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Criticism of Adidas & Co. causes serious misunderstandings

As a law firm working for numerous medium-sized companies, PASCHEN Rechtsanwälte feels obliged to comment on a legal issue currently under public discussion. The announcement by Adidas and some other well-known commercial enterprises that they will temporarily suspend their rent payments has provoked numerous, albeit misleading statements and even some rather extreme actions. Not only the Federal Minister of Transport but even the Federal Minister of Justice has felt compelled to criticise these announcements harshly without any differentiation. False statements about tenants’ rights have been widely reported in various media reports this week including this statement from the Federal Minister of Justice Christine Lambrecht, “Tenants must, of course, pay their rent. If they actually get into serious payment difficulties as a result of the crisis, they can simply not be dismissed for a limited period of time”, suggesting that a rent reduction made against the background of the Corona crisis is unlawful or even indecent.

The criticism voiced against Adidas and Co., that the tenancy law does not allow a reduction of rent for these affected persons, is wrong. It is probable that the overwhelming majority of landlord and tenant lawyers assume that at least if the exact purpose of the use of the rented premises is stipulated in the lease, the closure ordered by the authorities constitutes a so-called lack of environment which does indeed entitle a rent reduction. It is correct to assume that tenants affected in this way will be able to pay a considerably lower rent for the period of the ordered closure than would be appropriate should the premises still operate as a warehouse or, if applicable, as an office.

The special regulations in light of the Corona crisis, which were passed last week in summary proceedings, should not be read to restrict an already existing protection for tenants. On the contrary, the protection against dismissal granted in this context, initially applicable until the end of June, is obviously intended to protect tenants of flats whose income has been lost. In these cases, the obligation to pay rent is indeed maintained in full. It was therefore clear to experts from the outset that the announcement of the trading companies would have nothing to do with this special regulation.

We consider it irresponsible not to provide immediate clarification here. The vast majority of shopkeepers are not financially strong, multinational corporations, but small, independent retailers. Many of those affected not only fear for their livelihoods because of corona-related closures but also have long been suffering from extreme competitive pressure from the Internet giants of online trading. The closure of shops due to the Pandemic is now distorting competition in an intolerable way and is putting many independent retailers out of business.

If the impression created by these statements were correct, that the new regulations were also intended to clarify that an appropriate reduction in rent is to be ruled out, this would not represent an extension of tenant protection, but rather its massive curtailment. In this case, the sole beneficiaries would be the property owners, who, as major “crisis profiteers”, would not only retain their entitlement to payment of the rent in full but could even demand statutory default interest at an enormous rate in the event of late payment.

Apart from the fact that such a lack of burden-sharing harms solidarity and can therefore hardly be intended, it should be pointed out that such handling of tenancy law would cause the massive acceleration of the collapse of trade and would inevitably result in the subsequent insolvencies of manufacturers and suppliers. The protective umbrella (insolvency) proceedings of Galeria Karstadt Kaufhof, which have already been applied for this week, are a first foretaste.

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