Ineffective cosmetic repair clause does not entitle to rent increase

The VIII. The VIII Civil Senate of the Federal Court of Justice (BGH), which is also responsible for residential tenancy law, had to decide whether a landlord can demand a surcharge on the local comparative rent in the context of a rent increase pursuant to Section 558 (1) sentence 1 of the German Civil Code (BGB) if a clause contained in a form tenancy agreement obliging the tenant to carry out cosmetic repairs is invalid.

The decision was essentially based on the following facts: The defendant is the tenant of a (non-price-linked) flat of the plaintiffs. The form tenancy agreement contains a clause obliging the tenant to carry out the cosmetic repairs "regularly" within certain periods. According to the case law of the Federal Court of Justice, cosmetic repair clauses are invalid if they impose a renovation obligation on the tenant according to a rigid schedule without regard to the condition of the flat.

The plaintiffs, who consider the clause used by them to be invalid according to this case law, offered the defendant the conclusion of a supplementary agreement with which the obligation to carry out the cosmetic repairs by the tenant was to be regulated otherwise. As the defendant did not agree to this, the plaintiffs demanded the consent to increase the rent by a surcharge on the local comparative rent for the cosmetic repairs to be carried out by them as landlords in the amount of € 0.71 per sqm per month. This corresponds to the amount that may be applied to the cost rent in publicly subsidised housing if the landlord bears the costs of the cosmetic repairs (section 28, paragraph 4, sentence 2 of the Second Calculation Ordinance). The defendant refused to agree to an increase of the rent by this surcharge.

The district court granted the claim for consent to a monthly rent increase of € 0.71 per square metre. On appeal by the defendant, the Regional Court dismissed the action insofar as the plaintiffs had demanded consent to a monthly rent increase of more than € 0.20 per sqm; it dismissed the further appeal. Both parties challenged this judgement with the appeal allowed by the court of appeal. The plaintiffs objected to the limitation of the surcharge to an amount of € 0.20 per sqm per month. The defendant continued to pursue its motion to dismiss the action in its entirety. The defendant's appeal was successful; the Federal Supreme Court dismissed the plaintiffs' appeal.

The Federal Court of Justice has ruled that the landlord is not entitled to demand a surcharge on the customary local rent if the tenancy agreement contains an invalid clause on the transfer of cosmetic repairs. Pursuant to Section 558 (1) sentence 1 of the German Civil Code, the landlord may only demand consent to increase the rent up to the local comparable rent; the law does not provide for a surcharge in excess of this. Nor could it be reconciled with the system of comparative rent envisaged by the legislator. In this respect, the respective market conditions are the yardstick for the justification of a rent increase. The requested surcharge, however, is based on the costs for carrying out the cosmetic repairs. The recognition of a surcharge would therefore mean that in non-price-linked rented housing a cost element would be used to justify a rent increase without regard to whether these costs would be enforceable on the market. The fact that the Senate has assumed that the transfer of cosmetic repairs to the tenant is a payment (BGHZ 105, 71, 79) cannot justify a different decision. For no standards can be derived from it for determining the rent achievable on the market in the specific tenancy.

Nor can the plaintiffs demand the claimed rent increase by way of supplementary interpretation of the contract pursuant to §§ 133, 157 BGB, because a gap created by the invalidity of a contractual clause only requires completion if dispositive statutory law is not available for this purpose and the deletion without replacement of the invalid clause does not offer an appropriate solution that takes into account the typical interests of the contracting parties. These requirements are not met here. According to the statutory provision, the landlord has to bear the burden of the cosmetic repairs (§ 535 (1) sentence 2 BGB). If the same result occurs as a consequence of an ineffective contractual shifting of the renovation burden to the tenant, this does not constitute a regulation contradicting the typical interests of the contracting parties.

Similarly, the demand for a surcharge on the local comparative rent cannot be based on a discontinuance of the basis of the contract (§ 313 BGB). There is no room for taking into account disturbances of the basis of the contract if, according to the statutory regulation, the party invoking the disturbance of the basis of the contract has to bear the risk. The risk of the invalidity of form clauses has to be borne by the party using such clauses according to section 306 (2) BGB. This is because according to this provision, in the event of the clause being ineffective, the contract is governed by the statutory provisions that would otherwise apply. This means here that in the absence of an effective passing on of the cosmetic repairs, the plaintiffs as the user of the clause have to bear the maintenance burden in full according to section 535 sub-section 1 sentence 2 BGB.

Judgment of the Federal Court of Justice (BGH) of 9 July 2008 - VIII ZR 181/07

Previous instances: Düsseldorf Local Court (AG Düsseldorf) - Judgment of 25 August 2005 - 51 C 3169/05 Düsseldorf Regional Court (LG Düsseldorf) - Judgment of 16 May 2007 - 21 S 375/05

Source: Press release No. 131/2008 of the Press Office of the Federal Supreme Court of 9 July 2008, Herrenstr. 45 a, 76133 Karlsruhe, Tel. 0721-159-5013, Fax. 0721-159-5501, E-mail

Goldberg Attorneys at Law, Wuppertal - Solingen 2008

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