• Commercial rental space is also possible in cases of mixed usage of property
  • July 4, 2013 | Author: Michael Rainer
  • Law Firm: GRP Rainer LLP - Munich Office
  • The classification of a rental space as either residential or commercial conforms to the emphasis given by the lease tenancy agreement.

    GRP Rainer Attorneys and Tax Accountants in Cologne, Berlin, Bonn, Bremen, Düsseldorf, Essen, Frankfurt, Hamburg, Hanover, Munich, Nuremberg, Stuttgart and London www.grprainer.com/en explain: the Court of Appeal (Kammergericht) in Berlin in its judgment from 17 June 2010 (No. 12 U 51/09) decided that the classification of a lease as a residential or commercial tenancy agreement will follow respective to what the parties have agreed in the conclusion of the contract.  In this way, such a classification could follow according to the circumstances of any given individual case. Specific purposes of the contract that may have been agreed under certain circumstances may also be relevant for determining the classification.

    The determination of classification of a lease tenancy agreement can also be influenced by the title of the lease, the choice of ranking order of intended uses as well as the specified square footage allotted for each use.

    The structure and design of a lease can be of existential importance. Lease agreements that fall under commercial tenancy law are often entered into for a long time. Moreover, considerably high investments have been made for the conversion of rental properties; therefore, the parties considering a lease should allow for a thorough review of the lease prior to the conclusion of the contract agreement by an attorney working in the area of commercial tenancy law.

    The classification of a lease as a residential or commercial rental agreement can otherwise lead to far-reaching consequences under certain circumstances for contracting parties.

    An attorney working in commercial tenancy law helps create leases for commercial landlords and tenants. In doing so, interests are incorporated from the outset throughout the agreement structure of the contract. In the case of fixed-term rental contracts, it may be advisable to include unilateral renewal options in the contract. In the case of open-ended contract lease agreements, however, it can be an advantage to provide for different cancellation term arrangements other than the statutory period of notice for contract termination. In addition, commercial leases should contain provisions regarding the adjustment of rent during the contract term because there are no legal provisions for this purpose.