Mitigating the lack of written form? – Federal government is sceptical about the Bundesrat’s legislative initiative

The legislator wants to remedy the eternal dispute about written form defects of long-term rental contracts. After the Federal Court of Justice recently finally overturned so-called cure clauses in long-term rental agreements (we reported), the Bundesrat took the initiative and decided to reform the regulation in December 2019. Failure to comply with the formal requirements is often used as a loophole in order to be able to get out of an unpleasant lease at an early stage. The draft of a law to revise the written form requirement in tenancy law now provides for limiting the right of termination to the purchaser. This reduces the norm to the protective purpose which the historical legislator had intended it to serve, the draft states. In addition, the right of termination to which only the purchaser is now entitled for the written form infringements prior to his acquisition is to be limited in time to protect the tenant. In this way, it is prevented that the tenant has to expect a termination by the purchaser due to a formal defect that has come to light during the entire remaining agreed contract term. In addition, the termination will become ineffective if the tenant objects to it and agrees to the continuation of the rental agreement on the terms agreed in writing.

The draft law has now been submitted to the Bundestag for resolution. However, the Federal Government rejects the draft. The new regulation would also apply to residential leases. Since an abuse of the regulation is not detectable there is, according to a statement, no need for action. The Federal Government is therefore not in a position to support the Bundesrat bill in this form. The Federal Government would examine whether and with which instruments the planning security for the term of contracts in commercial rental law could instead be improved. So things remain exciting. If no alternative is found by the end of this legislative period, the dispute will enter a new round. Click here for the draft law.