Leasehold law

Before any claims or rights concerning notices of termination, reduction of rent for cause or remedy of defects or deficiencies can be asserted at all, a lawyer who is faced with issues of leasehold law will have to find out and determine which type of lease agreement  was actually agreed upon between the parties according to their own intentions. The difference between a leasehold and a tenancy basically consists in that only objects can be let or rented, whereas leaseholds apply not only for objects or aggregates of things but also for rights (e.g. a lease of hunting ground) or aggregates of rights (enterprises) . A tenant’s only right is the right to use the rented object, while a leaseholder has the right to not only use the leasehold but to also attain a benefit or yield  as a result of the management or husbandry of the leasehold concerned. Problems are frequently met in the differentiation between rent and leasehold of business premises. Rent of business premises relates to the mere letting and use of the premises for a purpose which has been defined by way of a contract. A leasehold of business premises  additionally includes the furniture and the furnishings which are suited for benefit-producing purposes and which are also let to the leaseholder. In cases where empty locations are let this will have to be understood to be rented locations  regardless of the wording or definition which has been used therefore by the contracting parties. If a location is let with furnishings or equipment which serves as a direct source for profits or income this is to be understood as a leasehold. When lawyers are consulted and asked for legal advice they often have to differentiate whether it is not only the use of the premises which is allowed to the tenant or whether yet other  services or equipment were provided which are suited to permanently enhance the business concerned. Unless the provisions of Section 582 and the following Sections of the German Civil Code stipulate otherwise the statutory provisions concerning rented premises are applicable for leaseholds mutatis mutandis. Nevertheless There are a few special aspects which ought to be mentioned.: As a matter of principle the maintenance of the inventory is deemed to be the leaseholder’s responsibility. 

In cases where the life of a leasehold is not specified in the contract notice of termination may only be given for the end of one leasehold year; it must be given at the latest by the third working day  of the six months period at the end of which the leasehold is to come to an end.

In the event where the leasehold object will be returned too late the lessor is entitled to a compensation  for loss of use.

As far as the lessor’s claim for return and replacement of missing inventory is concerned this claim and right is subject to a limitation period of six months. Special legal provisions govern the  lease of forestry and agricultural land, the leasehold of allotment gardens (Federal German

Allotment Garden Act) and the lease of chemist’s shops (German Chemist Shop Act). Thus questions pertaining to leasehold law issues  are frequently coming up with regard to contracts concerning the use of premises as pubs, restaurants or hotels with their inventory, furnished chemist’s shops or petrol stations,  furnished camping sites, car parks, horse stables or the operation  of a golf course. Our office’s two certified expert lawyers who are specialists in tenancy and condominium law issues will be glad to give you advice and assistance.


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