The breach of the obligation to offer an alternative apartment that became available during the notice period in the case of a termination for personal use pursuant to § 573 para. 2 no. 2 BGB does not result in the termination being an abuse of rights and becoming subsequently invalid.

Decision of the BGH: No subsequent invalidity of the termination

In its judgment, the BGH confirms that a partially legally capable (external) partnership under civil law (GbR) can, by analogous application of § 573 para. 2 no. 2 BGB, base a termination on the personal use requirement of a relative of one of its partners. Furthermore, the BGH confirms that the landlord is obliged, within the framework of their duty of consideration, to offer the terminated tenant an alternative apartment in the same building or residential complex that became available during the notice period.

However, a breach of this obligation shall no longer lead to subsequent abuse of rights and invalidity of the termination, but shall only give rise to a monetary damages claim by the tenant.

New legal consequence: Damages instead of invalidity

Prior to the recognition of the partial legal capacity of the (external) GbR, it was recognized that the partners as landlords can invoke the personal use requirement of their relatives pursuant to § 573 para. 2 no. 2 BGB.

The BGH had also continued to proceed on this basis; however, the BGH treated the partially legally capable (external) GbR, co-ownership communities and communities of heirs equally primarily because it often depended on chance whether a partially legally capable (external) GbR or merely a co-ownership community was established.

Company law context: Partial legal capacity of the GbR

This reasoning was frequently criticized. The BGH continues to uphold the right to terminate for personal use of the partially legally capable (external) GbR, now however with different reasoning: According to the BGH, the recognition – for company law reasons – of the partial legal capacity of the (external) GbR was not intended to be accompanied by a curtailment of the termination options of a plurality of landlords; moreover, the differences and size of the different pluralities of landlords are irrelevant for the applicability of § 573 para. 2 no. 2 BGB according to its normative purpose.

Of greater relevance, however, is the fact that the BGH no longer adheres with this decision to its previous case law, according to which

• the breach of the obligation to offer residential space that had become available in the same residential complex led to the invalidity of the termination for personal use.
• The BGH correctly proceeds on the basis that this now only leads to a monetary damages obligation.
• A prerequisite for the obligation to offer is ultimately that a justified termination for personal use was first declared, as only this triggers the ancillary obligation to offer the terminated tenant alternative accommodation.
• The breach of the ancillary obligation cannot, however, result in the initially justified termination for personal use becoming invalid. The legally objectionable conduct ultimately lies in the breach of the ancillary obligation, but not already in the declaration of the termination itself, which proceeds from a legitimate interest.

Reference: BGH, Judgment of 14.12.2016 – VIII ZR 232/15 (published in: NZM 2017, 111)

Background: What are written form healing clauses?

The BGH ruled in its judgment of 27.09.2017 that so-called written form healing clauses are incompatible with the non-derogable provision of § 550 BGB and are therefore invalid.

They cannot therefore in themselves prevent a contracting party from ordinarily terminating a lease agreement by invoking a written form defect (continuation of the Senate judgments BGHZ 200, 98 = IMR 2014, 155 = NJW 2014, 1087, and of 30.04.2014 – XII ZR 146/12, IMR 2014, 330 = NJW 2014, 2102).

The consequence of the judgment is that lease agreement parties can no longer rely on the impossibility of ordinary termination of the lease agreement during the agreed fixed term.

Rather, lease agreements that have a written form defect can in principle be terminated at any time by either contracting party in compliance with the ordinary notice period.

Decision of the BGH: Written form healing clauses violate mandatory law

The BGH had until now always left open the general compatibility of written form healing clauses with § 550 BGB. Previously, the BGH had only decided that it is incompatible with § 550 BGB if written form healing clauses also deprive an acquirer who enters into the lease agreement as the new landlord of the possibility of ordinary termination on grounds of a written form violation.

Reasoning of the court

With its current judgment, the BGH has now aligned itself with the voices within legal literature that consider written form healing clauses to be generally invalid (regardless of whether the clause constitutes standard terms and conditions or an individually negotiated agreement).

The BGH justifies its view on the grounds that the provision of § 550 BGB serves not only

• to protect the acquirer, but also
• to ensure the provability of long-term agreements between the contracting parties and to protect the contracting parties from entering into long-term obligations without due consideration.

According to the BGH, the legislature deliberately restricted contractual freedom through § 550 BGB to the effect that long-term lease contractual obligations (whether relating to residential or commercial premises) require the written form. If the written form prescribed in § 550 BGB is not observed in lease agreements, the non-derogable statutory consequence is that there is also no long-term tenancy to be preserved.

Consequences for landlords and tenants

A written form healing clause would circumvent this legal consequence deliberately intended by the legislature in an impermissible manner, since a lease agreement, even if the written form is not observed, should not – as provided by the legislature – be subject to ordinary termination. The BGH considers this to constitute an impermissible violation of mandatory law with the consequence of the invalidity of the written form healing clause.

Although the BGH identified a written form defect in the case now decided (the parties had agreed on an adjustment of the contractually agreed indexation clause without adequate reference to the lease agreement), the landlord was unable to validly terminate in the present case. Rather, the judges found that the landlord’s conduct was contrary to good faith (§ 242 BGB), since they had benefited solely from the subsequently concluded agreement and now merely wished to use the lack of written form to “extricate themselves from a long-term lease agreement that had become burdensome.”

Risk of ordinary terminability

As a result of the BGH’s judgment, there is now a risk of ordinary terminability at any time in relation to every tenancy in which the statutory written form is not observed. Only the objection of § 242 BGB (good faith) stands in the way of a termination on grounds of non-compliance with the written form. However, this provision is likely to be invoked only where the strict application of existing law would lead to unjust results.

Our recommended course of action for practice

It is therefore strongly advisable to ensure both when concluding a lease agreement and during the term of the tenancy that all (material) agreements of the tenancy are recorded in compliance with the written form.

Reference: BGH, Judgment of 27.09.2017 – XII ZR 114/16

More on the topic:

• Written form goodbye – or maybe not?
• Abolition of the written form, introduction of the text form for long-term commercial lease agreements
• Written form also satisfied with unilaterally signed lease agreements

Do you have questions on the written form in tenancy law?

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