Renovations, Cosmetic Repairs and What to do when ending a lease conctract
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Issue II © AllGrund 2008
Notes for landlords and tenants
Certainly one of the most discussed subjects and one that concerned tenants as well as landlords most in the past two years is that of renovations (redecorations or cosmetic repairs, especially when a tenant leaves after contract expiry). Non-transparent as the legal issue may already seem to Germans, its nearly worse than a ride over the Dead Sea for a non-German speaking foreigner who came to Germany to work hereand not deal with issues about painting houses.
What advice can be given to the parties concerned theses days in view of latest Court sentences about the matter, in regards to new or existing rental contracts? Basically its less difficult than it may seem. Having a look at the most authoritative case law of the Federal Court of Justice one finds four categories of clauses concerning cosmetic repairs in the usual formal rental contracts:
Clauses on final redecoration:
Any clauses of final redecoration declared by a set form are invalid due to unreasonable disadvantage, as far as they bind the moving out tenant to conduct cosmetic repairs independently from the condition of the flat and the time it has been renovated last. This holds true for set form isolated obligations of final redecorations (Federal Court of Justice of 12 Sept. 2007, file reference VIII ZR 316/06) but also in case this gets aggregated with the shift of the periodic duty to cosmetic repairs (Federal Court of Justice of 14 May 2003, file reference VIII ZR 308/02). If the rental contract contains a clause of obligation of the tenant to renovate during his time of tenancy as well as when moving out, this aggregation makes the whole arrangement invalid. The result is that the tenant doesn’t need to do any renovation works at all. (Three cheers to the tenants!)
Fixed time limits
The same is also valid if the rental contract sets fixed time limits. In case the rental contract contains a bond for the tenant to conduct cosmetic repairs within a given time period then this makes the clauses of cosmetic repairs invalid (Federal Court of Justice of 23 June 2004, file reference VIII ZR 361/03). Fixed time limits arise from an agreement based on which the renovation has to be done “latest”, “at least” or “within” (certain time periods). They can also ensue from a mere statement such as “bound to”, however. This even holds true when the fixed schedule with the fixed formulation is settled in a separate paragraph.
Clauses which prescribe certain ways of fulfillment of the redecoration work
These are notably dangerous for the landlord, for they generally lead to the utter invalidity of the transfer of duty to conduct cosmetic repairs. In this regard the Federal Court of Justice wrote the clause “The tenant may only depart from the previous way of fulfillment with the agreement of the housing company”, from the decision of 28 March 2007 (file reference VIII ZR 199/06). This regulation will be found especially in the contracts of long-term use and rental contracts of building societies. But also clauses of renovations, prescribing a certain way of decoration, such as “The painting works are to be done with woodchip wallpaper, and painted in white”, make the whole bond to conduct cosmetic repairs invalid.
The problems in regard to binding the tenant to conduct a final renovation at the completion of his tenancy has lead to proportional clauses in the past. Subject of such clauses are the tenants duty to take care of proportionate costs at the ending of the contract in case cosmetic repairs are not due yet based on the agreed upon schedule. Hereby the amount of the proportionate costs the tenant has to come up with gets determined by schedule according to the proportion of the time period since the last time cosmetic repairs had been done or since the time the rental contract was started. Has such a clause been stipulated effectively then the landlord normally has a right to the tenant’s participation in the next cosmetic repairs that need to be done. Yet also the proportional clauses hold considerable risks as the decisions of the Federal Court of Justice from 7th March 2007 (file reference VIII ZR 247/05) and from 26 September 2007 (file reference VIII ZR 143/06) show: a proportional clause can only be considered effective if it is not made fixed (i.e. setting fixed periods of time for such renovations), if the calculation of the proportion is transparent and if the flat was renovated at the time the tenant moved in.
Federal Court of Justice
The jurisdiction of the Federal Court of Justice makes clear that the housing industry will be better off, when doing a new rental contract, to reduce clauses on renovations down to a minimum and to eliminate any other agreements, annotations and/or guidelines entirely. This also holds true for time limits usually laid out in the hitherto existing rental contracts, which the Federal Court of Justice had considered to be generally reasonable in a fundamental judgment from the year 1987. Thus one has to bear in mind that it might be that these set renovation periods do not conform today’s standards (other material, better building substances) anymore, which in turn holds the risk – at least in the case of a new rental contract – that this also leads to an utter invalidity of the duty to conduct renovations, at least in conjunction with a proportional clause.
From the point of view of a tenant it seems that most tenants are at a great advantage now. When they have old contracts which have any of the flaws outlined in this article, yes they may be lucky. On the other hand fairness is still indicated: if a flat was handed over freshly renovated to the tenant some years back, and if it was agreed in the contract that the tenant has to do the cosmetic repairs, he should hand it back as he received it.
In general, cosmetic repairs and renovations are duty of the landlord but are allowed by German tenancy law to be enjoined on the tenant. This must me agreed in the tenancy contract, and it can be done by a simple clause as “The tenant has to do the renovations or cosmetic repairs”.
Other than cosmetic repairs or general beautification real damages done to an apartment must be repaired or fixed by the tenant or else the landlord has the right to get that done at the tenants expense. Such damages can be heavy marks in the wooden floor, damaged wallpaper, mold on the wall due to bad airing habits, holes in walls or ceilings (also those made by putting up pictures or lamps; they must be property closed with any dowels removed). Admittedly a single case may not always be easy to judge but with common sense and communication usually we have managed to settle any arguments about this issue with our clients – tenants as well as landlords – well and fair in the past.
Nothing in this article is to be construed or understood as legal advise. For any legal assistance consult a solititor who is familiar with the German rental law. The whole purpose of these notes is to make life a bit easier and understand the sometimes complex matter of rights and duties of tenants and landlords.
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