The Federal Court of Justice (Bundesgerichtshof) has made a decision on the justification requirements for termination without notice due to default of payment by a residential tenant in a case where the arrears had accumulated over several years with fluctuating monthly amounts.
The landlady made a claim against the defendants, her tenants, for eviction from a flat in Leipzig. The tenants had predominantly paid only a reduced rent from March 2004 up to and including October 2007. After the landlady, who did not accept the reductions in the amount claimed, had demanded payment of a rent arrears of € 5,023.80 from the tenants in March 2007, she terminated the tenancy without notice by letter of 21 May 2007 on the grounds of late payment. For the period from May 2004 to April 2007, it listed the arrears it considered to exist with regard to the basic rent and the advance payments, in each case on a monthly basis, and calculated a total arrears of € 5,303.27 for the basic rent and € 2,038.80 for the advance payments.
The Local Court held that the termination without notice was invalid due to a violation of the obligation to state reasons under Section 569 (4) of the German Civil Code and dismissed the landlady's action for eviction. In contrast, the Regional Court concluded that the tenancy had been terminated by the termination without notice of 21 May 2007 and ordered the tenants to vacate.
The tenants' appeal against this decision was unsuccessful. The VIII. Civil Senate of the Federal Court of Justice (BGH), which is responsible for residential tenancy law, ruled that the termination without notice of 21 May 2007 met the requirements of § 569, Subsection 4, German Civil Code (BGB), and was therefore not invalid. The purpose of the provision is to enable the tenant to know on which events or on which conduct the landlord bases the termination without notice and whether or how he can defend himself against it. Based on this purpose, the Federal Court of Justice has previously ruled for simple cases that it is sufficient if the landlord states the default in payment as a reason for termination and quantifies the total amount of the rent in arrears.
The Federal Court of Justice has now further developed this case law for cases in which the landlord - as in the case decided - also bases the termination on previous arrears. In such cases, it is sufficient for the formal effectiveness of the termination that the tenant is able to recognise from the reasoning of the termination letter which rent arrears the landlord is assuming in order to be able to independently check the validity of the termination with the help of this information. These requirements were met by the notice of termination of 21 May 2007 in the case at hand.
§ 543 BGB reads:
Extraordinary termination without notice for cause
(1) Either contracting party may terminate the tenancy for good cause without notice. ...
(2) An important reason exists in particular if
1. …
2. …
3. the tenant
(a) is in default of payment of the rent or a not insignificant part thereof for two consecutive dates; or
(b) is in arrears in the payment of rent for a period exceeding two dates by an amount equal to two months' rent.
...
§ 569 BGB reads:
Extraordinary termination without notice for cause [special provision for residential tenancies]
...
(4) The important reason leading to termination shall be stated in the termination letter.
...
Judgment of the Federal Supreme Court of 12 May 2010 - VIII ZR 96/09
Lower courts:
AG Leipzig, judgement of 30 June 2008 - 167 C 5138/07
Leipzig Regional Court, Judgment of 18 March 2009 - 1 S 372/08
Source: Press release of the Federal Supreme Court (BGH)
Goldberg Attorneys at Law
Attorney at Law Michael Ullrich, LL.M. (Information Law)
E-mail: info@goldberg.de
