without Written Agreement Invalid
The decision of the Dresden Higher Regional Court on February 27, 2024, demonstrates that the absence of a written agreement can render notice periods in a commercial lease invalid.
In the case at hand, the tenant had entered into a lease agreement for office space with a partnership (GbR). The parties agreed that the lease would be for a fixed term of three years and would automatically renew for one year if neither party objected to the extension of the lease at least three months before the end of the lease term. The lease was signed by the tenant and one partner of the GbR leasing the office space. The issue was that the signature of the second partner of the GbR was missing from the lease agreement.
Property Changes Ownership
This became problematic when the leased property was sold to a new owner, who then stepped into the lease agreement as the landlord. The new landlord declared their objection to extending the lease and issued a timely termination. The new landlord argued that the termination was valid because the original lease agreement did not comply with the written form requirement, and therefore the statutory notice period should apply. Consequently, the new landlord demanded that the tenants vacate the commercial premises.
Notice Periods Not Effectively Agreed
The dispute went to the Leipzig Regional Court, which ruled that the defendants (the tenants) were obliged to vacate and return the commercial premises. This decision was confirmed by the Dresden Higher Regional Court on appeal.
The Higher Regional Court explained that, to comply with the statutory written form requirement, the essential terms of the contract—primarily the leased premises, the amount of rent, and the term of the lease—must be evident from the contract document itself. This was not the case here. When a party is represented by multiple individuals, such as the two partners of the GbR in this case, it is necessary for all authorized persons to sign the lease. Written form could exceptionally be maintained if only one authorized person signs the lease but simultaneously declares that they also represent all other authorized persons whose signatures are missing. However, no such statement was present in this case, according to the Dresden Higher Regional Court.
Landlords and Tenants Must Adhere to Written Form
The consequence of failing to meet the required written form is that the lease is considered to be indefinite. Consequently, any contractually agreed notice period that exceeds the statutory notice period is invalid, the Dresden Higher Regional Court clarified. In this case, the extension clause in the lease effectively extended the statutory notice period, as termination could only occur three months before each annual renewal date. Therefore, this clause was deemed invalid, and the termination was ruled valid by the Dresden Higher Regional Court.
This decision emphasizes the importance of both landlords and tenants observing the written form requirement in commercial leases, as a violation could negatively impact one of the parties.
MTR Legal Rechtsanwälte has extensive experience in real estate law, including commercial leasing law.
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