Regional Court of Cologne, 20/09/2017, Ref.: 13 S 50/17
Pursuant to Section 556 (1) of the German Civil Code (BGB), a tenancy agreement may stipulate that the tenant must bear operating costs. Operating costs are the costs that the owner or heritable building right holder incurs on an ongoing basis due to the ownership or heritable building right to the property or due to the intended use of the building, outbuildings, facilities, installations and land.
This agreement can be made in accordance with paragraph 2 of Section 556 BGB, subject to other provisions, in such a way that operating costs are recognised as a lump sum or as an advance payment. However, advance payments for operating costs may only be agreed in an appropriate amount.
These advance payments for operating costs must be settled annually, whereby the tenant must be notified of the settlement by the end of the twelfth month after the end of the settlement period at the latest. After expiry of this period, the landlord may not assert an additional claim unless the landlord is not responsible for the late assertion.
In the following judgement, the Regional Court of Cologne states that in the case of an agreement under the law of obligations regarding the creation of a right in rem to a flat, the time limit in Section 556 (3) of the German Civil Code (BGB) should also apply accordingly to the settlement of advance payments. This is because there is an unintended loophole in the case in which the person who uses someone else's living space on the basis of a legal relationship other than a tenancy, but also has to make advance payments for operating costs to the owner.
The court answered in the affirmative by applying a double analogy of the provision, stating that the preclusive period of Section 556 (3) sentence 3 BGB also applies if a person entitled to the flat has to bear the operating and ancillary costs according to the contractual agreement, but does not have to make any advance payments.
Buying a property with a right in rem: dispute over operating costs
In this case, the plaintiffs and the defendant concluded a notarised purchase agreement for the acquisition of a property. In addition, the defendant was granted a right in rem to use part of the property. The contract stipulated that the defendant had to bear the operating costs, which would normally also have to be borne by a tenant. The plaintiffs therefore demanded that the defendant pay the operating costs for the years 2013, 2014 and 2015 totalling EUR 2,824.81. However, the defendant refused to pay. The plaintiffs subsequently brought an action before the local court, which ruled in their favour in full.
The defendant appealed against the judgement and argued that there was no separate agreement on the allocation of operating costs. The contract alone could not justify the plaintiffs' claims.
Judgement of the Regional Court of Cologne: Partial success of the appeal
The Cologne Regional Court ruled that the defendant's appeal was largely successful. It partially amended the judgement of the district court and only ordered the defendant to pay the operating costs for 2015 in the amount of EUR 910.58 as well as pre-trial legal fees of EUR 176.12. The court dismissed the plaintiffs' claims for the years 2013 and 2014, as these had not been settled on time.
The basis for the decision was the contractual provision in the notarised agreement in which the assumption of operating costs by the defendant was stipulated. The statement for 2015 was issued on time, which is why the plaintiffs' claim was justified in this respect.
Settlement period and analogy to Section 556 (3) BGB
The plaintiffs could no longer assert any claims for the years 2013 and 2014 as they had missed the billing deadline in accordance with Section 556 (3) BGB. Although the defendant did not have to make any advance payments for the operating costs, the court applied Section 556 (3) BGB by analogy. This provision stipulates that operating costs must be claimed no later than twelve months after the end of the billing period. As the plaintiffs had not met this deadline for 2013 and 2014, the claim for these operating costs was cancelled.
Conclusion: Payment obligation for 2015, time limit for earlier years
The Cologne Regional Court came to the conclusion that the defendant was only obliged to pay the operating costs for 2015. The claims for 2013 and 2014 were time-barred, as the billing deadline pursuant to Section 556 (3) BGB was not met. The decision illustrates how important it is to settle accounts on time in order to successfully enforce claims, even in the case of a right in rem.
Source: Cologne Regional Court
Important Note: The content of this article has been prepared to the best of our knowledge and belief. However, due to the complexity and constant evolution of the subject matter, we must exclude liability and warranty. Important Notice: The content of this article has been created to the best of our knowledge and understanding. However, due to the complexity and constant changes in the subject matter, we must exclude any liability and warranty.
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