Lease Agreements

Abstract

Given the high percentage of commercial real estate, tenancy law is of outstanding importance in the German real estate industry. For the owner (landlord) of business premises which he does not use itself, the rent from such business premises is the legal basis for achieving his desired return on the property. For the owner (landlord) of business premises, the economic importance results in particular from the fact that the sustained value of a commercial property (e.g. an office building, a shop, a hotel) comes mainly from the commercial lease agreements on the building. These establish what returns the landlord can expect on the real estate over what period. If the rented property is sold to an investor, the purchase price is therefore generally determined on the basis of the lease agreements concluded or yet to be concluded and the rental income generated. Generally, the investor is not so much interested in acquiring the real estate itself but the lease agreements on the premises.