Commercial leases that are concluded for a period longer than one year must be concluded in writing in accordance with Section 550 German Civil Code (BGB). High demands are placed on compliance with the written form requirement: All essential contractual conditions must be set out in writing, signed, and summarized in a uniform document. Each page does not have to be signed separately; however, the individual pages should be stapled together or otherwise firmly bound together in some way. Annexes (such as site plans) should also be firmly attached to the rest of the document. Whereby, according to supreme court rulings, a firm physical connection of the individual pages of the document is no longer necessary “if their unity is undoubtedly clear” (e.g. from consecutive pagination or numbering). The consequences of a breach of the written form are devastating: despite having agreed upon a fixed term, the lease is deemed to have been concluded for an indefinite period with the consequence that it can be terminated ordinarily (i.e. within a period of 6 – 9 months).

The primary purpose of the written form requirement is to protect the purchaser of the property. Upon acquiring ownership, the purchaser enters into an existing lease as the landlord’s successor in accordance with Section 566 German Civil Code (BGB). The purchaser must therefore be able to obtain information about the content and extent of the obligations transferred to him.

According to current legislative efforts, the statutory written form requirement is to be replaced by the text form. The reason for this is to drive forward the digitalization while maintaining the same level of protection. A legible declaration made on a durable medium in which the person making the declaration is named is sufficient to comply with the text form requirement. For example, an email or text message would satisfy the text form requirement.

It is obvious that the current level of protection would no longer be given under these circumstances: a purchaser would hardly be able to reliably obtain knowledge of the content of the contract, especially as an agreement could then consist of several messages and the boundaries between negotiation and agreement could become blurred. As it is aimed to maintain the current level of protection, the strict requirements for the uniformity of the lease agreement would also have to apply in conjunction with the text form requirement. In practice, this would mean that the lease agreement documentation would no longer have to be signed in person, however, would still have to be drawn up diligently, meaning that the planned legal changes are likely to be marginal. It remains to be seen if and to what extent the draft legislation will ultimately be adopted; a decision is likely to be made in the fall of this year.

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