The XII. Civil Senate of the Federal Court of Justice (BGH) ruled on 12 January 2022 (XII ZR 8/21) on the obligation of a commercial tenant to pay rent in the event of a closure of its retail store due to the Covid 19 pandemic. The plaintiff landlord sought payment of commercial space rent from the defendant tenant for the month of April 2020. The defendant’s textile retail store was closed due to a general order of the Saxon State Ministry for Social Affairs and Social Cohesion to contain the Covid 19 pandemic in the period from 19 March 2020 to 19 April 2020 inclusive.
The Senate first ruled that the applicability of the warranty rights under tenancy law and the provisions of the general law of breach of duty under the German Civil Code was not precluded by Art. 240 Sec. 2 Introductory Act to the German Civil Code (EGBGB).
However, the rent for the period in question had not been reduced pursuant to Sec. 536 (1) of the German Civil Code (BGB) because the closure of the plant based on the aforementioned general order had not led to a defect in the leased property in this sense. This follows from the fact that a pandemic-related closure of operations constitutes an impediment to use which is not based on the quality, condition, or location of the leased property, but relates solely to the risk of use on the part of the tenant. An exemption from the obligation to pay rent could also not be derived from Sec. 326 (1), 275 (1) BGB, since the plaintiff had in any case also performed the service owed by it pursuant to Sec. 535 (1) BGB during the period of the closure of the business. The Senate did not decide whether the provisions of Sec. 326 (1) and 275 (1) BGB were applicable at all even after the rented property had been handed over to the tenant or whether they were superseded by the warranty law under tenancy law. However, in the case of a business closure due to a sovereign measure to combat the Covid 19 pandemic, a claim by the tenant of commercially used premises for adjustment of the rent due to disturbance of the basis of the business pursuant to Sec. 313 (1) BGB could be considered. When examining whether it is unreasonable for the tenant to adhere to the unchanged contract, a general approach is not permitted. All circumstances of the individual case are decisive. For example, the disadvantages suffered by the tenant, such as the drop in sales in relation to the specific rental property, must be taken into account, as well as what measures the tenant has taken or could have taken to avoid the impending losses from the closure of the business. Thus, state benefits that were not only granted in the form of a loan had to be taken into account, as well as any obligations of the tenant to take out business insurance. At the same time, the interests of the landlord must also be considered.