With the passing of the Bureaucracy Relief Act IV (BEG IV) in the Bundestag, far-reaching changes are imminent for commercial leases. These reforms relate in particular to the formal requirements for rental agreements and aim to relieve companies of unnecessary bureaucracy. The decisive innovation: in future, text form will be sufficient for commercial leases – provided that the Bundesrat still approves the law.
Previous legal situation: Written form requirement
Until now, commercial leases with a term of more than one year had to be concluded in writing in accordance with Sections 550, 578, 126 (1) BGB. Failure to comply with this requirement meant that a tenancy agreement could be terminated prematurely, despite a longer fixed term. These strict requirements often led to legal uncertainty, particularly in the case of long-term commercial leases involving high levels of investment.
Even minor errors, such as the absence of a signature or formal deviations, could constitute a breach of the written form requirement. This was a challenge for many companies, as the regulations surrounding written form are complex and cover numerous problem areas.
Purpose of the written form requirement
The main purpose of the written form requirement was to give the purchaser of a property the opportunity to break away from long-term tenancy agreements that they were taking on with the property (Section 566 (1) BGB). As a purchaser could not fully examine the contract if the written form was insufficient, there was the possibility of ordinary termination.
In practice, however, the contracting parties themselves also used breaches of written form to terminate unwanted long-term rental agreements. This bureaucratic formalism was often met with incomprehension – especially from international business partners.
The new legal situation under the BEG IV
On September 26, 2024, the Bundestag passed the Bureaucracy Relief Act IV (BT printed matter 20/11306). It abolishes the previous written form requirement for commercial leases and replaces it with the text form in accordance with Section 126b BGB. This affects contracts with a term of more than one year. If the contract is not in text form, it is deemed to have been concluded for an indefinite period and can be terminated with due notice, as was previously the case for breaches of the written form requirement.
The text form has less stringent requirements: A legible declaration on a durable medium, for example by e-mail, as a PDF or fax, is sufficient. A signature is no longer required as long as the sender is clearly identifiable.
Entry into force and transitional provisions
BEG IV comes into force as soon as the Federal Council approves it and it is published in the Official Gazette. The first day of the quarter following the promulgation marks the start of the new regulation. There will be a one-year transitional period during which existing commercial leases can still be terminated due to a lack of written form. After this period, the new text form requirements will apply to all rental agreements.
Effects on future commercial leases
Companies should pay close attention to the new requirements and record all contractual agreements in text form. Ambiguities about the status of contract negotiations can lead to misunderstandings, so careful documentation is essential. Declarations of intent must be delivered in text form, although proving delivery is a challenge, especially in the case of emails.
Written form required
In order to maintain the previous standard, tenants can agree a so-called optional written form, which stipulates that the contract and all amendments must be made in writing. However, this double written form clause does not offer absolute protection, as it can be revoked by an oral agreement (BGH, decision of January 25, 2017 – XII ZR 69/16).
Effects on due diligence in real estate transactions
In the context of real estate transactions, the introduction of the text form could increase the audit effort, as all e-mail correspondence must also be checked in order to uncover possible ancillary agreements that conform to the text form. Seller guarantees that no such ancillary agreements exist should therefore be included in the purchase agreements in order to minimize the risk.
Conclusion: Bureaucracy reduction through BEG IV
With the introduction of the text form, BEG IV makes it considerably easier to conclude commercial leases. This could significantly increase flexibility and efficiency in day-to-day business. It remains to be seen whether these changes will actually lead to a reduction in legal uncertainty and how quickly all parties involved will adapt to the new requirements. However, the reduction of bureaucracy could take an important step forward in this area.