Written form healing clauses invalid – BGH strengthens legal certainty in lease agreements

Background: What are written form healing clauses?

The BGH ruled in its judgment of 27.09.2017 that so-called written form healing clauses are incompatible with the non-derogable provision of § 550 BGB and are therefore invalid.

They cannot therefore in themselves prevent a contracting party from ordinarily terminating a lease agreement by invoking a written form defect (continuation of the Senate judgments BGHZ 200, 98 = IMR 2014, 155 = NJW 2014, 1087, and of 30.04.2014 – XII ZR 146/12, IMR 2014, 330 = NJW 2014, 2102).

The consequence of the judgment is that lease agreement parties can no longer rely on the impossibility of ordinary termination of the lease agreement during the agreed fixed term.

Rather, lease agreements that have a written form defect can in principle be terminated at any time by either contracting party in compliance with the ordinary notice period.

Decision of the BGH: Written form healing clauses violate mandatory law

The BGH had until now always left open the general compatibility of written form healing clauses with § 550 BGB. Previously, the BGH had only decided that it is incompatible with § 550 BGB if written form healing clauses also deprive an acquirer who enters into the lease agreement as the new landlord of the possibility of ordinary termination on grounds of a written form violation.

Reasoning of the court

With its current judgment, the BGH has now aligned itself with the voices within legal literature that consider written form healing clauses to be generally invalid (regardless of whether the clause constitutes standard terms and conditions or an individually negotiated agreement).

The BGH justifies its view on the grounds that the provision of § 550 BGB serves not only

• to protect the acquirer, but also
• to ensure the provability of long-term agreements between the contracting parties and to protect the contracting parties from entering into long-term obligations without due consideration.

According to the BGH, the legislature deliberately restricted contractual freedom through § 550 BGB to the effect that long-term lease contractual obligations (whether relating to residential or commercial premises) require the written form. If the written form prescribed in § 550 BGB is not observed in lease agreements, the non-derogable statutory consequence is that there is also no long-term tenancy to be preserved.

Consequences for landlords and tenants

A written form healing clause would circumvent this legal consequence deliberately intended by the legislature in an impermissible manner, since a lease agreement, even if the written form is not observed, should not – as provided by the legislature – be subject to ordinary termination. The BGH considers this to constitute an impermissible violation of mandatory law with the consequence of the invalidity of the written form healing clause.

Although the BGH identified a written form defect in the case now decided (the parties had agreed on an adjustment of the contractually agreed indexation clause without adequate reference to the lease agreement), the landlord was unable to validly terminate in the present case. Rather, the judges found that the landlord’s conduct was contrary to good faith (§ 242 BGB), since they had benefited solely from the subsequently concluded agreement and now merely wished to use the lack of written form to “extricate themselves from a long-term lease agreement that had become burdensome.”

Risk of ordinary terminability

As a result of the BGH’s judgment, there is now a risk of ordinary terminability at any time in relation to every tenancy in which the statutory written form is not observed. Only the objection of § 242 BGB (good faith) stands in the way of a termination on grounds of non-compliance with the written form. However, this provision is likely to be invoked only where the strict application of existing law would lead to unjust results.

Our recommended course of action for practice

It is therefore strongly advisable to ensure both when concluding a lease agreement and during the term of the tenancy that all (material) agreements of the tenancy are recorded in compliance with the written form.

Reference: BGH, Judgment of 27.09.2017 – XII ZR 114/16

More on the topic:

• Written form goodbye – or maybe not?
• Abolition of the written form, introduction of the text form for long-term commercial lease agreements
• Written form also satisfied with unilaterally signed lease agreements

Do you have questions on the written form in tenancy law?