On 24 February 2021, the Higher Regional Courts of Karlsruhe and Dresden issued two decisions on the question of the impact of Covid-19-related state measures on the tenant’s obligation to pay rent which, however, turned out inconsistently. The Karlsruhe Higher Regional Court (“OLG Karlsruhe“) ruled that the tenant is obliged to pay the full rent, whereas the Dresden Higher Regional Court (“OLG Dresden“) considered an adjustment of 50% of the cold rent to be appropriate.
Judgement of OLG Karlsruhe – file no. 7 U 109/20
OLG Karlsruhe had to rule on a judgment of Heidelberg Regional Court which had ordered the defendant to pay the full rent (see also our Smart News issue of 9 September 2020). The appeal of the defendant was rejected and the judgment of the Heidelberg Regional Court – file no. 5 O 66/20 was confirmed by the court.
In the opinion of the court, there was no claim for adjustment of the lease agreement pursuant to Sec. 313 German Civil Code. There was no case of unreasonableness of the adherence to the agreed obligation to pay rent. As in the first instance proceedings the defendant had not sufficiently presented the existence of unreasonableness in the appeal proceedings either.
The OLG Karlsruhe agreed with the Heidelberg Regional Court’s comments that sales losses should not be viewed in isolation but that state aids such as short-time allowance (Kurzarbeitergeld) should also be included in the weighing process. In addition, the court noted that unsold goods (unless they are Easter items) could still be sold after the lock-down which distinguishes retail from the restaurant or event industry.
The court clarifies that it does not consider a lump-sum reduction of the rent by 50% to be convincing. The unreasonableness of paying the rent must be examined in detail for each individual case.
Judgement of OLG Dresden – 5 U 1782/20
OLG Dresden had to rule on a judgment of Chemnitz Regional Court, which, like Heidelberg Regional Court, had ordered the defendant to pay the full rent. The defendant’s appeal to the OLG Dresden was partially successful. According to the press release of the court, the state closure order constituted a material adverse change (Störung der Geschäftsgrundlage) pursuant to Sec. 313 German Civil Code.
Since none of the parties had caused or foreseen the material adverse change the court considered an equal distribution of the associated burdens among the parties to be appropriate in the case at hand. The court decided on an adjustment of the lease agreement to the effect that the cold rent owed would be reduced by 50% for the duration of the ordered closure.
As mentioned in the beginning, the rulings of the Higher Regional Courts do not show a consistent line of case law.
However, OLG Karlsruhe confirms that the Covid-19-closure orders do not constitute a material defect of the leased object and do not establish a case of impossibility of performance. In this regard, a consistent line of case law now appears to be recognizable. The OLG Dresden also assumes that the provisions of impossibility do not apply but that the existence of a defect in the leased property, however, is not relevant.
Both Higher Regional Courts have allowed an appeal to the Federal Court of Justice (“BGH“) so that it remains to be seen with interest which line of case law the BGH will follow and whether tenants and landlords will achieve legal certainty in the final instance.