In order to cushion the economic burdens of the corona crisis on private and commercial tenants, the Bundestag passed a "Law to mitigate the consequences of the COVID-19 pandemic in civil, bankruptcy and criminal procedural law" on Wednesday, March 25, 2020. This includes, among other things, regulations that are intended to protect tenants and tenants against extraordinary termination of their tenancy, provided that they fall into arrears as a result of COVID-19.

• Rental debts that arise from April to the end of June must not be grounds for termination, provided the tenant believes the connection between the effects of COVID-19 and the accrued rental arrears.
• The tenant has until June 30, 2022 to pay the outstanding rent.
• These regulations could be extended up to two times: initially until September 30, 2020 and - with the consent of the Bundestag - beyond, provided that the impairments caused by COVID-19 continue after the first extension.

The details of these regulations are explained in more detail in our Client Alert and are generally relevant for all companies that are economically affected by the COVID 19 pandemic, whether as a tenant or as a landlord, in Germany.

I. INTRODUCTION

The increasing spread of the respiratory disease COVID-19 caused by the SARS-CoV-2 coronavirus has had far-reaching effects on public life and practically all economic sectors in Germany within a few weeks. It is not yet clear how serious the damage will be caused by the pandemic that is just beginning. However, it is already certain that COVID-19 will be a major economic challenge for many - both private individuals and entrepreneurs. To alleviate these burdens, the federal government published a “Law to mitigate the consequences of the Covid 19 pandemic in civil, bankruptcy and criminal procedural law” last Monday, which was passed by the Bundestag on Wednesday, March 25, 2020. Among other things, this includes regulations,

II. THE REGULATIONS IN DETAIL

The draft law provides that landlords cannot terminate their tenants due to rent arrears between April 1 and June 30, 2020, provided payment is not made in whole or in part due to the impact of the COVID-19 pandemic. This should apply equally to both residential and commercial tenancies, as well as leases. If not explicitly clarified in the draft, the regulation should also include the ancillary costs, so that even such arrears from this period cannot justify extraordinary termination. Terminations for reasons that are not directly related to COVID-19 remain possible without restrictions.

The tenant must make the connection between the effects of COVID-19 and the accrued rental arrears credible. In abstract terms, this means that he has to present facts that show that it is likely that he will not pay his rent due to the effects of COVID-19. This will be possible for commercial tenants above all by proving (e.g. by submitting official orders) that the operation of their company is considerably restricted or completely prohibited by official measures that have been issued in connection with COVID-19. This currently affects restaurants or hotels, for example, the operation of which is prohibited in many federal states for tourism purposes. But other ways of making credibility by means of appropriate evidence or an affidavit are also possible. In addition to the clear cases of closure by official order, tenants can also rely on the termination ban, who lack essential income as a result of the COVID-19 pandemic. In this respect, it should also be possible to grant them discretion as to which claims they serve primarily. Instead of taking oaths, apartment tenants can affirm that they have lost the income required to pay the full rent in connection with COVID-19. In this respect, it should also be possible to grant them discretion as to which claims they serve primarily. Instead of taking oaths, apartment tenants can affirm that they have lost the income required to pay the full rent in connection with COVID-19. In this respect, it should also be possible to grant them discretion as to which claims they serve primarily. Instead of taking oaths, apartment tenants can affirm that they have lost the income required to pay the full rent in connection with COVID-19.

The draft law also provides that the tenant, who has successfully demonstrated the link between his rent arrears and the effects of COVID-19, has until June 30, 2022 to pay the outstanding rent. During this time, he is in arrears and the corresponding default interest accrues, but notice of termination due to the arrears that arose between April 1 and June 30, 2020 remains unaffected until then. The tenant has until 30 June 2022 to pay the rent. If he does not pay in full by June 30, 2022, an extraordinary termination due to late payment can also be made for payments that have not been made during this period under the usual legal requirements.

These regulations in favor of economically affected tenants should be able to be extended twice: First, the Federal Government should be authorized to also rule out extraordinary termination for rental arrears that arise due to COVID-19 by September 30, 2020 in accordance with the rules described above. According to this, the federal government should be able to determine a further extension beyond September 30, 2020 if the impairments caused by COVID-19 continue after the first extension. However, this second extension would require the approval of the Bundestag.

To the detriment of the tenant, no deviations from these regulations may be made.

III. OUTLOOK

The regulations described are intended to prevent the COVID 19 pandemic from temporarily losing income, tenants or tenants losing the basis of their employment and temporarily shift this economic burden entirely to the landlord. This is a decision that is politically wanted and justified as an act of solidarity, whose economic meaningfulness and balance could be disputed. However, the landlords do not lose their right to full payment of rent and utilities; they are also entitled to payment of the default interest at the market from the due date of the rent.