First Court Ruling with reference to the new Sec. 7 of Art. 240 of the Introductory Act to the Civil Code (Einführungsgesetz zum Bürgerlichen Gesetzbuch - EGBGB)

The initial hope of many commercial tenants, having a legal claim on rent adjustment by the new Sec. 7 of Art. 240 EGBGB, in case of official closure orders (behördliche Schließungsanordnungen), might be somewhat blurred since the last week.

On 25 January 2021, the Regional Court of Munich I (Landgericht München I) (31 O 7743/20) ruled in favor of a landlord, applying Sec. 7 of Art. 240 EGBGB for the first time, to have the full unabated claim to the contractually owed rent. In doing so, the Regional Court correctly assumes the assumption of a frustration of contract (Störung der Geschäftsgrundlage) in the present case. However, an adjustment of the lease fails due to the normative element of Sec. 313 (1) Civil Code (Bürgerliches Gesetzbuch - BGB).

It was reasonable for the tenant to adhere to the unchanged contract on the basis of the detailed consideration of the individual case. In its decision, the court emphasizes that the tenant, as the debtor, is basically responsible for his own solvency regardless of fault and must take precautions against any drop in sales by building up appropriate reserves. Even from an average economic entrepreneur, it can be expected to create appropriate safeguards from past sales for bad times. By the way, the Regional Court also addresses the much-discussed question of the retroactive effect of the new Sec. 7 of Art. 240 EGBGB and states that it has only a clarifying character and that the question of retroactive effect therefore does not arise at all.

Even if the judgment seems to be trend-setting in this respect, the concrete argumentation of the Regional Court, which depends on the individual case, does not make it impossible to recognize that the legislator, when introducing Sec. 7 of Art. 240 EGBGB, fundamentally pursued the goal of bringing the interests of both contracting parties, which are worthy of protection, into an appropriate balance. Accordingly, the focus must continue to be strongly on the individual case, which is why open communication between the parties to the rental agreement is unavoidable. Showing a certain willingness to talk and striving for a cooperative solution in individual cases can therefore do no harm.

The first appeal decisions in the ''COVID-19 cases'' can be expected soon, which may provide further information on how to deal with the tenant's obligation to pay rent.

For more Update in Commercial Tenancy Law, click here.