Termination of tenancies for the construction of a residential complex

The VIII. The Federal Court of Justice (BGH) had to decide under which conditions the termination of tenancies pursuant to Section 573 (2) no. 3 of the German Civil Code (BGB) is permissible for the economic exploitation of residential space.

The defendants rented flats in an apartment building which the plaintiff acquired in 2005. The plaintiff intends to demolish the building, which was built in 1914 and is in great need of renovation, and to construct a larger building with six condominiums and sell them. The plaintiff obtained planning permission for the demolition of the existing residential building as well as planning permission for the planned project and terminated all tenancies with effect from 31 January 2006. The local court dismissed the actions for eviction. In response to the plaintiff's appeals, the Regional Court ordered the defendants to vacate the flats they had rented. The defendants' appeals against this decision were unsuccessful.

The Federal Supreme Court ruled that the plaintiff was entitled to terminate the tenancies.

The construction measures planned by the plaintiff constitute a reasonable economic realisation of the property pursuant to § 573 (2) no. 3 BGB because they are supported by reasonable and comprehensible considerations. A refurbishment would require investments at high cost in the existing building in need of repair with a relatively short remaining useful life. The new building that has already been approved will also create a considerable amount of additional living space.

Furthermore, the continuation of the tenancy would also cause the plaintiff the considerable disadvantages required by law for a termination by the landlord. When assessing whether significant disadvantages are to be assumed, the tenant's interest in maintaining the tenancy and the landlord's interest in exploiting the property are to be weighed up, taking into account the circumstances of the individual case. If the plaintiff were required to continue the tenancy, it would only have the option of a "minimal refurbishment", although the condition of the building would require either a comprehensive refurbishment, which would be necessary for a fit-out according to today's usual conditions, or a demolition followed by a new building. According to the findings of the Court of Appeal, moreover, the implementation of the most urgent measures would be associated with considerable costs without achieving an extension of the useful life of the building. In view of the economic risks involved in such a "minimal renovation", the owner's interest in carrying out a permanent renovation as soon as possible and not only when the building fabric is completely worn out cannot be denied. The plaintiff would also not have the possibility to comprehensively renovate the building if the tenancies were continued, because the necessary gutting would also require the tenants to move out. Finally, a termination for the purpose of demolishing a building and subsequently reconstructing it does not contradict the legislator's idea; in fact, in the legal materials this possibility is cited as an example of a termination for realisation. In view of these circumstances, the Court of Appeal's assessment that a continuation of the tenancy would lead to considerable disadvantages for the plaintiff within the meaning of § 573.2 no. 3 BGB does not reveal any errors of law.

Judgment of the Federal Supreme Court of 28 January 2009 Ref.: VIII ZR 7/08

Lower courts:

AG Heidelberg - Judgment of 3 July 2007 - 61 C 581/05

Heidelberg Regional Court - Judgement of 30 November 2007 - 5 S 86/07

 

Judgment of the Federal Court of Justice of 28 January 2009 Ref.: VIII ZR 8/08

Lower courts:

AG Heidelberg -Judgement of 3 July 2007 - 61 C 584/05

Heidelberg Regional Court - Judgment of 30 November 2007 - 5 S 89/07

 

Judgment of the Federal Court of Justice of 28 January 2009 Ref.: VIII ZR 9/08

Lower courts:

AG Heidelberg - Judgment of 3 July 2007 - 61 C 582/05

Heidelberg Regional Court - Judgment of 30 November 2007 - 5 S 87/07

 

Source: Press release of the Federal Supreme Court No. 19/2009 of 28.1.2009

 

Goldberg Attorneys at Law

Attorney at Law Michael Ullrich, LL.M. (Information Law)

E-mail: info@goldberg.de

Seal