BGH: Subsidiary ordinary termination remains valid despite grace period payment

Tenancy law update: If a residential tenancy is terminated without notice due to rent arrears and simultaneously terminated with notice as a precautionary measure, the Berlin Regional Court had decided that the ordinary termination has no effect if the extraordinary termination becomes invalid due to a grace period payment pursuant to § 569 para. 3 no. 2 BGB, since at the time of its receipt a tenancy would no longer exist due to the extraordinary termination.
The BGH has now overturned this decision. The ordinary termination takes effect. KFR – Kanzlei für Real Estate explains the decision and its significance for landlords.

Background: Decision of the Berlin Regional Court

The LG Berlin had decided that a notice of termination, as a right of formation, takes immediate effect upon receipt and that a kind of suspended state is impermissible.
Subsequently occurring, modifying facts such as a grace period payment pursuant to § 569 para. 3 no. 2 BGB could therefore not – as sometimes argued in legal literature – lead to the termination becoming invalid ex tunc.
However, if the extraordinary termination initially stands and only becomes invalid ex nunc from the point in time of the new fact (e.g. grace period payment), a simultaneously declared subsidiary ordinary termination cannot take effect, since the effect of the subsidiary ordinary termination must also be assessed at the time of its receipt and, due to the initially valid extraordinary termination, no tenancy existed that could have been terminated. The ordinary termination is ineffective in this case.

BGH overturns decision

The ordinary termination takes effect. A landlord who, in addition to an extraordinary termination, also declares a subsidiary ordinary termination on account of the accrued rent arrears, does not make this declaration only for the case that the extraordinary termination is already invalid at the time of its receipt, but precisely and especially also for the case that the extraordinary termination subsequently becomes invalid due to a legally provided circumstance (e.g. the so-called grace period payment). By focusing solely on the fact that an extraordinary termination initially dissolves the tenancy and the ordinary termination therefore has no effect, the Berlin Regional Court artificially split a unified, naturally occurring set of facts into individual components.

Significance for landlords

Through this decision, the BGH spares landlords from having to seek alternative solutions in the future due to the formalism applied by the Berlin Regional Court, which would under certain circumstances also have been associated with a loss of several months. The decision is therefore very much to be welcomed from a landlord’s perspective.
Sources: LG Berlin, Judgment of 13.10.2017 – 66 S 90/17 (BeckRS 2017, 127840)
BGH, Judgments of 19.09.2018 – VIII ZR 231/17 and VIII ZR 261/17