10. Feb 17

BGH: GbR can terminate tenancy agreement if there is a need to make personal use of the property

A Gesellschaft bürgerlichen Rechts (GbR) [a type of German partnership constituted under civil law] is able to terminate a tenancy agreement if it needs to make use of the property itself. That was the verdict of the Bundesgerichtshof (BGH), Germany’s Federal Supreme Court, in its judgment of December 14, 2016 (Az.: VIII ZR 232/15).

GRP Rainer Lawyers and Tax Advisors in Cologne, Berlin, Bonn, Düsseldorf, Frankfurt, Hamburg, Munich, Stuttgart and London conclude: It is common knowledge that landlords are able to terminate a tenancy agreement if they need to make use of the property themselves. The point at issue in the case in question was whether a GbR is also allowed to terminate a tenancy agreement for the same reason. The BGH has since clearly addressed this issue with its recent ruling. According to this, a GbR is able to terminate a tenancy arrangement if one of the partners or one of his relatives needs to make personal use of the property.

In the instant case, a GbR consisting of four shareholders had terminated a tenancy agreement and justified this with reference to the daughter of one of the shareholders needing to make personal use of the property. However, the tenants who had hitherto been living in the five-room apartment refused to accept the termination. The dispute was heard by various courts. Both the Amtsgericht and the Landgericht München (District and Regional Courts of Munich) dismissed the action for eviction, stating on the one hand that the GbR had omitted to offer the tenants a vacant two-room apartment and that a GbR is prohibited for reasons relating to the protection of tenants from terminating a tenancy agreement because of a personal need to make use of the property.

Nonetheless, the BGH took a different view. The fact that the two-room apartment had not been offered as an alternative did no render termination ineffective. It went on to say that this merely constituted a breach of contractual obligations, which could potentially give rise to damages claims.

The Court also held that a GbR is entitled to terminate if there is a need to make personal use of the property. It ruled that a GbR partner declaring that he needs to make personal use of a property is comparable to joint ownership or a community of heirs on the key points, it also being possible to issue notice of termination in relation to these due to a need to make personal use of the property. The Court concluded that even a lack of clarity regarding the circumstances of the partnership could not justify placing a GbR in a less favourable position than a co-owner or community of heirs.

This ruling delivered by the BGH has bolstered the rights of GbRs. At the same time, it has also opened another door to communities of heirs. When properties are passed on to communities of heirs, this frequently gives rise to problems. Establishing a company or partnership can potentially make it significantly easier to manage the properties, as the provisions of company law afford more possibilities here.

Lawyers who are versed in the fields of company law and succession law can offer advice.

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