Cost-effectiveness requirement in the cost accounting for operations: Who has to prove what?

In short: Anyone who claims that the landlord has violated the economic viability requirement must demonstrate and prove the breach of duty and the resulting damage. The landlord is not required to disclose his calculation of the costs himself on a regular basis. The complaint must also be made within the twelve-month period.

The basis is the case law of the Federal Court of Justice, in particular the judgment of 6 July 2011 (VIII ZR 340/10) and the judgment of 20 May 2026 (VIII ZR 6/24). In the following we explain what tenants have to present in concrete terms, what the role of the evidence review is, and why nationwide average values do not help in court.

The cost-effectiveness requirement as a contractual subsidiary obligation

After Section 556, paragraph 3, sentence 1, sub-clause 2 of the BGB The landlord must observe the principle of cost-effectiveness when calculating operating costs. He must take into account an appropriate cost-benefit ratio when making decisions that affect the amount of costs incurred.

The Federal Court of Justice has since the judgment of 28 November 2007 (VIII ZR 243/06) classified this obligation as a contractual accessory obligation. Therefore, if the charge of operating costs has been agreed upon, a breach does not lead to the entire bill being invalid. The tenant, on the other hand, has a claim for damages, which is directed at the reimbursement of the unnecessary costs or the exemption from them. The BGH has recently reaffirmed this in the judgment of 20 May 2026 (VIII ZR 6/24).

A breach can take various forms: inflated prices, non-required services, excessive quantities, or a frequency of service that is not appropriate for the property. An unfavorable contract that the landlord entered into before the lease was concluded alone does not constitute a breach; however, a breach is considered to exist if the landlord does not take advantage of an opportunity to rectify the situation (BGH, judgment of January 25, 2023, VIII ZR 230/21). It is a prerequisite that an adjustment or termination of the contract was actually possible and economically reasonable.

Evidence and proof: What tenants and landlords must present

Because this is a claim for damages, the general rules apply. The tenant must present the facts and, in the event of a dispute, prove the breach of duty and the damage that resulted. In the case of fault, the burden of proof shifts to the tenant. § 280, paragraph 1, sentence 2, BGB The burden of proof: If a breach of duty is established, the landlord must prove that he or she is not responsible for it.

Why the landlord does not have to disclose his calculation regularly

A secondary burden of proof applies to a party only under general principles if the other party does not know the relevant circumstances, while the latter itself knows the facts and more detailed information is reasonable. This situation is not usually present when examining a utility bill calculation under the German Supreme Court (BGH). It is a matter of objective circumstances such as fees set by notice, customary charges for a caretaker or market prices for services and fuels. These can be determined by the tenant himself, and he obtains the billing basis from the bill review (BGH, Judgment of 06.07.2011, VIII ZR 340/10).

This does not mean that the landlord can remain silent: he must properly invoice and, upon request, provide access to the documents. Furthermore, he must explain and prove that the invoiced costs actually occurred and are eligible for reimbursement under the rental agreement. However, there is no further requirement, such as presenting a price comparison or substantiating his decisions regarding the assignment, simply because the tenant raises doubts. The Supreme Court confirmed in its judgment of May 20, 2026 that a secondary burden of proof does not automatically arise.

Presenting is not the same as proving

There are two distinct steps. First, the tenant must present specific facts that could constitute a violation. Only when the landlord disputes these facts does the burden of proof shift to the tenant, for example through offers, price lists, witnesses, or an expert report. At the same time, the requirements for the tenant’s presentation must not be overly broad (BGH, judgment of 17 December 2014, XII ZR 170/13, paragraph 13).

The 2011 case: garbage fees and the cost of operating the facility

The landlord of an apartment in Heidelberg calculated the operating costs for the year 2007 in November 2008. The tenants paid €525.71 in garbage disposal fees. The tenants considered this amount excessive and referred to the „Operating Cost Index for Germany“ of the German Tenants’ Association, which showed €185.76 for a comparable apartment. They demanded the refund of the difference of €339.95 and retained part of the January 2009 rent, their legal costs of €99.60 from the February rent.

The landlord sued for payment of the withheld rent and prevailed in all instances. The tenants’ counterclaims were unsuccessful; their appeal and their revision remained unsuccessful. The BGH found that the tenants had not established a breach of duty. The appeals court had also argued with a graduated burden of proof. The BGH upheld the result, but made it clear that the landlord regularly did not bear any secondary burden of proof for the basis of his cost calculation.

Why nationwide averages are not sufficient

The operating cost index provides regional averages. However, operating costs depend heavily on local fees, price levels, and the specific characteristics of the building. Therefore, a deviation from the average does not indicate whether the landlord had a more favorable option in the specific location. However, comparing the two is nevertheless useful as a reason to examine the billing more closely and request access to supporting documentation.

How to concretely substantiate a violation

Depending on the nature of the violation, different approaches are possible. This is not a checklist that must be fully met in every case:

• Unmarketable prices: Comparison offers or price lists for the same service at the same location. According to the BGH, it matters that the service was commissioned at an objectively overpriced price and that a comparison would actually have led to savings (VIII ZR 6/24).
• Non-required services: Proof that a paid-for service for the property was not necessary.
• Excessive amounts or frequency: for example, too large trash cans or cleaning that is too frequent for the building.
• Corrections not made: The landlord does not resort to a possible termination or renegotiation of an unfavorable contract (VIII ZR 230/21).

Comparisons must be relevant to the facts: the same billing period, the same scope of services, comparable quality, and an alternative that was actually available to the landlord. The fact that the landlord did not seek out comparison offers is not in itself sufficient.

Time limit for use and access to supporting documents

The twelve-month period applies to this objection as well.

The tenant must inform the landlord of objections to the bill no later than the end of the twelfth month after receipt of the bill (§ 556, paragraph 3, sentence 5, BGB). Thereafter, they are excluded unless the tenant is not responsible for the delayed enforcement (§ 556, paragraph 3, sentence 6, BGB). The BGH ruled in a judgment of May 20, 2026 that this exclusion of objections applies in principle also to the objection that the landlord violated the economic principle (VIII ZR 6/24).

The exception to this is statute of limitations. Claims for restitution generally expire after three years (§§ 195, 199 BGB). However, the statute of limitations does not replace the limitation period: anyone who lets the twelve months elapse cannot, on a regular basis, claim the violation even within the limitation period.

Evidence insight as the basis of the lecture

For residential premises, § 556, paragraph 4, of the German Civil Code (BGB) regulates the tenant’s right to inspect the billing documents, including the possibility of providing them electronically. The right of inspection also extends to the underlying payment documents; the tenant does not have to demonstrate a special interest in this (BGH, judgment of 09.12.2020, VIII ZR 118/19). On the other hand, the right of inspection does not constitute a basis for a claim for disclosure of all internal considerations of the landlord regarding the assignment of the contract.

In-depth information on deadlines and documentation requirements: Disputing utility bills: deadlines, receipts and objections.

And in commercial lease law?

The economic efficiency principle also applies to commercial lease agreements, although § 556 of the German Civil Code is not directly applicable there. The XII Civil Chamber of the German Supreme Court has confirmed that the commercial tenant must also prove a violation (judgment of 17 December 2014, XII ZR 170/13). However, the twelve-month period under § 556(3) of the German Civil Code does not apply in the commercial sector. More about this in our article. Service charge statement in commercial tenancy law: deadlines, receipts and audit.

Action in practice

1. Note the date of billing. From this day onwards, the twelve-month period begins.
2. Mark the conspicuous positions. What costs are unusually high compared to previous years or the property itself?
3. Require proof of access. In writing and verifiable, including contracts, invoices, and payment receipts.
4. Compare locally. Obtain offers or prices for the same scope of services at the same location.
5. Formulate the objection in concrete terms. Position, amount complained of and justification in writing, within the deadline.
6. Have a success probability check done, before you cut payments or add them up.

Frequently asked questions

Read more

• Disputing utility bills: deadlines, receipts and objections – Proofing and substantiation of the denial in the case of residential space.
• Service charge statement in commercial tenancy law: deadlines, receipts and audit – the special features for commercial tenants.
• Tenancy law in Cologne – Advice and representation in residential and commercial lease law.