Duties of a property manager
A manager looks after third-party assets on a large scale. He is expected to do this conscientiously and with commercial prudence. This includes, on the one hand, protecting the objects from damage, maintaining them, insuring them and, if possible, increasing their value. On the other hand, this includes generating income and increasing it in the long term. The manager must also keep an eye on the total costs of the property and its management.
The property generates income from its rental income. If the administrator deliberately or negligently omits rental income, this leads to damage to his client in the form of lost profits. This means that the administrator, so not contractually regulated otherwise, on the one hand regularly carry out the possible rent increases and on the other hand must agree on the re-lease market prices. If he rents the apartment below the usual price, he does not carry out any increases or if he arranges for reductions during the current tenancy, the losses for the owner and thus damages. According to general civil law principles, the administrator is liable for their replacement.
Liability trap rental cover
The planned rental cover brings the stewards in the above background already in an impossible situation:
- If they do not follow suit, fines and legal costs are threatened by rent reduction disputes. The fines (and thus the damage) fall away again, if the Mietendeckel turns out to be void.
- If they are directed towards the rented cover and this is void in the end, which, according to everything that we currently know, will be the case, then the owner incurs damages in the amount of the missed rent difference.
- If an authority has a rent reduction and the administrator takes this, there are also rent differential damages. If the administrator does not anticipate the reduction, fines will be incurred.
- If the administrator is currently refraining from renting, in order to avoid the above ambiguities, the owner has lost his rent. In addition, this could be a misappropriation (fine and legal costs).
- If the carer is leasing up-to-date and the rented cover comes into force and is effective, a long-term rental relationship arises for the owner, which he can not easily get rid of. After expiry of the Mietendeckels the apartment is bad, because too low, rented. It might have been better to leave them empty and then rent them again at a market price.
- If the caretaker does not make repairs in order to reduce costs with regard to the rental cover, it may be necessary to modernize it later in the current lease. This is more expensive and potentially conflict-prone. In addition, the apartment would fall out of the rental price brake with complete renovation and could be better rented than without. Even smaller refurbishments are rent increasing in the connection rental. A failure to interim modernization thus reduces the yields of the object, which in turn can mean a differential damage.
- However, if the manager carries out modernization and the rented cover comes and is effective, the owner has no adequate income from it. The steward would have thrown money out the window for nothing.
Also, the rent brake currently holds this liability trap. After BGH VIII ZR 130 / 18 it may not apply in Berlin. If so, can be freely re-rented. But if that's not the case, then it does not work. If the Administrator decides incorrectly, he is liable for consequential damages.
The range of the legally possible situations thus ranges from completely free new letting possibility as in the new building over a covered new letting to 10% over Mietspiegel (if the Mietpreisbremse applies) up to rent cover rent, whereby due to the still outstanding conditions regulations of the senate is not clear which buildings at present under which lettings fall. Each variant carries damage risks and thus potentially liability for the administrator.
Occasionally, journalists or private individuals on Twitter, and the like wonder that so few landlords abide by these rules. The reason is in my opinion that economic caution forces the owners meanwhile to demand the maximum of what is conceivable, and then, if necessary, to let down to the maximum of what is legally possible. Because whether and how the legal situation is up-to-date, is unclear, and how it develops in the future, even more so.
In the end, the legal provisions of the past decades in tenancy law have always punished those who have cautiously and socially let. Thus, the pre-rent lower limit for new rentals after rent brake. Was the Vormiete high, she continues to apply. If it was not high, it can only be re-rented lower. Better are those who demanded high rents even earlier. The same applies to rent increases: 15% of 3 Euro are 45 cent, 15% of 10 Euro are 1,50 Euro. The higher the starting point, the greater the rent increases, unless the Mietspiegel does not cut at some point. But then you are at the maximum and not far below.
If now in the Bundestag legislative initiatives are started, after which rent increases should be possible in the future only in the amount of maximally 3% and the Mietspiegelberechnungen are downsampled by statistic interferences, prefers those, which are already on high rent level, while the social landlords again the neglect to have. These have now learned that restraint is not worthwhile. Many private owners are therefore giving up on this and optimizing their stocks as far as they can. There is nothing left for them.
In the end, these considerations also apply to stewards: the unclear legal situation and the unclear political outlook force them, from an economic point of view, to maximize returns with all the possibilities that can be identified in individual cases. That means cost minimization and rent increase. A reliance on the fact that something that is still possible today, is also possible in the future, is out of commercial prudence currently not recommended. Therefore, it needs to be optimized as quickly as possible.
Thus, the numerous regulations and tightening exactly the opposite of what they officially intend.
increased work with conditional regulations
If lawyers do not know exactly what the situation is, they work with conditions: if the situation is like this, one thing is true; if it's different, the other is. This mechanism is often used in contracts whose future development is not foreseeable today. However, it also lends itself to acting in an unclear legal situation as currently.
In the case of new leases, the following can be agreed: if it applies, the rent is temporarily reduced and the higher afterwards. If it does not apply, the rent is not reduced. Either way, there can be no fine, the earnings situation is as optimal as the situation allows.
It is also possible to work in the case of reductions of the authorities: it is explained that in the event that the rented cover is effective, the rent is reduced to the amount required for the duration of the cover. This in turn means that the lowering does not occur with ineffective cover and ends when it expires.
When it comes to the question of whether apartments are to be re-rented in the state-of-the-art state, or whether they can be cleaned up, you can work with a time limit. § 575 Paragraph 1 Number 2 BGB allows the time limit of a lease, if you do not want to redevelop now, but later comprehensively. The planned measures must be specified in the contract and be as far-reaching as required by the regulation. But then you can rent now for the first time (and must probably do the highest price, just refurbished) and the rental cover debate sit out. Then the tenant has to move out and you bring the renovation after.
After all, the owners are always faced with the question of whether they would rather sell to an owner-occupier and save themselves all the trouble and hassle. At least for condominiums, administrators should therefore inform the owner of existing vacancy and query his decision on how he wants to proceed with the apartment on.
individual contractual clauses
If you need an individual contractual solution or need strategic advice for special situations, I am happy to be available as a lawyer.
Invest at the apartment level
For the construction of assets and passive income from real estate, especially one or more condominiums, I have written an ebook, you can find the link to Amazon here, If you prefer to keep it printed in your hand, you will find it here.
Who under the new rules no longer rent, but wants to use, can cancel due to personal needs.
If you want to read about the topic of self-employment termination, you will find related blog articles under the following links. Of course you can also just commission me, then I will do everything for you as your lawyer.
- Personal use termination for others
- Documents for personal use termination
- Protection against dismissal for old tenants?
- Own requirements: elimination of the reason for termination before expiry of the deadline
- BGH: no landlord change in internal sale
- No self-service termination via 80 for second home
- Script for personal use
- Own use also for second home
- Tenant protection at conversions