Fourth Bureaucracy Reduction Act (BEG IV) entered into force Jan. 1, 2025

The Fourth Bureaucracy Reduction Act (BEG IV) took effect Jan. 1, 2025, introducing a major change for commercial leases. Compliance with the statutory written form pursuant to section 126 BGB of the German Civil Code (BGB) will no longer be required to meet the form requirement for long-term commercial lease agreements stipulated at section 550 BGB. Instead, compliance with the statutory text form pursuant to section 126b BGB will be sufficient. As a result, commercial leases with a fixed term of longer than one year will now only have to comply with the text form requirement.

As was previously the case, lease agreements concluded without complying with this form requirement will not be invalid. Rather, they will be deemed to have been concluded for an indefinite period and may be terminated after one year, complying with the statutory notice period for ordinary termination.

The relaxation of the form requirement applies to all commercial leases entered into or amended after Jan. 1, 2025. For leases concluded before Jan. 1, 2025, the written form will continue to apply up to and including Jan. 1, 2026. Thereafter, the applicable form for existing leases will also be the statutory text form.
 
Compliance with the Statutory Text Form

In contrast to the written form, the text form does not require a wet-ink signature or a qualified electronic signature. To comply with the statutory text form, a legible declaration must be recorded on a durable medium and names the person making the declaration. A durable medium enables the recipient to store or save the declaration in such a way that it remains accessible to them for a reasonable period and can be reproduced unchanged. Examples of such mediums include e-mail, messenger services, SMS, social media messaging services, as well as PDF files or data files that have been signed using a simple electronic signature (e.g. via DocuSign).

Open Questions

Previous case law has developed several requirements for complying with the statutory written form, particularly regarding wet-ink signatures. The signature serves as a concluding function, and courts required maintaining “documentary connection” (Urkundszusammenhang), meaning all components of a lease agreement (the individual pages, annexes, and amendments), must be recognizable as belonging to the same contract. While current case law no longer requires the physical binding of all documents, a connection between the main contract, amendments and annexes must remain clearly recognizable through corresponding references. It remains uncertain whether the courts will impose the same requirements for lease agreements executed in text form. However, given that the form requirement’s purpose remains unchanged – allowing property purchasers who enters into lease agreements by operation of law the opportunity to comprehensively review the contract – suggests this may be the case.

Despite the BEG IV’s relaxation of the required form, careful consideration remains essential. Companies should review and potentially adapt existing conclusion and signing processes, depending on the preferred method of signing. Additionally, companies may wish to exercise caution during digital contract correspondence, as it could bring about unintended contract changes or risk required form breaches by failing to preserve the required documentary connection. Additionally, the content of digital correspondence is often unclear, incomplete, or contradictory. This not only makes it more difficult for the contracting parties and potential purchasers to clearly determine the contract content, which may lead to disputes and give rise to a breach of form due to unclear provisions.

Considerations

In light of the new relaxation of the form requirements, companies and practitioners should consider the following points:

• Form of signature

As future long-term commercial lease agreements now only need to comply with the statutory text form, neither wet-ink signatures nor qualified electronic signatures are required. As such, lease agreements can be concluded electronically, without printing out the contract and its annexes. For evidentiary and storage purposes, however, consider using tools to sign the contract digitally. Wet-ink or qualified electronic signatures also remain permissible, as they meet the text form requirements. Parties may also agree to subsequently use the stricter written form. Landlords should determine whether and how they wish to sign their contracts in future and adapt their contract conclusion, signing and storage processes, if necessary. Purely digital contracts may quickly gain acceptance, particularly in the case of major landlords or international contracting parties, due to the simplified processes for preparing contracts and obtaining signatures.

• Careful contract drafting

Material contractual terms should still be recorded clearly and without contradiction, regardless of form. Companies should consider creating a single (even if only digital) document including all annexes. Caution should be exercised when concluding or amending contracts by means of purely digital correspondence, e.g. by way of email, as this entails risks with regard to form and interpretation.

• Disclaimers in offers and correspondence

To avoid unwanted contracts being concluded by email or other digital media, companies should use clear communication guidelines and appropriate disclaimers.

• Complete contract document exchange

When concluding a contract digitally, parties should exchange the entire contract, rather than only exchanging signature pages. If annexes need to be sent separately, they should clearly relate to the main body of the contract, and the other party should expressly confirm their content.

• Secure digital document storage

Digitally concluded contracts must be permanently saved. Since some tools delete contracts after a certain period of time, separate storage is required. Depending on the circumstances, associated email correspondence may also need to be archived.

• Amendment of previous written form clauses

Depending on the preferred conclusion procedure, previously standard written form clauses should be amended in new and existing lease agreements, and any voluntary (text) form criteria for concluding future contracts defined, e.g., it can be agreed, for evidentiary and storage purposes, that contract conclusion requires at least the exchange of parts signed using a simple electronic signature.

In summary, while the relaxation of the form requirement under section 550 BGB the BEG IV introduced will simplify the conclusion of long-term commercial leases in the future, it does give rise to potential pitfalls. Parties should continue to carefully observe form requirements and adjust existing contract conclusion, signing, and filing processes if required.