Germany: Owner’s claims against main tenant and subtenant in case of termination of main lease agreement

28 October 2014

Elie Kaufman

In its decision dated 14 March 2014 (V ZR 218/13) the German Federal High Court of Justice (Bundesgerichtshof, BGH) addressed the possible claims of an owner against the main tenant, as well as the subtenant in case of the termination of the main lease agreement. In particular the BGH ruled that if the subtenant has only parts of the premises in its possession, the owner can only claim for compensation of the benefits regarding such parts from the subtenant.

I. Claim for compensation of the obtained benefits

If the tenant refuses to return the lease object after the termination of the lease, the owner has a claim for compensation against the tenant for the duration of the withholding in the amount of the agreed rent or the local reference rent, sec. 546a German Civil Code (Bürgerliches Gesetzbuch, BGB).

In relation to the subtenant, the owner has no contractual relationship. Accordingly, the compensation claim cannot be based on § 546a BGB. If the subtenant is in bad faith, that is if it is informed about the termination of the main lease agreement, the owner may however claim compensation for the obtained benefits, which are the benefit of the use of the premises, according to sec. 987, 990 para. 1 BGB.

II. Facts

The owner let a building to the main tenant. The main tenant partially let the building to the subtenant. The owner terminated the main lease agreement with the main tenant for good cause. In the following, he obtained and enforced an eviction judgement against both the main tenant and the subtenant.

The owner claimed the same amount of compensation for obtained benefits from both the main tenant and the subtenant. The district court (Amtsgericht) sentenced the main tenant and the subtenant as joint debtors to a payment in the same amount. The regional court (Landgericht) reduced the payment obligation of the subtenant to an amount actually corresponding to the extent of the benefits obtained by the subtenant.

III. Decision of the BGH

Although the BGH reversed the decision of the regional court and remitted the case for a new trial because it was not clarified yet, whether the subtenant had in fact rented the entire building or only a part thereof, the BGH explicitly confirmed the legal opinion of the regional court in fundamental terms. Against a subtenant who rents only a part of a building, a claim for compensation of obtained benefits according to sec. 987, 990 para. 1 BGB can exist only in the amount that corresponds to the extent of the subtenant's possession. Such "actually obtained benefits" correspond to the objective rental value of the space rented by the subtenant.

Although in the present case it did not have to be decided on such question, the BGH also clarified that the owner may have, in addition to the claim for compensation of benefits, a claim for damages due to delayed return of the premises  in accordance with sec. 990 para. 2, 286 BGB. Depending on the facts of the respective case, such a claim may be wider than the claim for compensation of obtained benefits; it could for example also include damages for loss of rent, if due to the delayed return of the premises held by the subtenant, a rental of the entire object was not possible.

From the main tenant, the owner may claim payment of the agreed rent or the local reference rent pursuant to sec. 546a BGB. In addition, the owner may claim for compensation of the obtained benefits resulting from the sublease, pursuant to sec. 987, 990, para. 1 BGB, for example the sub-rent paid by the subtenant to the extent such sub-rent exceeds the compensation claim pursuant to sec. 546a BGB.

The claims for compensation of obtained benefits of the owner against the subtenant and the main tenant have different contents and can vary, for example, if the objective rental value does not coincide with the rent agreed between the subtenant and the main tenant. The owner is entitled to claim against the main tenant and the subtenant at the same time until he is completely satisfied. Although due to the different contents of the claims, the main tenant and subtenant aren’t joint debtors within the meaning of sec. 421 et seq. BGB, to avoid a prohibited double satisfaction of the owner sec. 421 et seq. BGB have to be applied by analogy, so that the performance by one debtor also is effective in favour of the other.

IV. Practice Notes

For the eviction of a sublet property after termination of the main lease agreement an eviction judgement against the main tenant alone is not sufficient. Instead it requires an eviction judgement against all possessors of the leased property, including the subtenant.

To avoid a double burden from the perspective of the subtenant it is advisable to arrange with the main tenant that payment can be made with debt releasing effect directly to the owner, in case the owner raises claims against the subtenant.

From the perspective of the owner, in cases of delayed eviction, it is advisable to raise claims (as the case may be in court) for payment against both the main tenant and the subtenant. As the case may be, the owner may claim for damages against the subtenant, if a new letting of the entire property is not possible because of the possession by the subtenant.

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