On October 30, 2024, the Fourth Bureaucracy Reduction Act (BEG IV) was published, which will come into effect on January 1, 2025. One of the key changes concerns commercial lease law, specifically the provisions related to the written form requirement for long-term lease agreements. These changes bring some relief for both tenants and landlords of commercial properties, but also present new challenges.
The Importance of § 550 of the German Civil Code (BGB) in Commercial Lease Law
Until now, commercial lease agreements were governed by the statutory provisions of § 550 of the German Civil Code (BGB). If these agreements were concluded for a period longer than one year, the regulation required compliance with the legal written form until the enactment of the new law. This meant that all essential contractual elements—such as the names of the parties, a detailed description of the leased property, the duration of the contract, and the rent amount—had to be documented in writing in a deed and signed by both parties.
Failure to comply with the written form requirement led to significant legal consequences: in such cases, the contract was considered to be concluded for an indefinite term, meaning that it could be terminated by either party at any time without cause (§ 580a BGB). This posed a major economic risk, as long-term lease agreements could suddenly end prematurely, creating planning uncertainty for both tenants and landlords.
This risk was a significant disadvantage, particularly for businesses that rely on long-term leases, such as project developers of wind farms and solar parks.
The New Regulation: Introduction of Text Form Instead of Written Form
The previous requirement for written form under § 550 of the German Civil Code (BGB) is now replaced by the requirement for text form, as set out in the newly revised § 578 BGB. According to § 126b BGB, a document only needs to contain a readable statement that identifies the declarant and is stored on a durable data carrier. This includes modern communication methods such as emails, SMS, or even WhatsApp messages.
Impact on Existing Contracts
Upon the law’s enactment, a one-year transitional period applies to existing contracts. During this period, commercial lease agreements entered into before the law’s enactment can still be terminated ordinarily due to a lack of written form, provided this does not constitute a violation of the new text form requirement. However, if existing commercial leases are amended or new commercial leases are entered into during the transitional period, a violation of the text form is required to exercise the termination right. Once the transitional period ends, this regulation will apply to all commercial lease agreements.
Since usage agreements for wind turbines and solar parks qualify as commercial lease agreements, they too are subject to the new text form requirements.
Advantages and Disadvantages of the New Regulation
The shift to the text form offers several advantages:
A key aspect is the reduction of bureaucracy. The previously lengthy processes for drafting and signing paper contracts are eliminated. Lease agreements can now be created digitally and sent via modern communication methods, which can lead to significant time and cost savings.
The ability to manage and conclude contracts digitally not only enhances efficiency but also meets the demands of an increasingly digital business world. The new regulation enables tenants and landlords to respond more flexibly and quickly to market changes and to conclude contracts and amendments more easily.
However, the amendment also brings some challenges.
A potential risk of misuse lies in the fact that digital documents can be altered more easily than physical contract documents. Since a handwritten signature is no longer required, it may be more challenging in practice to prove the authenticity or binding nature of a lease agreement. This could lead to uncertainties, particularly in cases of dispute. Additionally, legal conflicts over the authenticity or content of digitally created contracts could increase, as they are more susceptible to subsequent modifications.
During the legislative process, the Bundesrat also expressed concerns that there is no explicit regulation on whether the text form requires the use of a single data carrier or if referencing is sufficient when multiple data carriers are used. This ambiguity was not resolved by the new regulation itself and could also lead to uncertainties in practice.
Contractual Agreement in Written Form
Despite the legislative change, the parties still have the option to subject their contracts to a contractual requirement for written form. This so-called double written form clause allows the parties to tailor the form requirements according to their own preferences and needs. In this way, the contracting parties can decide whether they wish to choose a stricter form that goes beyond the new text form requirements.
Our Recommendation
The parties to commercial lease agreements should be aware of the potential legal uncertainties and risks. Our recommendation is therefore to use additional security measures such as digital signatures or encrypted communication channels to minimize the possibility of manipulation and ensure the evidentiary value of contracts. Alternatively, the option to agree on written form remains available.
If you have any questions about the topics mentioned above, feel free to contact us – we look forward hearing from you.