Last Updated on June 27, 2021 by LawEuro
German Civil Code (BGB) German law
Subtitle 5
Farm lease
Section 585
Concept of farm lease
(1) By means of a farm lease, a plot of land with the residential and utility buildings (business) that serve its cultivation, or a plot of land without such buildings, is leased largely for agriculture. Agriculture means the cultivation of the soil and the livestock breeding associated with the use of the soil in order to produce plant or animal products, and horticultural production.
(2) Section 581 (1) and sections 582 to 583a apply to farm leases, as do the special provisions below.
(3) The provisions on farm leases also apply to leases relating to forestry properties if the plots of land are leased for use in a predominantly agricultural business.
Section 585a
Form of a farm lease
If a farm lease is entered into for more than two years without written form, then it remains in effect for an indefinite period of time.
Section 585b
Description of the leased property
(1) The lessor and the lessee should at the beginning of the usufructuary lease jointly prepare a description of the leased property in which its extent and the condition in which it is when surrendered are established. This applies with the necessary modifications to the termination of the usufructuary lease. The description should state the date of its preparation and must be signed by both parties.
(2) If a party to the lease refuses to participate in the preparation of a description or if differences of opinion as to fact emerge during the preparation, then each party to the lease may demand that a description is prepared by an expert, unless more than nine months have passed since permitting use of the leased property or more than three months have passed since termination of lease; the expert is appointed by the Agricultural Court [Landwirtschaftsgericht] upon application. Costs incurred in this connection are borne by the parties to the lease at the rate of one-half each.
(3) If a description of this type has been prepared, then the presumption between the parties to the contract is that it is correct.
Section 586
Typical contractual duties in a farm lease
(1) The usufructuary lessor must surrender the leased property to the lessee in a condition suitable for use in conformity with the contract and must maintain it in this condition for the lease period. However, the lessee must carry out the customary improvements of the leased property at his own expense, including without limitation improvements of the residential and utility buildings, the paths, ditches, drains and fences. He is obliged to manage the leased property properly.
(2) The provisions of sections 536 (1) to (3) and of 536a to 536d apply to the liability of the usufructuary lessor for material and legal defects in the leased property as well as for the rights and duties of the lessee in relation to such defects.
Section 586a
Encumbrances on the leased property
The usufructuary lessor must bear the encumbrances imposed on the leased property.
Section 587
Due date of rent; payment of rent where the usufructuary lessee is personally prevented
(1) The rent is to be paid at the end of the lease period. If the lease period is assessed by time periods, then it is to be paid on the first working day after the end of the individual time periods.
(2) The usufructuary lessee is not released from payment of the rent due to the fact that he is unable to exercise the right of use to which he is entitled for a reason relating to him personally. Section 537 (1) sentence 2 and (2) apply with the necessary modifications.
Section 588
Measures of maintenance or improvement
(1) The usufructuary lessee must acquiesce in impacts on the leased property necessary to maintain it.
(2) Measures to improve the leased property must be tolerated by the usufructuary lessee, unless the measure would represent a hardship for him that is not justified even when the justified interests of the lessor are taken into account. The usufructuary lessor must compensate the lessee for expenses incurred and earnings lost as a result of the measure to an extent appropriate to the circumstances. On demand, the usufructuary lessor must make advance payment.
(3) To the extent that the usufructuary lessee, due to measures under subsection (2) sentence 1, earns higher income or could earn it with proper management, the lessor may demand that the lessee gives prior consent to a reasonable increase in rent unless the usufructuary lessee cannot reasonably be expected to accept an increase in rent in view of the circumstances of the business.
(4) Upon application, the Agricultural Court [Landwirtschaftsgericht] decides disputes under subsections (1) and (2). If the usufructuary lessee fails to give prior consent in the cases in subsection (3), then the Agricultural Court [Landwirtschaftsgericht] may give substitute consent on application by the lessor.
Section 589
Surrender of use to third parties
(1) Without the permission of the usufructuary lessor, the lessee is not entitled to
1. permit use of the leased property to a third party, including without limitation subletting the property,
2. permit use of the leased property, in whole or in part, to an agricultural association for the purpose of joint use.
(2) If the usufructuary lessee permits use of the leased property to a third party, then he is responsible for any fault of the third party in its use, even if the lessor has given permission for this use by the third party.
Section 590
Change of agricultural purpose or of previous use
(1) The usufructuary lessee may only change the agricultural purpose of the leased property with the prior permission of the lessor.
(2) For a change of the previous use of the leased property, the prior permission of the lessor is only required if the nature of the use will be influenced by the change after the lease period. The usufructuary lessee may only erect buildings with the prior permission of the lessor. If the usufructuary lessor refuses permission, then substitute permission may be given by the Agricultural Court [Landwirtschaftsgericht] upon application by the lessee to the extent that the change appears to be appropriate for the maintenance or permanent improvement of the profitability of the business and the lessor can reasonably be expected to accept it if his justified interests are taken into account. This does not apply if the lease has been terminated or the lease ends in less than three years. The Agricultural Court [Landwirtschaftsgericht] may give substitute permission subject to stipulations and conditions, including without limitation by ordering that security is provided, and may specify the nature and extent of the security. If the reason for providing security has ceased, then the Agricultural Court [Landwirtschaftsgericht], upon application, decides with regard to the return of the security; Section 109 of the Code of Civil Procedure [Zivilprozessordnung] applies with the necessary modifications.
(3) If, in connection with a change of use of the leased property, the usufructuary lessee has substantially reduced the inventory taken over under section 582a at its estimated value, then the lessor may demand compensation in money, applying section 582a (3) with the necessary modifications, even during the lease period, unless the proceeds of the inventory items disposed of have been used for an improvement of the leased property under section 591 that is in a reasonable ratio to the amount of the proceeds.
Section 590a
Use in breach of contract
If the usufructuary lessee makes use of the leased property in breach of contract, and if he continues the use in breach of contract notwithstanding a warning by the lessor, then the lessor may seek a prohibitory injunction.
Section 590b
Necessary outlays
The usufructuary lessor is obliged to compensate the lessee for necessary outlays on the leased property.
Section 591
Outlays that increase value
(1) The usufructuary lessor must reimburse the usufructuary lessee on the termination of the lease for outlays that are not necessary outlays for which he has given his approval, to the extent that the outlays increase the value of the leased property beyond the lease period (added value).
(2) If the usufructuary lessor refuses to approve the outlays, then substitute approval may be given by the Agricultural Court [Landwirtschaftsgericht] upon application by the usufructuary lessee to the extent that the outlays appear to be appropriate for the maintenance or permanent improvement of the profitability of the business and the usufructuary lessor can reasonably be expected to accept them when his justified interests are taken into account. This does not apply if the lease has been terminated or the lease ends in less than three years. The Agricultural Court [Landwirtschaftsgericht] may give substitute approval subject to stipulations and conditions.
(3) The Agricultural Court [Landwirtschaftsgericht] may upon application decide on provisions relating to the added value and may assess the latter. It may determine that the usufructuary lessor need only reimburse the added value in instalments and may impose conditions for granting such instalments. If the usufructuary lessor cannot reasonably be expected to accept reimbursement of the added value upon the termination of the lease, even in instalments, then the lessee may only demand that the lease is continued on the previous conditions until the added value of the leased property has been paid for. If no agreement can be reached, then the Agricultural Court [Landwirtschaftsgericht] decides upon application as to the continuation of the lease.
Section 591a
Removal of installations
The usufructuary lessee is entitled to remove an installation with which he has furnished the thing. The usufructuary lessor may ward off exercise of the right of removal by paying appropriate compensation, unless the lessee has a justified interest in removal. Any agreement excluding the right of removal of the usufructuary lessee is only effective if it provides for appropriate compensation.
Section 591b
Limitation of compensation claims
(1) The compensation claims of the usufructuary lessor for change to or deterioration of the leased thing as well as the claims of the lessee for reimbursement of outlays or for permission to remove an installation are subject to a six-month limitation period.
(2) The limitation period for the compensation claims of the usufructuary lessor commences on the date when he receives the returned thing. The limitation period for the usufructuary lessee commences upon termination of the lease.
(3) Upon limitation of the claim of the usufructuary lessor to return of the thing, the compensation claims of the lessor are also statute-barred.
Section 592
Security right of the usufructuary lessor
For his claims under the usufructuary lease, the lessor has a security right over the things contributed by the lessee and over the fruits of the leased property. The security right may not be asserted with regard to future compensation claims. With the exception of the things cited in section 811 (1) no. 4 of the Code of Civil Procedure [Zivilprozessordnung], the security right does not extend to things that are not subject to attachment. The provisions of sections 562a to 562c apply with the necessary modifications.
Section 593
Amendment of farm leases
(1) If, after the usufructuary lease is entered into, the circumstances that were decisive for the determination of the performance under the lease change with lasting effect in such a way that the mutual duties are in a gross disparity to each other, then each party to the contract may demand an amendment of the lease, with the exception of the duration of the lease. If, as a result of the cultivation of the leased property by the lessee, its income improves or deteriorates, then, to the extent not otherwise agreed, an amendment of the lease may not be demanded.
(2) An amendment may be demanded at the earliest two years after the commencement of the lease or after the most recent amendment of the performance under the lease has become effective. This does not apply if devastating natural events against which insurance coverage is not customary have fundamentally and permanently changed the ratio of the acts of performance under the lease.
(3) Amendment may not be demanded for a period prior to the lease year in which the demand for amendment is declared.
(4) If one party to the lease refuses to consent to an amendment of the lease, then the other party may apply to the Agricultural Court [Landwirtschaftsgericht] for a decision.
(5) The right to demand an amendment of the lease under subsections (1) to (4) may not be waived. An agreement that one party to the lease is to enjoy special advantages or suffer special disadvantages if he exercises or fails to exercise the rights under subsections (1) to (4) is ineffective.
Section 593a
Transfer of a business
If, on the transfer of a business by way of a lifetime transfer of property, a plot of land leased for the business that serves agricultural purposes is included, then the transferee succeeds to the usufructuary lease in place of the lessee. The usufructuary lessor must, however, be promptly notified of the transfer of business. If proper management of the leased property by the transferee is not guaranteed, then the usufructuary lessor is entitled to terminate the lease for cause with the statutory notice period.
Section 593b
Disposal or encumbrance of the leased property
If the leased property is disposed of or encumbered with a third-party right, then sections 566 to 567b apply with the necessary modifications.
Section 594
Termination and extension of the lease
The usufructuary lease ends at the end of the period for which the lease has been entered into. In the case of usufructuary leases entered into for at least three years it is extended for an indefinite period of time if, upon the inquiry of one of the parties to the lease as to whether the other party is willing to continue the lease, the latter does not refuse continuation within a period of three months. The enquiry and the refusal must be in writing. The inquiry is without effect if there is no explicit reference in it to the consequences of disregarding it and if it is not made within the third-but-last year of the lease.
Section 594a
Notice periods
(1) If the lease period is not fixed, then each party to the lease may terminate the lease at the latest on the third working day of a lease year to the end of the next lease year. In case of doubt, the calendar year is deemed to be the lease year. Agreement on a shorter period must be in writing.
(2) In the cases where the lease may be terminated for cause with the statutory notice period, termination is only allowed to the end of a lease year; it must occur at the latest on the third working day of the half-year at the end of which the lease is to terminate.
Section 594b
Lease for more than thirty years
If a usufructuary lease is entered into for a period of more than thirty years, then after thirty years each party to the lease may terminate the lease at the latest on the third working day of a lease year to the end of the next subsequent lease year. Termination is not allowed if the lease has been entered into for the lifetime of the lessor or the lessee.
Section 594c
Termination in the case of occupational disability of the usufructuary lessee
If the usufructuary lessee has become occupationally disabled within the meaning of the provisions of the statutory pension scheme, then he may terminate the lease for cause with the statutory notice period if the lessor objects to the transfer of the leased property for use to a third party who guarantees proper management. A deviating agreement is ineffective.
Section 594d
Death of the usufructuary lessee
(1) If the usufructuary lessee dies, then both his heirs and the lessor are entitled within a month after obtaining knowledge of the death of the lessee to terminate the lease with a notice period of six months to the end of a calendar quarter.
(2) The heirs may contest the notice of termination of the usufructuary lessor and demand continuation of the lease if proper management of the leased property appears to be guaranteed by them or by a co-heir commissioned by them or by a third party. The usufructuary lessor may refuse the continuation of the lease if the heirs have not declared their objection at the latest three months prior to expiry of the lease and informed of the circumstances by reason of which further proper management of the leased property appears ensured. The enquiry and the refusal must occur in writing. If no agreement can be reached then the Agricultural Court [Landwirtschaftsgericht] decides on application.
(3) In response to notice of termination by the usufructuary lessor under subsection (1), a continuation demand by the heir under section 595 is excluded.
Section 594e
Termination for cause without notice for a compelling reason
(1) Immediate termination of the lease for cause is allowed, applying sections 543, and 569 (1) and (2) with the necessary modifications.
(2) Notwithstanding section 543 (2) n. 3 letters a and b, just cause exists in particular, without limitation, if the usufructuary lessee is in default for more than three months of payment of the rent or of a portion of the rent that is not insignificant. If the lease is assessed by time periods of less than one year, then termination is only admissible if the usufructuary lessee is in default, for two successive dates, of payment of the rent or of a substantial portion of the rent.
Section 594f
Written form of termination
Notice of termination must be made in written form.
Section 595
Continuation of the lease
(1) The usufructuary lessee may demand continuation of the lease from the lessor if
1. in the case of a commercial usufructuary lease, the business constitutes the economic basis of his existence,
2. in the case of a usufructuary lease of a plot of land, the lessee is dependent on this plot of land to maintain his business, which is the economic basis of his existence,
and termination of the lease in conformity with the contract would be a hardship for the lessee or his family which would not be justifiable even if the justified interests of the lessor were taken into account. Subject to these requirements, continuation may be demanded repeatedly.
(2) In the case in subsection (1), the usufructuary lessee may demand that the lease is continued as long as is appropriate when all circumstances are taken into consideration. If the usufructuary lessor cannot reasonably be expected to continue the lease under the previously applicable contract terms, then the lessee may demand that it be continued with an appropriate amendment of the terms.
(3) The usufructuary lessee may not demand continuation of the lease from the usufructuary lessor if
1. he has terminated the lease,
2. the usufructuary lessor is entitled to terminate the lease for cause without notice, or in the case of section 593a to terminate the lease for cause with the statutory notice period,
3. the lease period in the case of a usufructuary lease of a business, the leasing of additional plots of land as a result of which a business is created, or in the case of the lease of marshland or wasteland that has been cultivated by the lessee has been agreed for at least eighteen years, or in the case of the lease of other plots of land for at least twelve years,
4. in the case of property leased only temporarily under a usufructuary lease, the lessor wishes to repossess it for his own use or to use it to perform statutory or other public tasks.
(4) The declaration of the usufructuary lessee demanding the continuation of the lease must be in writing. Upon demand by the usufructuary lessor, the lessee should without undue delay provide information on his reasons for demanding continuation.
(5) The usufructuary lessor may refuse continuation of the lease if the usufructuary lessee did not demand continuation from the lessor at least one year prior to termination of the lease or rejected continuation upon inquiry by the lessor under section 594. If a twelve-month notice period or less has been agreed, then it suffices if the demand is declared within a month of receipt of the notice of termination.
(6) If agreement is reached, then the Agricultural Court [Landwirtschaftsgericht] decides upon application on a continuation and on the lease period, and also on the conditions under which the lease will be continued. The court may order continuation of the lease, but only up to a date that, starting from the commencement of the current lease, does not exceed the periods stated in subsection (3) no. 3. Continuation may be limited to a part of the leased property.
(7) The usufructuary lessee must file the application for a court decision at the Agricultural Court [Landwirtschaftsgericht] at the latest nine months prior to termination of the lease and, in the case of a twelve-month notice period or less, two months after receipt of notice of termination. The court may admit the application at a later date if it appears called for to avoid undue hardship and the lease has not yet expired.
(8) The right to demand extension of the lease under subsections (1) to (7) may only be waived if the waiver is declared in settlement of a lease dispute heard in a court of law or by a professional lease conciliation board. An agreement that one party is to have particular advantages or particular disadvantages if the party exercises or does not exercise the rights under subsections (1) to (7) is ineffective.
Section 595a
Early notice of termination of farm leases
(1) To the extent that the parties to the contract are entitled to terminate a farm lease for cause with the statutory notice period, they are entitled to this even after the extension of the farm lease or the modification of the farm lease.
(2) Upon application by one of the parties to the lease, the Agricultural Court [Landwirtschaftsgericht] may make orders on the winding up of a farm lease terminated early or terminated in part. If the extension of a farm lease is limited to a portion of the leased property, then the Agricultural Court [Landwirtschaftsgericht] may determine the rent for this portion.
(3) The contents of Agricultural Court [Landwirtschaftsgericht] orders are deemed to be part of the lease agreement as between the parties to the lease. The Agricultural Court [Landwirtschaftsgericht] decides upon application on disputes relating to these contents of the contract.
Section 596
Return of the leased property
(1) The usufructuary lessee is obliged to return the leased property upon termination of the lease in a condition conforming with proper management continued up to its return.
(2) The usufructuary lessee has no right of retention of the plot of land for his claims on the lessor.
(3) If the usufructuary lessee has transferred use of the leased property to a third party, the lessor may also demand return of the leased property from that third party upon termination of the lease.
Section 596a
Duty to compensate for early termination of lease
(1) If the lease terminates in the course of a lease year, the usufructuary lessor must compensate the lessee for the value of any fruits not yet severed but to be severed prior to the end of the lease year under the rules of proper management. When this is done, the harvesting risks must be given appropriate consideration.
(2) If the value referred to in subsection (1) cannot be determined for seasonal reasons, then the usufructuary lessor must compensate the lessee for outlays on these fruits to the extent that they correspond to proper management.
(3) Subsection (1) also applies to timber intended for felling but not yet felled. If the usufructuary lessee has felled more timber than allowed in the case of proper use, then he must compensate the lessor for the quantity of timber that exceeds normal use. Assertion of additional damage is not excluded.
Section 596b
Duty to leave behind
(1) The usufructuary lessee of a business must prior to termination of the lease leave behind as much of the available agricultural produce as is needed for continuation of the farm until the next harvest, even if he did not take over such produce at commencement of the lease.
(2) To the extent that the usufructuary lessee is obliged under subsection (1) to leave produce behind in a greater quantity or of a better quality than he took over at commencement of the lease, then he may demand compensation of their value from the lessor.
Section 597
Late return
If the usufructuary lessee does not return the leased property upon termination of the lease, then the usufructuary lessor may for the duration of such withholding demand the agreed rent as compensation. Assertion of additional damage is not excluded.
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