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 |  Dennis Wiegard

Lockdown - Corona-related store closures (rent abatement, yes or no?).

There are now over 20,000 "Corona deaths" in Germany. Most recently, there were 590 deaths in one day. With the numbers higher than ever, the lockdown "light" on Wednesday (Dec. 16, 2020) will become a hard lockdown. The closures of retail and other commercial establishments will result in significant revenue losses, especially during the Christmas shopping season for the respective businesses.

Even though the pandemic has been rampant for more than a year, there is unfortunately still no supreme court case law on this subject. In the following, I would like to show you how differently the lower instances have solved this legal question of rent reduction so far:

Rent reduction (-)

Subsequent district courts have ruled that the commercial rent must be paid in full and that a reduction in rent cannot be considered:

The Regional Court of Heidelberg (judgment of July 3, 2020, Case No. 5 O 66/20) and the Regional Court of Zweibrücken (judgment of September 11, 2020, Case No. HK O 17/20) rejected rent reductions due to official closure orders, referring to a 20-year-old decision of the Federal Court of Justice (BGH, judgment of February 16, 2020, Case No. XII ZR 297/97). The defect required for a rent reduction is not present, since the rented space is still usable. The lack of income is solely in the area of risk of the tenant.

"Restrictions on use brought about by sovereign measures can [...] only constitute a defect if they are directly related to the specific quality, condition or location of the specific rental object; measures that only affect the commercial success of the tenant fall within the latter's sphere of risk."

The Regional Court of Lüneburg (judgment of November 17, 2020, Case No. 5 O 158/20) added that there was no defect justifying the withholding of rent because the public-law order to close the stores was in fact issued to protect the health of the population and the stores could in principle continue to be used.

The Frankfurt Regional Court (judgment of October 5, 2020, Case No. 2-15 O 23/20) not only ruled that there was no defect in the rental property due to the Covid 19 pandemic and therefore a rent reduction pursuant to Section 536 (1) sentence 1 of the German Civil Code was ruled out. The Regional Court also denied the tenant an adjustment of the rental agreement pursuant to Section 313 of the German Civil Code (Störung der Geschäftsgrundlage). The plaintiff was a major chain store. The temporary closure in March/April 2020 had not threatened the existence of the plaintiff and the adherence to the lease agreement had therefore not been unreasonable. The Regional Court of Stuttgart (judgment of November 19, 2020, Case No. 11 O 215/20) rejected an adjustment of the contract for the same reasons.

Rent reduction (+)

The Munich Regional Court I (judgment of 22.09.2020, Ref. 3 O 4495/20) sees it differently. The judges recognized the officially ordered closure of a retail store as a rental defect within the meaning of Section 536 (1) BGB.

To reach this conclusion, the judges went particularly deep into mothballs and referred to a decision of the Reichsgericht of November 9, 1915 (Rep. III 145/15). According to this decision, the contractual use of the leased property was suspended due to a public-law order to close a pub. The closure of the pub took place in 1915 because the location was not insignificantly used as a dance bar and dances were severely restricted by the police after the start of the First World War. The Munich Regional Court compared this to the restrictions on a furniture store during the official Corona-related closures in April to June 2020. Rent reductions varied depending on the impact on the furniture store. From 80% in April, to 50% in May to 15% in June 2020.

No rent reduction, but still adjustment of the rent

A photographer had similar success at Munich Regional Court I (judgment of October 5, 2020, Case No. 34 O 6013/20). The official closures were deemed by the Regional Court to be an "unreasonable impairment of business operations", so that the court summarily adjusted the contract via Section 313 (1) of the German Civil Code (no defect necessary) and reduced the rent by half for one and a half months. This view was endorsed by the Mönchengladbach Regional Court in its judgment of November 2, 2020, Case No. 12 O 154/20.

In conclusion, it remains to be seen how the individual higher regional courts will decide the cases. A clarification by the legislator also finally follows with the hard lockdown, after a clear regulation was missed in March/April 2020. At that time, only a moratorium on terminations was passed. After a conference call between the Chancellor and the Minister Presidents of the federal states, the future amendment to the law was also decided yesterday (13.12.2020). A rebuttable presumption of disturbance of the basis of the contract is to be anchored in Section 313 of the German Civil Code (BGB). The higher courts will then in turn have to decide on this rebuttable presumption. There are therefore indications of a settlement, as the Munich I Regional Court did on October 05, 2020 and the Mönchengladbach Regional Court did on November 02, 2020 (Section 3). Of course, the final wording of the law remains to be seen. For disputes that are already pending, the pending evaluation of the legislator is to be introduced as soon as possible in proceedings that are already pending or to be taken into account in negotiations between tenants and landlords.

We will continue to report.

Attorney Dennis Wiegard

Düsseldorf, Dezember 14th, 2020

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