Fourth German Bureaucracy Relief Act adopted – commercial lease agreements in text form

On 15 March 2024, the German government presented the draft of a ‘Fourth Act to Relieve Citizens, Business and the Administration of Bureaucracy (Fourth German Bureaucracy Relief Act – Viertes Bürokratieentlastungsgesetz)’. After deliberation in the Bundestag (BT-Drucksache 20/11306), the bill was introduced to the Bundesrat, which, in a statement dated 26 April 2024, demanded significant changes and improvements, including to the proposed written form provisions of Section 550 of the German Civil Code (Bürgerliches Gesetzbuch, BGB). The Federal Ministry of Justice addressed these concerns with a ‘Formulation aid for the amendment to the government draft’ for proposed changes, which has been available since 19 July 2024. Today, 26 September 2024, the bill has now been passed in the Bundestag.

The main change with regard to the statutory written form requirement is that the application conditions of Section 550 BGB, the content of which remains unchanged, will be modified by an addition to Section 578 (1) BGB, and will now only apply with the proviso that a rental agreement that is not concluded in text form – instead of, as previously, in written form – for a period longer than one year is deemed to have been concluded for an indefinite period. Another significant adjustment requested by the Bundesrat, namely the general restriction of the termination option to the person of the purchaser, was no longer taken into account in the adopted version.

The change to text form will apply in accordance with the newly inserted ‘transitional provision for the written form requirement for commercial lease and land lease agreements’ in Article 229 from the date of entry into force of the Fourth German Bureaucracy Relief Act. Existing lease agreements will only be subject to the new regulation 12 months after the Fourth German Bureaucracy Relief Act comes into force, or in any case when an amendment is agreed.

The amendment will conceivably cause problems in practice. For example, the question may initially arise during a transitional phase as to what exactly will be covered by the ‘agreement of an amendment’. This will most likely not refer to the implementation of, for example, index-linked rent adjustments; however, a different approach may be conceivable in the case of an adjustment of advance payments for operating costs.

Furthermore, the question arises as to how to proceed in cases where a landlord wishes to adhere to the written form on the basis of a contractual agreement – e.g. for documentation purposes for large properties – and thus does not wish to agree to the text form as defined in the new wording of Section 578 (1) BGB. However, since a document created in written form necessarily fulfils all the requirements of the (simpler) text form, the scope of application of Section 578 (1) BGB should also be opened up for contracts concluded under an arbitrary written form.
No changes are to be expected in the design of the addenda. This is because addenda to a lease agreement concluded in text form must continue to contain all the relevant contractual agreements between the parties and document the completeness of the contractual agreements. Accordingly, we do not expect any changes to the requirement of ‘unity of the instrument’