Germany: Supreme Court Decision in Favour of Landlords

Owners of residential property in Germany who are not familiar with the rental laws and interpretations thereof, especially in the residential market, can be put at some very unfriendly surprises. Not so much by the fact that the law is supposedly tenant-friendly – that is the case today in many countries of the world and it does have a certain value to protect tenants against arbitraries – no, rather by the fact that one or two small mistakes in a lease contract can have consequences like a clause becoming totally invalid and be costly for the landlord. Such “booby-traps” can be hidden in agreements about contract length, notice periods, monthly utility payments, repairs, wear and tear and last but not least, renovation and decoration. We do not want to go at length into any of these details, but what if you have a newly built or freshly renovated apartment and want to rent it out and get it back in such nice condition at the end of the lease? Virtually piles over piles of court cases have accumulated about quarrels on this subject, until finally one decision of the Supreme Court rolled like and earthquake over Germany in 2004. Since then landlords are very concerned to have the right and correct wordings in their lease contracts.

If you are about to rent out an investment property, make sure that the agent preparing the contract is familiar with the exact wordings needed and also knows about the very latest case decided to the favour of a landlord on 14 January 2009 (BGH, Urteil v. 14.01.2009, Az. VIII ZR 71/08) as this can help you ensure that the renovations be done by the tenant in the end.

Email us if you have any question on this.