Termination of Office Lease Agreement – What to Consider

A commercial lease agreement differs significantly from a residential lease agreement. It is important to note that in a commercial lease, only what is stated in the contract is valid. Before terminating, it is advisable to review the signed documents to see exactly what is included in the contract. It is also best to document all communication in writing (email, letter, registered mail, etc.). We have summarized some of the key points to consider when terminating an office lease agreement.

Fixed-term contract

In most cases, commercial lease agreements are entered into for a specified period. The tenancy ends after the expiration of the agreed-upon lease term without requiring termination. Unless the provision of § 545 BGB is used: "If the tenant continues to use the leased property after the expiration of the lease term, the lease is extended indefinitely unless one party declares its contrary intention to the other party within two weeks." However, in most commercial lease agreements, this provision is expressly excluded. If this provision exists, both the tenant and the landlord should ensure to terminate in a timely manner.

Indefinite contract

It is possible to enter into commercial lease agreements for an indefinite period. If the lease agreement does not stipulate otherwise, a notice period of three months to the end of a quarter applies according to the regulation in § 580a (2) BGB: "In the case of a lease of business premises, ordinary termination is permissible no later than on the third working day of a calendar quarter to the end of the next calendar quarter."

Extension option / Extension clause

Many commercial lease agreements contain an extension option or extension clause. With the extension option, the tenant has the opportunity to extend the contract for a specified duration after the agreed-upon lease term. This usually needs to be communicated to the landlord in writing within a certain period.

An extension option can be structured differently in the contract. It can be agreed whether the terms of the old lease agreement remain unchanged or whether, for example, the rent amount will be renegotiated after the expiry of the original contract. With an extension clause, the contract is automatically extended once the original term has expired.

Termination agreement

If the tenant wishes to terminate the commercial lease agreement prematurely, it is possible – if the landlord agrees – to enter into a termination agreement. This usually includes a compensation payment to compensate for the expenses incurred for early re-renting. The amount of this compensation payment is negotiated between both parties, and it may be helpful to already propose a new tenant to the landlord.

Notarial forced execution submission

Regardless of the type of termination, landlords are increasingly demanding a forced execution submission from the new tenant. This prevents the tenant from continuing to use the premises in the event of termination, as a judicial eviction procedure takes one to two years. With such a declaration, the landlord has the option to vacate the property directly upon the expiration of the lease. If the eviction is unfounded, the tenant has the option of an enforcement defense lawsuit. The court will then decide whether it is justified. However, if the tenant adheres to the contract, they should have no reason to worry. Additionally, protective mechanisms for the tenant can also be incorporated into the design of the notarial submission.

In the case of terminations: Always document everything in writing and carefully read the contract!