GERMANY LAW AND PRACTICE Contributed by: Wolfram H Krüger, Barbara Rybka, Markus Wollenhaupt and Alexander Zitzl, Linklaters
of comfort ( Patronatserklärungen ). For residen - tial leases, German law prohibits a rent security exceeding three months’ net rent. Additionally, the landlord has a lien ( Vermieterp- fandrecht ) over the movable assets of the tenant in the leased premises. This lien has priority over contractual liens. 6.17 Right to Occupy After Termination or Expiry of a Lease The Civil Code gives the tenant the right to occu - py the premises even if the contractually agreed fixed term has ended, if the landlord does not object within two weeks after the official termi - nation date. In this case, the lease will continue, and statutory ordinary termination rights (usually between six and nine months) will apply. Parties regularly exclude this provision in lease agree - ments. Leases do not typically contain any fur - ther stipulations to ensure that the tenant leaves on the termination date, as the tenant is obliged to vacate the premises after the lease has ended under statutory law. Therefore the landlord can - not arrange for timely eviction by the tenant in advance but can claim for damages if the tenant does not vacate the property on time. 6.18 Right to Assign a Leasehold Interest The right to sublet to third parties is commonly accepted, and in the case of residential leas - es, it cannot be excluded. Subletting is usually subject to the landlord’s prior written consent which can only be withheld for good cause. The main tenant remains fully liable for rent payment and compliance with other obligations under the lease agreement vis-à-vis the landlord. It is sometimes agreed that the surplus rent gener - ated in the sublease, or a certain percentage thereof, has to be paid out to the landlord. If VAT is payable in addition to rent, subletting is often
permitted only to parties which must pay VAT as well Non-authorised subletting constitutes a serious offence and justifies extraordinary ter - mination of the lease agreement without notice. For transfer of the entire lease agreement to a third party, an agreement involving the landlord, the existing tenant and the new tenant is neces - sary. In commercial leases, a transfer without the landlord’s involvement is sometimes permitted for affiliated companies. 6.19 Right to Terminate a Lease Commercial leases are usually agreed for a fixed term and ordinary termination rights are excluded. Sometimes break options towards a predetermined date are granted to the tenant. The Civil Code grants both landlord and tenant extraordinary termination rights if the other party cannot reasonably be expected to continue the lease, considering all circumstances of the indi - vidual case. The tenant may terminate if: • the property is not handed over on time; • the tenant violates the rights of the landlord by substantially endangering the property; or • if the tenant is in significant rent arrears (for two successive due dates or for payments amounting to at least two months’ rent). The Civil Code also grants both parties the right to terminate the agreement 30 years after the start of the lease, with a statutory notice period of six to nine months. • the tenant is deprived of its use; or • the landlord has increased the rent. The landlord may terminate if:
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