Text form instead of written form - What are the consequences of the Fourth Bureaucracy Relief Act for commercial leases?

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On September 26, 2024, the Bundestag passed the Fourth Bureaucracy Relief Act, which has yet to be approved by the Bundesrat. We explain what parties to commercial leases should know about the upcoming changes.

Initial situation: Written form requirement in commercial leases

If commercial leases are agreed or amended by addendum, the written form requirement under Sections 578, 550, 126 BGB must always be observed. To this end, the essential contents of the tenancy, such as the contracting parties, the subject matter of the tenancy, the amount of rent and the term, must be set out in a document signed by both parties in their own hand. If, on the other hand, essential points of the contract are agreed verbally or by e-mail or are practically lived in deviation from the contract, the tenancy agreement can be terminated in compliance with the statutory notice periods despite the agreed long-term term.

Landlords of commercial premises in particular are therefore confronted with the risk that the commercially significant term of the contract will be drastically shortened by written form defects. The Federal Court of Justice has also abolished the answer that used to be widespread in the practice of drafting rental agreements, namely, to counteract defects in the written form by means of written form clauses. Checking compliance with the written form has always played a particularly important role in the purchase test.

Text form instead of written form according to the Fourth Bureaucracy Relief Act

As part of its efforts to reduce bureaucracy, the German government presented the draft of a Fourth Act to Reduce Bureaucracy (BEG-IV) back in May 2024. Following amendments proposed by the Legal Affairs Committee on September 26, 2024, the draft was passed by the Bundestag and has yet to be approved by the Bundesrat.

Instead of the written form required for tenancy agreements, the draft law introduces the text form for commercial tenancies, among others. Section 126b BGB requires the text form to include:

• a legible explanation
• in which the person making the declaration is named,
• delivered on a durable (unalterable storable) data carrier.

A declaration in text form can therefore be made in the form of emails, text messages or other digital communication. If the legal amendment comes into force, it should therefore be possible to conclude long-term commercial leases by email or text message without the risk of premature termination due to a lack of written form.  

Consequences of a text form requirement

Whether the move from the written form requirement to the text form requirement will relieve the burden on the contracting parties of commercial leases and thus reduce bureaucracy appears questionable for the time being. On the one hand, the legal changes and the transitional provisions are likely to result in unresolved legal issues and therefore new uncertainties in connection with the formal requirement for commercial leases. On the other hand, the written form requirement - in line with its protective purpose - has protected purchasers from unpleasant surprises and encouraged the parties to document the contractual relationship precisely. Against this background, we would not be surprised if the parties voluntarily impose a written form requirement, at least for larger single tenant leases.

The real estate team at Chatham Partners specializes in advising on and negotiating commercial leases and real estate transactions and will be happy to advise you.

We would like to thank Fabian Tobianski for his valuable support in preparing this article.