The Bureaucracy Relief Act IV (BEG IV) will come into effect on January 1, 2025, introducing a significant change for Commercial Leases.
Commercial lease agreements with a term exceeding one year are currently subject to the strict requirement of written form under § 550 BGB. If this requirement is not met, the lease is automatically deemed to be concluded for an indefinite period, allowing for early termination despite an agreed fixed term.
However, significant changes are on the horizon. While the written form requirement for residential leases remains unchanged, commercial lease agreements will soon require only text form. This change will simplify and accelerate contract execution, particularly in a digital environment, as agreements can now be finalized via email or other text-based formats without the need for physical signatures.
Transitional Provision for Existing Agreements
The new text form requirement will not only apply to commercial lease agreements concluded after the introduction of BEG IV but also to those already in place. To ease the transition, the law includes a 12-month transitional period, during which the current written form requirement will continue to apply. This transitional period ends on December 31, 2025.
After this date, existing commercial leases will only be terminable for violations of the text form requirement. Therefore, if you intend to terminate an existing lease agreement due to a breach of the written form requirement, it is crucial to act promptly before the transitional period expires.
What Should You Do Now?
For new leases: Prepare to adapt your processes to accommodate the text form requirement, which will streamline and modernize commercial leasing practices.
For existing leases: Review your contracts to identify any potential breaches of the written form requirement. If termination is a consideration, ensure you take action within the transitional period.
The shift to text form is a welcome modernization that reflects the growing prevalence of digital processes. However, businesses should take proactive steps to ensure compliance with the new framework and protect their rights under existing agreements.
If you need assistance navigating these changes or reviewing your lease agreements, feel free to reach out to our team for guidance.
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