Last week, the German Federal Government and the Bundestag, with the support of the Bundesrat, passed various laws in a fast-track process to mitigate the economic consequences of the corona pandemic. A whole bouquet of such regulations is contained in the law to mitigate the consequences of the COVID-19 pandemic in civil, insolvency and criminal proceedings of last Friday (March 27, 2020).
One of these regulations temporarily restricts the possibility of terminating a rental agreement because the tenant has not made due rental payments.
Rental payments can be suspended for 3 months
The lessee can then suspend payment of the rent from April 1 to June 30, 2020, without the lessor being able to terminate the lease for this reason, as would otherwise be permitted by law under certain circumstances. To do so, the tenant only has to prove that the non-payment of the rent is due to the effects of the COVID-19 pandemic. This should not be a problem for many tenants who, as employees or entrepreneurs, are severely affected by the consequences of the corona crisis.
The rent must then be paid in arrears no later than June 30, 2022, i.e. within two years, otherwise the statutory right of termination will be revived. The same applies to lease agreements.
Regulation applies to all types of rental agreements
The regulation applies to private individuals as tenants as well as to self-employed persons and large corporations. It applies to private rental apartments and commercial property (land and premises). At the end of last week, the media reported that some wholesale companies intend to temporarily suspend their rent payments.
The regulation also applies regardless of whether the landlord is a private landlord or a company acting as a landlord and regardless of the economic consequences of non-payment of rent to the landlord.
Landlords must expect renegotiations of rental agreements
This arrangement creates temporary liquidity for tenants, but at the same time ensures a temporary absence of three months’ rent for landlords. Many tenants will also use this arrangement to renegotiate their lease.
However, it may also be in the interest of both parties to the lease to seek dialogue in order to mitigate the effects of the corona crisis for both parties.
Rent is still owed and interest must be paid
The rent remains owed, must be accounted for accordingly and is to be paid in arrears with interest on arrears.
WINHELLER advises tenants and landlords
We advise tenants and landlords on the possibilities and consequences of this law, as well as companies on the various legal issues related to the corona pandemic. Please feel free to contact us!