Changes to leases due to the law to mitigate consequences of the COVID-19 pandemic

As expected, the German Parliament and Federal Council have passed a law to mitigate the consequences of the COVID-19 pandemic. The law applies to both entrepreneurs and consumers as well as to commercial and residential tenants.

In general, landlords can terminate leases, if tenants are in arrears with their rents for two consecutive dates. Another reason for terminating leases is when the tenants are arrear with their rent in an amount equal to the total of the rent for two months during a period extending over more than two months.

What has changed?

The new law to mitigate consequences of the COVID-19 pandemic is limiting these termination rights temporarily as follows: if tenants are not able to pay their rent between 1 April 2020 and 30 June 2020 due to the COVID-19 pandemic, landlords cannot terminate leases. This period will possibly be extended until 30 September 2020, depending on whether the COVID-19 pandemic will continue to have a significant impact on social life or not.

What are tenants required to do?

In the event of a dispute, tenants must prove that their arrears are based on the COVID-19 pandemic. This can be done, for example, by means of a certificate of state aid or a certificate of reduced income or loss of earnings. Commercial tenants must indicate that the operation of their businesses has been prohibited or significantly restricted due to the COVID-19 pandemic.

For how long are the termination rights excluded?

The ban on termination for arrears from this period is valid until 30 June 2022. This means that tenants can remedy their arrears until 30 June 2022. Therefore, the law does not affect the tenants’ obligation to pay, but only allows them to fulfil their obligation later.

The right to terminate leases due to other reasons than the COVID-19 pandemic remains unaffected.