An owner (female) holds, in the hypothetical case, a small rented residential building. She wants to demolish it and replace it with a larger rented building. The first project sketch shows more future lettable area. A note based on this reads: New building brings higher returns, therefore we can terminate the tenancy. Several essential steps for the legal decision are missing from it.
This article deals with the examination of a possible termination for the purpose of realisation (Verwertungskündigung). It is neither a termination template nor an economic recommendation to demolish.
Do not equate the statutory ground with the project wish
Section 573(2) number 3 BGB requires an appropriate economic realisation prevented by the continuation of the tenancy with significant disadvantages. The chance of higher rent through letting housing elsewhere is disregarded. The disposal mentioned there in connection with the creation of condominium ownership is also excluded. [B573]
The owner therefore needs a more precise question than Is my new build worthwhile. She must have examined which concrete project is being pursued, what prevents the existing tenancy from this and which significant disadvantage to herself is supposed to result. The mere sequence wish-project, termination, later further planning would not be careful preparation.
Turn a possibility into a comprehensible plan
In judgment VIII ZR 243/16 the BGH distinguishes an indeterminate later interest in realisation from an interest sufficiently concrete in prompt implementation. [BGH243] For one’s own preparation the confirmed project status and outstanding conditions are therefore kept separate.
In the example there are initially two contradictory area drafts. Financing was only roughly mentioned. The owner therefore does not declare all prerequisites to be fulfilled. She names the current plan, the decisions still required and the question whether on this basis a sufficiently concrete legal examination is possible at all.
This includes a description of the factual dependence on the existing tenancy. Which works affect which rented rooms? Which other uses or contracts are also affected? The compilation should show the overall context, not conceal individual obstacles. It does not confirm any building-law permissibility.
Examine the own disadvantage with a reliable comparison basis
In the judgment mentioned the BGH emphasises that mere profit optimisation is not sufficient. At the same time the examination must not be narrowed exclusively to an impending loss of livelihood; the circumstances are to be weighed individually. Disadvantages of a legally different, affiliated company do not replace the owner’s own disadvantage. [BGH243]
Our editorial recommendation for the hypothetical case is therefore a clear separation of the documents. The project calculation describes what the new building is expected to cost and deliver. The inventory consideration describes the continued holding of the existing house with comprehensible assumptions. The legal examination then assesses whether and which of the evidenced differences could meet the statutory requirement.
The owner does not treat a non-binding estimate as an established loss. Claimed maintenance expenses are given a concrete basis; expected future income remain designated as assumptions. A particular result is not artificially produced by a favourably chosen period or omitted costs.
This preparation does not decide the legal question. It prevents a general more-profitable from becoming an alleged proof through frequent repetition.
Prepare the declaration only after a complete assessment
Section 573(3) requires the statement of reasons in the termination letter; further reasons are only taken into account if they arise subsequently. [B573] A later attempt to replace an imprecise initial justification with entirely different circumstances is therefore not a reliable plan.
The owner has the full facts assessed before any declaration. This also includes the further prerequisites, possible objections and the concrete procedure. This result can argue against a termination on the current basis.
The decisive step is the reasoned connection between the project actually pursued, the existing tenancy and the evidenced own economic situation. Only then can a suitable further course be decided. The more attractive drawing of the new building alone does not provide this connection.