GERMANY Law and Practice Contributed by: Wolfram H. Krüger, Barbara Rybka, Markus Wollenhaupt and Alexander Zitzl, Linklaters
6.4 Typical Terms of a Lease Fixed leases typically run for a period of between five and ten years, and extension options are often agreed. It is possible to negotiate terms of up to 30 years. The landlord is obliged to maintain the premises in the agreed condition – therefore, the landlord must bear all costs for repairs and decora - tion. It is market standard for maintenance and repair work to be undertaken by the tenant at its own cost. In most cases, the landlord remains responsible for structural and major repairs, and the tenant carries out internal repairs and maintenance as well as repairs solely for interior decoration. Case law regards clauses that oblige the ten - ant to repair the roof and structure of the leased premises, to decorate at fixed intervals, to com - ply with unlimited renovation obligations at the end of the term, or to pay for renovation irre - spective of the premises’ actual state at the end of term, to be unfair and invalid. Triple net leases (in which the tenant agrees to pay all real estate taxes, building insurance and maintenance) are generally not permitted unless individually agreed; eg, in sale-and-leaseback transactions. Rent is mainly paid on a monthly basis. In rare cases quarterly, six-monthly or yearly rents are agreed. 6.5 Rent Variation In principle, the parties are free to agree on the amount of the rent and its increase under com - mercial tenancy law. The parties generally agree on rent adjustment systems, such as indexation rent, graduated rent or turnover-linked rent. For
and that is not an operative business outside the financial sector. The German Federal Financial Supervisory Authority ( Bundesanstalt für Finanz - dienstleistungsaufsicht ) supervises German fund managers and investment funds offered by such companies under the provisions of the KAGB. 5.6 Annual Entity Maintenance and Accounting Compliance The annual entity maintenance and accounting compliance costs depend on the individual cir - cumstances of the entity and the property itself. 6. Commercial Leases 6.1 Types of Arrangements Allowing the Use of Real Estate for a Limited Period of Time German law differentiates between Pacht, enti - tling the tenant to use the property and benefit from it, and Miete, which only entitles the tenant to use the property. For example, the leasing of a hotel, including all fixtures and equipment, and the right to operate the hotel is regarded as a Pacht contract. 6.2 Types of Commercial Leases There are no different types of commercial leas - es, apart from the general differentiation previ - ously explained. 6.3 Regulation of Rents or Lease Terms Leases are subject to the Civil Code, which regulates basic contractual matters. Within that scope, contracting parties may freely negotiate the contractual provisions, as long as they do not violate any mandatory law, eg, regulations on the maximum rent payable and its increase for residential leases.
358 CHAMBERS.COM
Powered by FlippingBook