A Russian proverb says: "Haste only makes people laugh." Yet being laughed at is not the worst of it. Things get truly annoying when that haste hits your own wallet.
Running your own business requires premises. Suppose you want to open a restaurant, a bar or a daycare centre. You do not necessarily have to buy the space you need – it can be rented on a long-term basis. What matters is that the premises meet the requirements of their intended use. Once you have settled on a specific property, a lease must be concluded. Before signing, you should check the landlord's Verfügungsbefugnis (power of disposal), that is, the landlord's right to let these particular premises. The lease must set out all the essential terms provided for by law: the landlord's obligation to hand over the premises in a condition fit for the contractual use; the lease term; the amount of rent and when it falls due; the conditions under which the contract takes effect; the termination conditions, and so on.
A Lease Subject to a Condition: Official Approval
A woman – let us call her Natalia – came to our law firm. She wanted to open a Kindertagesstätte (Kita, a children's daycare centre) in Berlin and needed to rent premises for it. After viewing several properties, she chose one that, in her assessment, met all the necessary requirements. The representative of the letting company assured her that the premises were intended precisely for a childcare facility and complied with all relevant regulations, but that she would need to obtain approval from the competent authority. The parties concluded a Gewerberaummietvertrag (commercial lease agreement).
Terms of the Lease
The lease was concluded as of 1 November 2013 for a term of 10 years. The contract allowed one month to obtain the official approval to open the daycare centre. If the authority refused its consent, the contract would be deemed not to have taken effect, but the tenant would be obliged to pay a Vertragsstrafe (contractual penalty) of 2,000 euros (§§ 339 et seq. BGB). In addition, a broker acted for the letting company, and the tenant was to bear his fee (Provision, commission) of 4,832 euros — but only once the contract had taken effect, that is, after the official approval had been granted.
According to the client, she submitted the application with the required documents to the authority and, without waiting for a response, transferred 4,832 euros to the broker – she was confident of a positive decision, because both the company's representative and the broker himself had assured her of it. She made the transfer on 4 November 2013. A few weeks later she received the authority's Bescheid (official decision) refusing permission to open the daycare centre on these premises. She approached the broker in person and asked for the commission to be refunded – the broker was sympathetic and promised to repay the money in any event, but it never went beyond that promise.
The Broker Is Entitled to a Commission Only Once the Contract Takes Effect
Natalia waited several months, reminding him of her claim from time to time, but received nothing, and decided to bring in a lawyer. The lawyer explained to the client that the broker may only demand payment for his services once the contract concluded between the parties has taken effect – this rule is laid down in § 652 of the Bürgerliches Gesetzbuch (BGB, the German Civil Code) and was also expressly stated in the contract. The parties had agreed that the lease would take effect only once the official approval to open the daycare centre was granted. The authority had refused approval, so the contract had not taken effect. In that case, as provided for in the contract, Natalia owed the company a contractual penalty of 2,000 euros, but she was under no obligation to pay the broker anything. She had acted rashly by paying for the broker's services prematurely – but the lawyer assured her that he would help her get the money back.
The lawyer drafted a letter to the letting company demanding repayment of the money received by the broker acting on its behalf. He relied on the provisions of the BGB under which a broker can claim his fee only once the lease brought about through his services has taken effect, and only if he can show that the contract was concluded as a result of his own efforts. Where the contract is to take effect subject to an aufschiebende Bedingung (condition precedent), the broker can claim his fee only once that condition has been met – in this case, once permission to open the daycare centre had been granted. Since the condition had not been met, the contract had never taken effect, and the broker had therefore received the money without legal grounds. The lawyer demanded repayment of the full amount within two weeks.
Outcome of the Negotiations
In its reply, the company stated that it was not at fault — the client had transferred the money herself without waiting for the contract to take effect. The lawyer maintained his demands and pointed out that otherwise the firm would take the matter to court. The company then invoked the contractual clause providing for a 2,000-euro penalty if the contract did not take effect and proposed a set-off — repayment of the broker's fee minus this penalty. Since the proposal to set off the penalty came from the other side itself, the lawyer agreed to these terms.
To conclude, it is worth stressing once again: anyone planning a step as significant as running their own business should seek legal advice. The same applies when concluding any contract – whether for a purchase, a lease, a supply arrangement or anything else – it is advisable to consult a lawyer beforehand. This will spare you problems later on and give you confidence that your decisions are legally sound.
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