Germany: Real Estate - Recent Developments and Decisions (December 2012)

Last Updated: 2 January 2013
Article by Elmar Günther

Keywords: price clause act, sub-leasing, commercial lease, security deposit

Validity of indexation clauses under the Price Clause Act (Preisklauselgesetz)

OLG Brandenburg, decision of October 17, 2012 - 11 O 153/10

Since the introduction of the Price Clause Act of September 7, 2007, which replaced the Price Clause Directive (Preisklauselverordnung), the legal consequence of a violation against the provisions by an indexation clause under the previous law is unclear. The transition provision applies only to explicitly approved clauses. Beyond this, Section 8 PrKlG applies, according to which price clauses are ineffective only after a judicial determination.


The legal dispute deals, inter alia, with subsequent increased rent claim of the lessor as plaintiff for the period from December 2004 until May 2008 based on a contractual indexation clause from 2000. The parties agreed a leasehold term of five years with the lessee being entitled to unilaterally extend the term by further five years. According to the contractual provisions, the lessee had to bear the service charge himself directly and reimburse the lessor only for a few precisely specified kinds of service charge costs upon invoice. Subsequently, the parties orally agreed on a monthly service charge payment (unclear whether as advance payment or lump sum) to the lessor.


The court correctly assesses the validity of the indexation clause pursuant to the new Price Clause Act, although the agreement dates from 2000. The reason is, that the transitional rule under Section 9 paragraph 1 PrKlG provides for the continued application of the Price Clause Directive (PrKlV) only for existing clauses which have been either explicitly permitted or for which a permit has been confirmed to be unnecessary (negative clearance). In the case at hand, the indexation clause had not been permitted but was initially agreed based on the fictitious approval according to the stipulation of the Price Clause Directive. The respective stipulation has been included in the Price Clause Act without changes and requires either the lessor's waiver of its ordinary termination right for a time of at lease ten years or the lessee's unilateral right to extend the lease term to ten years. At hand, the lessee was entitled to extend the term to ten years in total.

However, such fictitious approval is discontinued upon the pre-requirements not being met anymore. In particular, a non-compliance with the written form requirement entails the invalidity of the agreed term. The lease agreement can be terminated by either party at any time. In the present case, the violation of the written-form requirement consists of the subsequent oral amendment of the contract.

The court considers the subsequent change regarding service charge payments as a material change of the contract. This is substantiated by the court primarily with the relative amount of the payment, which amounts to nearly 15 percent of the base rent and the expansion of the lessor's abilities to terminate the agreement and; because the non-payment by the lessee in respect to this service charge payment on two dates opens up the ability to terminate pursuant to Sections 581 paragraph 2, 543 paragraph 2 sentence 1 No. 3 of the German Civil Code (BGB). According to the court, however, the invalidity of the indexation clause occurs not only when determined by the court, but immediately as soon as the written form requirement is violated.

According to the Price Clause Act, a clause that violates the provisions of the law is invalid (Section 1 PrKlG). However, the invalidity is caused only once it has been established by a court in a legally binding way and only for the future (Section 8 paragraph 1). In deviation from this, earlier invalidity, e.g. from the outset or from the time of assertion of the invalidity, may be agreed upon.

Section 8 PrKlG is interpreted differently in respect to its effect on clauses already agreed prior to its introduction. One legal view derives from the wording of the transition provision that all clauses, which were not previously approved or for which an explicit negative clearance was obtained, are subject to the Price Clause Act and thus also the rule regarding invalidity. Accordingly, the judicial establishment of invalidity would have to be caused also for (invalid) indexation clauses under the former legal situation. Otherwise, the clauses would remain applicable.

Another view considers - as interpreted by the court - the reference to the violation "against this law" (i.e. the Price Clause Act) as evidence that this rule is only meant to apply to those clauses, which were agreed in accordance with the provisions of the Price Clause Act. The court adopts this view, however, the interpretation by the court is based on a misunderstanding. According to the cited view, this citation pertains only to the relationship to the invalidity of a clause due to other reasons, e.g. as an unreasonably discriminating general term and condition. The applicability of Section 8 PrKlG to all previously agreed indexation clauses, however, is not questioned.

Finally, the court argues that the invalidity of the clause had occurred already prior to the introduction of the Price Clause Act at the time of violation against the written-form requirement. The invalidity occurred immediately under the former legal situation and the mere introduction of the Price Clause Act was not capable of making the clause effective. The court refers to case law of the German Federal Court of Justice (BGH) regarding other matters of law in its argument here, according to which the annulment of a prohibiting statute leaves unaffected the invalidity of legal transactions, which were concluded prior to the annulment in violation of the statute. In the present case, the prohibiting statute (i.e. the Price Clause Directive) had merely been modified by the Price Clause Act.


The rule of Section 8 Price Clause Act appears neither particularly well-worded to leave no doubt, nor does it seem that the legislator has considered the economic consequences in their entirety. It is nevertheless doubtful, whether the dogmatic explanation of the court can be reconciled with the statutory rule and the will of the legislator.

The eventual result of the court's decision is that the introduction of the Price Clause Act would have no factual effect on all contracts concluded prior to September 14, 2007 with fictitiously approved indexation clauses. It remains to be seen, whether this case law will prevail and how the German Federal Court of Justice will decide in respect to this issue. If the fictitious approval of an indexation clause is cancelled - as in most cases due to a violation of the written-form requirement or otherwise - or does not apply, it will particularly depend on whether this violation occurred prior to the introduction of the Price Clause Act. If this was the case, a lessee should not rely on the immediate invalidity for reasons of precaution, but also pursue the judicial establishment of the invalidity. On the other hand, a lessor as a matter of precaution will have to take into account that the clause already may be invalid without a court decision and that subsequent claims for rent might not be enforceable.

Other alternatives to immediately enforcing an adjustment also face difficulties in practice: even though the parties had also agreed in the present case that an effective rule, which resembles the economic intent, should be included if the indexation clause was invalid; however, according to the correct view of the court, the other party will first have to be sued for the issuance of a corresponding declaration in order to enforce this claim. The court sets high standards for the lessor's statements for the adjustment of the rent for reasons of equitableness. It must be demonstrated that the adjustment is justified due to not only the general increase of the rent level but in particular for comparable objects. However, depending on the particularities of the object, there may not be any comparable data or comparable objects at all.

Information and documentation obligations of the lessee vis-a -vis the lessor in the case of subleasing under a commercial lease

Higher Regional Court Düsseldorf, decision of September 20, 2012 - I-10 U 33/12

By Frank David Endebrock

According to the opinion of the Higher Regional Court (OLG) Düsseldorf, claims of the les-sor against the lessee for providing information and documentation about the terms of a sub-lease exist only in very special constellations.


Information or documentation claims in respect to the revenue generated from sub-leasing exist only if the lessor has got a recognisable interest for the information. The legal position as lessor alone does not yet justify such an information interest. The information interest in respect of the granting of a subletting permission pursuant to Section 540 paragraph 1 of the German Civil Code (BGB) no longer plays a role once it has been issued.


A commercially active lessee has subleased rooms. The lessor, who succeeded into the lessor position as an acquirer by way of legal succession (Section 566 BGB), has demanded information and documentation about the conditions of the sub-lease, including the amount of revenue generated by the sub-lease. After the prior instance had upheld the documentation claim because of the succession of the lessor into the lease, the OLG rejected the claim as non-existent and insofar reversed the decision.


The OLG addressed the question of the legal basis on which a demand of the lessor for information could be based and rejected a basis in the decided case. There is no statutory rule for a claim for information. The OLG did not have to finally decide whether a recourse to the principles of good faith is possible here; because there would have to be a recognisable information interest which does not exist in the case. The recognisable information interest could not be derived from the fact of legal succession on the lessor side, even if the acquirer of real property does not have the same information at his disposal as the seller. In order to justify this, the OLG argues that a prospective acquirer should rely on the opportunity to inquire with the seller about the detailed circumstances of a sub-leasing permission. This provides for sufficient protection for the acquirer. Beyond this, the lessee should not be confronted with further-reaching information obligations because of a sale and transfer of the real property than without a succession of the lessor, which corresponds to the purpose of the legal succession provisions in Sections 566 et seq. BGB.

Except for the information that is necessary prior to the granting of the subletting permission, the OLG cannot recognize another justified interest of the lessor in information about other sub-leasing conditions during an existing lease. The autonomous usage right of the lessee has to be recognized. The law does not grant any general control rights or even accountability claims to the lessor. The lessee is free to engage in his activities within the scope of the agreed purpose, which applies accordingly to the permitted sub-lease, since this also constitutes a permitted form of commercial activity. Only in case of a turnover rent could be recognized that the lessor needs to know the exact conditions of the sales results of the lessee in the premises; beyond that, no corresponding participation of the lessee in the economic success of the lessee exists which could justify a demand for information. The OLG determined at the same time that an information obligation in respect to already established sub-leases could be derived under special circumstances from Section 242 BGB.


As far as we can see, the question regarding information about sub-leasing conditions has yet not been decided in the leasing law-related case law and commentaries. The recent decision of the OLG Düsseldorf therefore provides indications about the legal situation in the specific constellation.

Many judgments and publications deal with the information obligations of the lessee when requesting the consent to a sub-lease. During this phase, the lessor has a significant interest in finding out details about the person, but also about the conditions of the proposed sub-lease (agreed purpose, term).

According to one opinion, information about the person of the sub-lessor must also be provided at any rate in respect to an eviction demand, which may be addressed both against the lessee and the sub-lessee (Section 546 paragraph 2 BGB) (cf. OLG Hamburg, NZM 1998, pg. 758).

These aspects, however, do not comply with the present case constellation.

The OLG clearly distinguishes between the various leases (lessor and main lessee on the one side; main lessee and sub-lessee on the other side) and related interests, particularly in respect to the legal succession on the lessor side. As in many other respects, the seller who has permitted a sub-lease has better information at his disposal than the prospective acquirer who therefore has to gain an impression of the property-related issues that are important to him prior to the investment decision.

Other than in the case of a turnover rent, the OLG cannot recognize a relevant interest of the lessor in the individual conditions of the sub-lease. It can be derived from the statements of the OLG that a particular interest in disclosure may be recognizable from the perspective of good faith. In respect to information about the "entrepreneurial success", particularly about the sub-lease revenue of the lessee, the OLG seems to assume a justified interest insofar only in the case of a success participation of the lessee.

It might be possible to name additional aspects in this context. One might consider the requirement, which is often found, that no sales excluding the input tax deduction may be generated on the leased premises. The lessor himself must prepare correct preliminary value added tax returns and document the preconditions so that one could recognize an interest in obtaining information about the exercise of the option for value added tax in connection with the sub-lease, if the lessor has opted for value-added tax in respect to the rent. If - which is advisable - the main lease agreement contains corresponding detailed obligation, documentation, and indemnification clauses, which also cover the case of a sub-lease, a contractual claim might already exist in this regard, which would make it unnecessary to take recourse to the aspect of good faith. The Value-Added Tax Implementation Ordinance (Umsatzsteuer-Anwendungserlass (UStAE)) states that this information has to be obtained regularly once each year (Section 9 paragraph 4 UStAE). The admissibility of corresponding obligatory clauses has not been questioned by the literature so far.

Entry of the acquirer of a real property into the claim for payment of the security deposit

BGH, Decision of July 25, 2012 - XII ZR 22/11

By Slaven Kovacevic

Rules concerning the payment of the security deposit are indispensable in real property purchase agreement for leased real property. The German Federal Court of Justice BGH had to deal with the question, which party is entitled to a security deposit that became due prior to the transfer of ownership of a sold real property, but had not been paid by the lessee yet.


The acquirer of a leased commercial building enters into the seller's due claim for payment of the security deposit, which arose prior to the transfer of ownership, pursuant to Sections 566 paragraph 1, 578 of the German Civil Code (BGB).


The former owners and lessors ("Sellers") of leased commercial premises demanded from a lessee of the sold real property payment of the contractually agreed security deposit to the new owner ("Acquirer").

As agreed, the lessee had pledged German federal treasury notes (Bundesschatzbriefe) as a security deposit to the Sellers and had asked the Sellers to release these notes upon their maturity. It was agreed in this context that equivalent security could also be provided in a different form. The Sellers granted the release of the federal treasury notes. In spite of a request prior to the transfer of ownership to the Acquirer, the lessee did not provide a new security deposit. It was then agreed in the purchase agreement between the Sellers and the Acquirer that the Sellers should assert the claim for the security deposit against the lessee, which was now open (again). The Sellers then sued the lessee for payment of the security deposit to the Acquirer.


The BGH first finds that the Sellers are able to assert the security deposit in a lawsuit by way of derivative action (Prozessstandschaft) for the benefit of the Acquirer.

From the perspective of substantive law, the Acquirer is entitled to the claim for payment of the security deposit. According to Section 566 paragraph 1 BGB, which also applies to commercial leasing law via Section 578 BGB, an acquirer enters into the rights and duties resulting from the lease for the duration of his ownership instead of the seller. A new lease between acquirer and lessee arose upon transfer of ownership, the content of which was identical to the one formerly existing with the seller. Section 566 BGB only covered those rights and obligations, which (i) either had to be classified as leasing law-related or (ii) were inseparably related to the lease agreement. Rights and duties outside of the lease were not covered, even if they were governed by the lease agreement. In accordance with these criteria, the obligation to pay the security deposit had to be classified as leasing law-related, since it served to secure claims of the lessor under the lease and was therefore inseparably related to it. The fact that the claim for payment of the security deposit had already been due prior to the transfer of ownership to the acquirer was irrelevant. Even though claims that had become due already prior to the transfer of ownership generally remained with the seller, this did not apply to the payment of a security deposit that had become due prior to the transfer of ownership, since the purpose of the security deposit was to secure all claims of the lessor throughout the entire term of the lease agreement, which also included the claims of the acquirer under the newly-created lease agreement with the same content. This result is also supported by the fact that an acquirer enters into the rights and obligations established by the paid security deposit pursuant to Section 566a sentence 1 BGB and that the seller's liability is only subordinate pursuant to Section 566 sentence 2 BGB. It would therefore not make sense to attribute the already due claim for payment of the security deposit to the seller, if the acquirer was to be primarily liable for it. The acquirer is therefore also entitled to the claim for payment of the security deposit by the lessee, if the claim had become due prior to the transfer of ownership to the acquirer. The follow-up question, whether the above also applies if the seller is entitled to claims against the lessee under the lease, which arose prior to the transfer of ownership, did not have to be decided and was therefore left open.


The parties of a real property purchase agreement should formulate the rules concerning rent deposits carefully (also) considering this case law. It should be set forth as detailed as possible, which security deposits are owed in which amount, which have already been paid, and which may have already been utilized by the seller. It should then e.g. be set forth, who should be entitled to any unpaid security deposits and who asserts these against the lessee. In addition, the seller should protect himself against the (subordinate) claims of lessees for repayment of paid security deposits, e.g. through an indemnification agreement.

On the knowledge of the impending inability of a lessee to pay based upon the non-execution of money transfer orders or return of direct debits

HansOLG Hamburg, decision of February 3, 2012 - 8 U 39/11

By Dr. Malte Richter, LL.M. and Sören Pruss

Temporary rental payment interruptions in commercial leases occur regularly and in many areas. In this context, the Higher Regional Court (OLG) Hamburg commented on the question, whether and at which point in time the lessor has to assume the (impending) inability of the lessee to pay in the event of such payment interruptions so that payments received from the lessee after the end of the payment interruption can be challenged and have to be repaid in the case of a subsequent insolvency of the lessee.


1. If a creditor has knowledge of actual circumstances, which compellingly indicate an impending or already occurred inability of the insolvency debtor to pay, a factual presumption suggests that he also has knowledge of the impending inability to pay. In this regard, it is sufficient that the addressee of the challenge right has knowledge of the factual circumstances from which, in case of a correct legal assessment, the impending inability to pay results without doubt.

2. The return of direct debits as well as the non-execution of a money transfer order for rent payable for the business premises of the insolvency debtor constitute significant indications for an impending inability to pay, since both the non-execution of a money transfer order and the return of a direct debit make it clear that sufficient liquidity is no longer available.


The plaintiff leased commercial premises to the subsequent insolvency debtor since 2001. The debtor did not pay the rent for April and May 2006. In June 2006, the money transfer order set up for the payment of rent was not executed, either, so that rents totaling EUR 38,005.05 were outstanding. Afterwards, rental payments were made in an orderly fashion again. In addition to the still outstanding claims for rent, the insolvent lessee had further payment obligations vis-a-vis the plaintiff resulting from leased car garages for the period from September 2002 until the end of 2006. These claims were reduced in a subsequent agreement and installment payments were agreed which, however, the debtor never paid. In August 2007, the plaintiff collected the rental guarantee and offset the payment received with the rent for April 2006 and part of the rent for May 2006. In September 2007, insolvency proceedings were opened over the assets of the lessee. The plaintiff demanded, inter alia, payment of the rent for the period after the commencement of insolvency proceedings until the end of the lease agreement at the end of 2007 as well as the acceptance of the open rental claims from 2006 and for the leasing of the garages, respectively, which were filed for registration with the insolvency schedule, but disputed by the insolvency administrator. The insolvency administrator invoked a challenge right pursuant to Sections 130, 133 of the German Insolvency Act (InsO) vis-a-vis the plaintiff in respect of all rental payments in an amount of EUR 146,559.60, which had been made by the debtor after the end of the temporary payment interruption in July 2006 until the commencement of insolvency proceedings, and demanded a repayment of the amount. Beyond this, the insolvency administrator offset the repayment claim resulting from this challenge against the claims of the plaintiff and demanded the repayment of the remaining rent by way of a countersuit, to the extent that the repayment claim was not cancelled as a consequence of the challenge.


According to the opinion of the OLG Hamburg, the challenge of the debtor's rental payments from the last year prior to the commencement of insolvency proceedings was justified, since the debtor had the intent within the meaning of Section 133 paragraph 1 InsO at the time of the payment to the plaintiff, to discriminate against its creditors and since the plaintiff had knowledge thereof. Due to the unpaid rent for April and May 2006 as well as the non-execution of the money transfer order for the rent in June 2006, a cessation of payments and thus the inability of the debtor to pay existed. In particular, this did not constitute a mere payment interruption, since the amounts at issue, which were not minor due to their existential importance for the continuation of its business operations, remained unpaid for more than 3 weeks. In addition, pursuant to established case law of the German Federal Court of Justice (BGH), the return of direct debits was a significant indication of evidence for an impending inability to pay. The same applied to the non-execution of a money transfer order, since this made it evident that no sufficient liquidity existed. Furthermore, the fact that an inability of the debtor to pay existed or was at least impending had also been recognizable for the plaintiff from the non-payment of three consecutive rent installments and the collection of the rent guarantee by the plaintiff as well as the non-payment of the also outstanding garage rent (in spite of its reduction and agreement of an installment payment).


The insolvency challenge based on intentional discrimination pursuant to Section 133 paragraph 1 InsO first inter alia requires that the debtor made payments with the intent to discriminate against creditors during the last 10 years before the insolvency application filing and that the payment recipient had knowledge of the debtor's intent at the time of that transaction. This knowledge is presumed, if the payment recipient knew that the debtor's inability to pay was impending and that the transaction discriminated against the creditors.

The question regarding the intent of the debtor to discriminate against his creditors and the payment recipient's knowledge thereof, respectively, is the element of Section 133 paragraph 1 InsO that is the most difficult to assess. The court decisions rendered on this subject over the last several years reflect the courts' general tendency to continuously reduce the thresholds particularly for the payment recipient's knowledge of the impending inability of the debtor to pay. While the case law is still characterized by many individual considerations in each case and by diverging decisions so that a generalization of the present decision is possible only to a limited extent, the decision of the OLG Hamburg nevertheless confronts lessors of commercial premises with a problem in the event of temporary payment interruptions of the lessee: All rental payments which the lessee makes to the lessor in an orderly fashion after a temporary payment interruption might have to be paid back in case of an insolvency of the lessee, such insolvency potentially to occur not until many years later. The period relevant for a challenge right may reach back up to 10 years prior to the filing for the opining of insolvency proceeding. Accordingly, the lessor would have to terminate the lease agreement in the event of payment interruptions as soon as the prerequisites for such a termination due to the default of the lessee are fulfilled in order to not expose himself to the risk of losing any payments received thereafter. It is obvious that this will regularly be neither in the interest of the lessor nor of the lessee. This approach would be feasible for the lessor only, if he can be sure that he will soon be able to release the object. It must therefore be hoped that this problem, which is not treated by all courts in the same manner, will be clarified by the BGH as soon as possible.

Originally published December 20, 2012.

Mayer Brown is a global legal services provider comprising legal practices that are separate entities (the "Mayer Brown Practices"). The Mayer Brown Practices are: Mayer Brown LLP and Mayer Brown Europe – Brussels LLP, both limited liability partnerships established in Illinois USA; Mayer Brown International LLP, a limited liability partnership incorporated in England and Wales (authorized and regulated by the Solicitors Regulation Authority and registered in England and Wales number OC 303359); Mayer Brown, a SELAS established in France; Mayer Brown JSM, a Hong Kong partnership and its associated entities in Asia; and Tauil & Chequer Advogados, a Brazilian law partnership with which Mayer Brown is associated. "Mayer Brown" and the Mayer Brown logo are the trademarks of the Mayer Brown Practices in their respective jurisdictions.

© Copyright 2012. The Mayer Brown Practices. All rights reserved.

This Mayer Brown article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.

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