Termination of fixed-term rental agreements in the case of pre-leasing

In the case of a pre-leasing, the tenancy only begins at a later date, usually the handover date. In such cases, the contracting parties usually assume that the fixed-term tenancy agreement cannot be terminated even before the start of the contract. Now, surprisingly, the BGH has ruled that ordinary termination is possible under certain circumstances (BGH, judgment of March 12, 2025 – XII ZR 76/24).

Commercial leases are often concluded for a fixed term with a long useful life. In the case of a pre-leasing, a property that has not yet been completed at the time the contract is concluded is let. The term of the tenancy usually begins with the handover, which can be a considerable time after the tenancy agreement has been signed. Sometimes tenants regret signing the contract and wish to terminate it before the handover. In principle, however, fixed-term tenancies cannot be terminated with notice. But does this also apply to the period between signing the contract and the start of the tenancy?

BGH distinguishes between time limit and condition

The BGH now draws attention to the following circumstance: Lease agreements that commence upon the occurrence of a certain event usually do not contain any provisions for the period between signing and commencement of the lease. In the case decided, the parties had leased a plot of land on which wind turbines were to be built. The term of the lease was to end 20 years after the last wind turbine to be erected was commissioned. Planning permission for the wind turbines had not yet been granted when the contract was signed. The tenant duly terminated the lease before the event occurred. The BGH held the termination to be effective.

The decisive factor is whether the parties assume that the event is certain to occur when the contract is concluded. Only if this is the case is the agreement also a time limit for the pre-contractual agreement within the meaning of Section 163 BGB. Ordinary termination up to the start of the agreed term is then excluded. If, on the other hand, it is uncertain from the parties’ point of view whether the event will ever occur, a condition precedent exists. In this case, the term of the agreement is indefinite according to the BGH and the contractual relationship can be terminated at any time. What the parties assumed when concluding the contract must be determined by interpretation.

The BGH classified the agreement in the above case as a condition precedent. This is because the parties had considered the possibility that the construction of the wind turbines would not be realized when the contract was concluded. The parties had agreed a right of premature termination in the event that the operation of the wind turbines was made impossible due to official requirements, bans or changes in the law. The wind turbines were still in the planning phase at the time.

In the case of pre-leasing, the time limit may also be invalid for other reasons

There may also be another reason for an ordinary right of termination in the case of a pre-leasing, namely if the fixed term is invalid. Fixed-term rental agreements for commercial premises and land with a term of more than one year must be in text form or, before January 1, 2025, in writing. If the form is not complied with, the rental agreement is valid for an indefinite period. It can then be terminated ordinarily at the earliest at the end of one year after the rental object has been handed over. If a termination is intended before handover, the tenant cannot invoke the lack of written form.

However, it is important to note that even if the tenancy agreement was generally agreed in text form, the form may not be complied with. This is because all essential contractual conditions must be set out in text form. In the case of pre-leasing, particular attention must be paid to the description of the rental property. It must be precisely described which rooms, areas, parking spaces etc. the tenant is renting in the overall property and how these are equipped. The text form is not complied with, for example, if the parties agree to specify the rental space at a later date. The same applies if the building description is to be specified or amended at a later date and this is not again recorded in a textual addendum. In some contracts, the description of the rental object is also subject to possible changes or conditions in the building permit that was not yet available at the time the contract was concluded. Even then, the text form is not complied with according to the OLG Brandenburg (judgment of January 10, 2022 – 3 U 110/20). Changes to the building and equipment description must be recorded in an addendum that complies with the text form in order to maintain the time limit.

An agreement according to which the tenancy begins with the handover, readiness for occupancy or another event generally complies with the text form (see BGH, judgment of November 2, 2005 – XII ZR 212/03). This is at least the case if the handover date is limited in time (see OLG Cologne, judgment of January 29, 2019 – 22 U 30/17). However, the handover date or the specific start of the tenancy should also be recorded in an addendum.

The parties should bear this in mind when drafting the contract

There are a number of pitfalls when concluding fixed-term pre-leasing agreements. The parties should ensure that the rental object is sufficiently described and clearly definable and that changes are set out in an addendum in text form.
If the start of the lease is postponed, for example to the handover, the parties should clearly stipulate whether this agreement is a condition precedent or a due date provision.
For clarification purposes, it is also advisable to conclude an agreement that explicitly excludes ordinary termination. It is also conceivable to expressly allow a fixed term to begin immediately upon conclusion of the contract, even in the case of pre-leasing, albeit with freedom from rent until handover.