Operating costs in commercial leases

In principle, the law in Section 535 (1) BGB assumes a so-called gross or inclusive rent: the landlord bears all costs incurred for the rental property, from heating and water consumption to repainting the walls. As this is neither in the interests of the landlord nor does it correspond to legal reality, the obligation to bear the additional operating costs incurred through the use of the rented property is transferred to the tenant almost without exception in the contract. There are a few stumbling blocks in commercial leases that need to be avoided.

Stumbling block no. 1: The contractual agreement of the cost items

A first obstacle to the effective transfer of the obligation to bear operating costs concerns the contractual agreement itself. Legislation and case law give the contracting parties a great deal of freedom in this respect. Nevertheless, all costs to be borne by the tenant must be specified in the contract. By drawing up a catalog of apportionable operating costs in the so-called Operating Costs Ordinance, the legislator has created an easily manageable regulation that can also be used in commercial leases by referring to this ordinance. However, this regulation often falls short, as it is based on the costs typically incurred in multi-family residential buildings. If the commercial tenancy agreement refers solely to the Operating Costs Ordinance, costly items such as the operation of air conditioning systems, fire protection equipment such as sprinklers or an automatic fire department activation system or even an alarm system are excluded and must be borne in full by the landlord. In this case, it is important to take a close look at the cost items incurred when drawing up the contract and to adapt the regulation on the operating costs to be borne individually.

Stumbling block no. 2: The extent to which costs are passed on

Even if case law tends to take a more generous view of agreements on operating costs in commercial leases, the limits that ultimately result from the regulations on general terms and conditions must be observed. The principle of transparent contract drafting in particular imposes a limit on contract drafting. For example, blanket references such as "all costs incurred" or supposedly more detailed references such as "all necessary and customary insurance", which are often encountered in practice but have been rejected by case law due to a lack of transparency, are prohibited. Caution is also required if there are several tenants in a property who share certain areas. In this case, case law considers provisions on the pro rata transfer of the costs incurred for the maintenance and repair of these communal areas to be "boundless" and therefore invalid if a binding upper cost limit is not specified.

Stumbling block no. 3: The certainty of settlement

In Section 556 (3) of the German Civil Code (BGB), the legislator has made a clear regulation on the settlement of operating costs: A statement of operating costs must be submitted within twelve months of the end of the billing period, usually the calendar year. If the deadline is not met, subsequent charges by the landlord are generally excluded. In turn, the tenant must raise any objections within twelve months of receiving the statement and is also generally excluded from raising them if the deadline is missed. However, this clear legal regulation does not apply to commercial tenancies. As case law has also abandoned the view that prevailed for decades, according to which an unconditional settlement of the balance from an operating cost statement is binding, it may still be possible to assert additional claims or reclaims years after the end of the billing period. This applies in particular to any claims for repayment by the tenant due to an incorrect agreement on operating costs, which can be asserted within the limits of the general limitation periods. The period begins at the earliest upon receipt of the landlord's statement of account, which in turn is often only available some time after the end of the accounting period, for example because invoices from tradesmen etc. have not yet been received. In this case, the landlord is often confronted with considerable claims for repayment, which could have been avoided if the contract had been drafted carefully.

From the landlord's point of view, care must be taken when drawing up the tenancy agreement to agree the apportionable operating costs. The "off-the-peg" solution all too often leads to a rude awakening. Conversely, it is worthwhile for tenants of commercial properties to take a closer look at the statement and the contractual agreements even years later. It is not uncommon for "surprises" to arise here.