Federal Court of Justice on rent payment due to business closure during the coronavirus pandemic
Verdict of 12 January 2022 – XII ZR 8/21
The twelfth civil senate of the Federal Court of Justice, which is responsible for commercial tenancy law among other things, had to decide the question of whether a tenant of commercially used premises is obliged to pay the rent in full for the period of an officially ordered business closure during the COVID-19 pandemic.
Facts:
The defendant rented business premises from the plaintiff for the operation of a retail shop for textiles of all kinds and everyday consumer goods. Due to the spread of the SARS-CoV-2 virus (COVID-19 pandemic) in Germany in March 2020, the Saxon State Ministry for Social Affairs and Social Cohesion issued general decrees on 18 and 20 March 2020, on the basis of which the defendant had to close its textile retail shop in the rental property from 19 March 2020 up to and including 19 April 2020. Consequently, the defendant did not pay any rent for the month of April 2020 due to the officially ordered closure of the business.
Process so far:
The Regional Court ordered the defendant to pay the rent for the month of April 2020 in the amount of € 7,854.00. On appeal by the defendant, the Higher Regional Court overturned the first instance decision and ordered the defendant to pay only € 3,720.09, dismissing the remainder of the claim. As a result of the COVID-19 pandemic and the government order to close the property on the basis of the general decrees, a disruption to the business basis of the rental agreement in accordance with Section 313 para. 1 of the German Civil Code (BGB) had occurred, which required an adjustment of the contract to the effect that the basic rent would be reduced by half for the duration of the ordered closure.
Decision of the Federal Court of Justice:
On the appeals of the plaintiff, who continues to demand the full rent, and the defendant, who continues to pursue its motion to dismiss, the Federal Court of Justice overturned the judgement of the Higher Regional Court and referred the case back to it.
The Federal Court of Justice has ruled that in the case of a business closure due to a sovereign measure to combat the COVID-19 pandemic, the tenant of commercially used premises is generally entitled to an adjustment of the rent due to disruption of the basis of the transaction in accordance with Section 313 para. 1 of the German Civil Code (BGB).
The applicability of the warranty provisions under tenancy law and the provisions of the general law of obligations, in particular Section 313 BGB on the cessation of the basis of the business transactions, is not excluded by the provision of Section 240 par. 2 Introductory law to the German Civil Code applicable for the period from 1 April 2020 to 30 September 2022. The Federal Court of Justice has ruled that, according to its clear wording and legal purpose, this provision is aimed solely at restricting the landlord’s right of cancellation and says nothing about the amount of rent owed…. Click here for the full press release.
Source: Press Office of the Federal Court of Justice, press release no. 004/2022 dated 12 January 2022
