As a matter of principle, how, and by whom, a company on the tenant side is managed is not subject to the landlord’s influence. It may be that landlords only wish to enter into, and continue, long-term commercial leases with business owners of whom they approve. In order to secure corresponding rights of influence, the landlord included the following provision in the lease: “Any change of owner on the tenant side shall be deemed equivalent to permitting use by a third party.” By doing so, the landlord sought to create a right of termination in the event that it did not approve of a change of owner on the tenant side. This is because, where the tenant permits use by a third party without authorisation, the landlord has a right to terminate the lease for cause with immediate effect after setting a deadline and threatening remedial action (section 543 para 2 sentence 1 no 2 alternative 2 of the German Civil Code (Bürgerliches Gesetzbuch, BGB)). By equating permitting use by a third party with a change of owner, the provision was intended to construct the same legal consequence, namely an early termination right in the event of a change of owner.
According to the Higher Regional Court of Frankfurt am Main, such a change-of-control clause, when used as a standard term, constitutes an unreasonable disadvantage within the meaning of section 307 para 1 sentence 1 BGB and is therefore invalid. The Court based its reasoning on the fact that, as a matter of principle, a person entering into a contract with a legal entity has no need of protection in this respect, because by concluding such a contract that person must, in principle, be taken to accept changes of ownership. Where breaches of duty occur on the tenant side in connection with a change of owner, the Court held that the landlord is in any event adequately protected, since such breaches may be warned against and, in the event of repetition, may give rise to a right of termination.
To the extent that case law has previously held change-of-control clauses to be permissible in the award of concessions for the operation of an energy supply network, this was an exceptional case and does not apply to landlord and tenant constellations.
Finally, the Higher Regional Court of Frankfurt am Main pointed out that, in the case of a negotiated individual agreement, the challenged change-of-control clause could validly be agreed. It cannot, however, be imposed unilaterally by the landlord as a standard term. In the case before the Court, the provision had to be treated as a standard term, since the lease was a customary printed form issued by an interest group, in relation to which an intention of repeated use is presumed. Such an intention of repeated use is a prerequisite for classifying a contractual clause legally as a general business term or standard term (Allgemeine Geschäftsbedingung, AGB clause). Once classified in this way, the clause is subject to substantive fairness control under section 307 BGB, which in the specific case led to the invalidity of the change-of-control clause.
So care is needed when drafting contracts. The real estate lawyers at SPIEKER & JAEGER are there to assist.