Many rental contracts, especially contracts for properties which have not yet been completed at the time the contract is concluded, contain provisions stipulating that the contract will take effect upon the handover of the rented premises. With regards to rental contracts for a contractually agreed term of more than one year, several higher district courts have held that these agreements do not satisfy the requirement of written form because the start of the rental period, which is a major element of the contract, is not defined with sufficient clarity. The courts have ruled that the result of this violation of the formal requirements is often a contract which is concluded for an indefinite period - that is, which can be terminated with notice within the statutory periods of notice.
On November 2 2005 the Federal Court of Justice decided that an agreement which states that the rental period is to begin with the handover of the rented premises contains a sufficient definition of the start of the rental period and thus satisfies the requirement of written form. The court ruled that only the factual circumstances which constitute the start of the rental period must be precisely defined, and when it is implemented there must be no doubt about the start of the contract.
The formal supplements which were previously necessary to fulfil the formal requirements for an agreed 'start of lease at handover' are thus now obsolete. With this ruling, the Federal Court of Justice has simplified the formally valid letting of properties which have not yet been completed and for which the parties are often unable to agree a specific handover date.
