How far does the obligation to tolerate modernization extend?

According to Section 555d, tenants are obligated to tolerate modernization measures, provided they do not constitute an unreasonable hardship for them. However, this obligation to tolerate such measures also has its limits, as a recent ruling by the Federal Court of Justice (BGH) demonstrates: If the modernization measure is so extensive that it fundamentally alters the character of the rented property, the tenant has the right to refuse it.

Section 555b defines modernization measures as structural alterations that go beyond mere maintenance, save energy, and sustainably increase the utility value of the rented property, so that "general living conditions are permanently improved." In the current dispute, however, the work was not intended to be limited to improving the existing structure: The landlord of an older terraced house sued her tenants because they refused to tolerate the announced construction work.

These planned measures included, among other things, thermal insulation of the facade, roof, and foundation slab; the replacement of windows and doors; changes to the layout of living spaces; the construction of a conservatory with an opening to a new eat-in kitchen; the conversion of the attic; the construction of a terrace; and the demolition of an extension. As a result of these measures, the base rent was to increase from €463.62 to €2,149.99 per month. The tenants successfully challenged the dismissal of the lawsuit.

Measures too far-reaching

In this case, the Federal Court of Justice (BGH) ruled that the measures in question no longer constitute a modernization measure under Section 555a Nos. 4 and 5 of the German Civil Code (BGB), which the tenant is legally obligated to tolerate ( BGH , decision of November 21, 2017 , case no . VIII ZR 28/17) . This is because a modernization measure must not alter the rented property so drastically that something entirely new is created. The measures announced by the plaintiff, however, were so extensive that the character of the rented property would be fundamentally changed and were not limited to improving the existing structure, the BGH found. The judges referred primarily to the changes to the floor plan and the addition of new rooms, a terrace, and a conservatory. With such far-reaching measures, it is no longer possible to speak of a "sustainable increase in the residential value of the rented property" (Section 555b No. 4 BGB) or a "permanent improvement of the general living conditions" (Section 555b No. 5 BGB).

Regulations for modernization

Generally, a tenant must tolerate modernization measures, provided the landlord gives three months' written notice. This notice must include details about the type and scope of the planned work, in addition to the start date and expected duration. The tenant must also be informed about the anticipated increase in rent and, if applicable, operating costs. Furthermore, the landlord must point out that the tenant can (in writing and within the prescribed time limit) claim undue hardship if the anticipated rent increase is unacceptable.

Sources: dejure.org, bgb.kommentar.de, haufe.de, immobilienzeitung.de