In a decision, the Federal Supreme Court (BGH) dealt with the question under which conditions the termination of a residential tenancy by the landlord for the purpose of own use for (freelance) professional or commercial purposes is possible.
Facts and course of proceedings:
The defendant has been the tenant of a 27 sqm two-room flat in Berlin since 1 July 1977. The plaintiff acquired the flat in 2008 by knockdown in a compulsory auction and entered into the tenancy agreement as landlord. According to the plaintiff's account, the plaintiff's husband runs a consulting company on the first floor of the front building of the property in which the flat used by the defendant is located.
The plaintiff terminated the tenancy on the grounds that her husband needed the flat to expand his business, which he had been running for 14 years, as the spatial capacity of the rooms rented for this purpose on the first floor of the property was exhausted. The offices, which were also used as consulting rooms, were overloaded with overfilled filing shelves reaching up to the ceiling. Her husband therefore intended to set up a further workplace, including an archive, in the defendant's flat. In order to realise this project, she wanted to make the rented flat used by the defendant available to him.
The lower courts initially affirmed the existence of a ground for termination because the plaintiff's asserted need for the rented flat for her husband's professional activity constituted a legitimate interest within the meaning of section 573 (1) sentence 1 of the German Civil Code (Bürgerliches Gesetzbuch, BGB), which was equivalent to the fact of termination due to own need (section 573 (2) no. 2 BGB). However, the courts dismissed the action for eviction and restitution with regard to the regulations on the misappropriation of residential space that had come into force in Berlin. The plaintiff continued to pursue her claim in the appeal allowed by the Regional Court.
Decision of the Federal Supreme Court:
The VIII. Civil Senate of the Federal Court of Justice has ruled that - contrary to widespread practice - it is not permissible to treat professional or business needs as an unwritten further category of a typically recognisable landlord's interest in terminating a residential tenancy. Rather, the courts have to determine in each individual case whether there is a justified interest of the landlord in terminating the tenancy (section 573 (1) sentence 1 BGB).
This is because the legislator has only regulated the circumstances under which the landlord's desire to obtain the apartment takes precedence over the tenant's interest in maintaining the apartment in the most practically significant groups of cases by means of the standardised circumstances of Section 573 (2) of the German Civil Code (BGB). If, however, the landlord does not need the flat for residential purposes - as in the present case - but wants to use it for commercial purposes, the termination condition of own need pursuant to Section 573 (2) no. 2 BGB is not fulfilled. Likewise, the owner-occupation of the rented residential premises for (freelance) professional or commercial purposes does not constitute an economic exploitation within the meaning of Section 573 (2) no. 3 BGB.
When applying the general clause of Section 573 (1) sentence 1 BGB, on the other hand, the law always requires a case-by-case determination and weighing of the mutual interests of the parties to the tenancy agreement concerned. In determining the legitimate interest, the courts have to take into account that both the legal position of the landlord and the tenant's right of possession derived from the landlord are protected by the constitutional guarantee of property. Generally binding considerations are prohibited in this respect.
However, the standardised circumstances of Section 573 (2) of the German Civil Code (Bürgerliches Gesetzbuch - BGB) give an initial indication of the necessary assessment and weighing of interests. If the landlord wants to use the flat himself for comprehensible and reasonable reasons - exclusively or predominantly - for residential purposes or if he wants to make it available to the relatives mentioned in the law for this purpose, a serious decision to use the flat is already sufficient for the landlord to have a priority interest in obtaining the flat (Section 573 (2) no. 2 BGB). In contrast, the law only grants priority to a landlord's economic interest in exploitation - supported by comprehensible and reasonable reasons - e.g. through sale or demolition for a new building, in exceptional cases if the landlord would suffer considerable disadvantages if the tenancy continued (Section 573 (2) no. 3 BGB).
The landlord's interest in using the flat in question for his own (freelance) professional or commercial purposes is, in terms of the interests at stake, regularly to be placed between the aforementioned typified standard cases. In this respect, too, it is not possible to lay down generally binding principles. However, rough guidelines can be formed on the basis of certain case groups:
Thus, the decision of a landlord not only to move into the rented flat for residential purposes, but to pursue a business activity there at the same time (so-called mixed use), is closer to own use pursuant to Section 573 (2) no. 2 BGB, since in such cases he also wants to establish a personal centre of life in the flat. In these cases it will regularly be sufficient that the landlord would suffer a noteworthy disadvantage if he were denied occupancy - which is likely to be the case frequently if the landlord's life and career planning is based on comprehensible and reasonable considerations. The same applies if the mixed use is to be carried out by the spouse or partner of the landlord.
In contrast, cases in which the landlord or his spouse/life partner wants to use the flat exclusively for business purposes show a greater proximity to the termination of utilisation pursuant to Section 573 (2) No. 3 BGB. In view of the fact that the tenant is to be displaced from his spatial centre of life solely for business-motivated reasons, the continuation of the residential tenancy must represent a disadvantage of some weight for the landlord, which may be assumed, for example, if the business activity could otherwise not be carried out profitably or the concrete way of life requires the use of the rented flat (e.g. health restrictions, care of children or persons in need of care).
Measured against this, a legitimate interest of the plaintiff in the termination of the tenancy is not given in the present case, because due to the intended use solely for commercial purposes of her husband, the plaintiff would otherwise have had to demonstrate disadvantages of some weight. However, it is not evident that the plaintiff or her husband would suffer an economic loss of some weight or a disadvantage affecting the organisation of the company to a not inconsiderable extent by moving a larger part of the file inventory (some of which dated back thirty years) to other, somewhat more distant premises and that they would therefore be dependent on the intended use of the rented flat - hitherto the personal centre of the defendant's life.
Judgment of the BGH of 29 March 2017 - VIII ZR 45/16
Lower courts:
Charlottenburg Local Court - Judgment of 19 January 2015 - 211 C 381/13
Berlin Regional Court - Judgment of 13 January 2016 - 18 S 74/15
Source: Press release of the Federal Court of Justice of 29.03.2017
Goldberg Attorneys at Law 2017
Attorney at Law Michael Ullrich, LL.M. (Information Law)
Specialist lawyer for information technology law
E-mail: info@goldberg.de
