A cosmetic repair clause is not valid even if the new landlord undertakes to carry out cosmetic repairs.
Nothing changes with the German Federal Court of Justice’s new ruling (ruling dated 22.08.2018, Az. VIII ZR 277/16). The Court continues to uphold to its landmark ruling (ruling dated 18.03.2015, Az. VIII ZR 185/14), which states that passing on the duty of cosmetic repairs to the tenant under the tenancy agreement is invalid if the rented premises are handed over to the latter without having undergone renovation or in need of renovation. This also applies if no appropriate compensation has been granted. A renovation agreement concluded between the previous tenant and the new tenant does not change this.
The case: The previous tenant had taken over the rented premises from the landlord in a non-renovated condition. When he moved out, he concluded an agreement with the new tenant to take the items remaining in the flat. A compensation payment was agreed and the obligation to carry out the renovation work was established.
When moving out, the tenant carried out the cosmetic repairs – but not to the full satisfaction of the landlord. He demanded the costs incurred for the repair work. The tenant, however, was of the opinion that the cosmetic repair clause was invalid because the flat had been handed over non-renovated, or rather in need of renovation. This was irrelevant in the landlord’s view. He referred to the renovation agreement concluded between the previous tenant and the new tenant.
The Federal Court of Justice ruled in favour of the tenant. According to the Court, the landlord cannot derive any obligation of the tenant from the agreement, as the bilateral agreement is limited only to the parties involved, i.e. the previous tenant and the new tenant.
An ineffectively agreed cosmetic repair clause can therefore become expensive for the landlord. The landlord must bear the full cost of cosmetic repairs himself.
The Federal Court of Justice further strengthens the tenants’ rights with this ruling, which landlords must take into account. In the past, the Court has already issued a number of rulings that are detrimental to landlords. Landlords must therefore be careful when drafting standard form tenancy agreements. In concrete terms, it is advisable to take a close look at the following:
Landlords should ensure that such terms are “flexible”. This means that the tenant is only obliged to carry out cosmetic repairs if the (worn) condition of the rented premises requires it.
Furthermore, agreements between new tenants and previous tenants generally do not favour the landlord. For this reason, the landlord would need to be part of a tripartite agreement. It remains to be seen whether the Federal Court of Justice will affirm the tenant’s obligation in such a caseSave as PDF
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