New text form requirement for long-term commercial leases in Germany

by Dr Jörn Bosse

As of 01 January 2025, a new form requirement applies to long-term commercial lease agreements in Germany. The previously mandated written form (Schriftform) under Section 550 of the German Civil Code (BGB) often caused practical difficulties. The alternative electronic form did not become established in practice. Now, the legislature has introduced the text form (Textform) as a more flexible alternative. But what exactly has changed, and will this really make handling commercial leases easier in practice?

Under the old regime, any lease exceeding one year had to comply with the strict written form: the lease agreement had to be signed in original by both parties, with all material terms included in one document or properly referenced annexes. This strict formalism frequently led to inadvertent violations if the parties did not involve their attorneys. Incomplete references, later amendments made informally, or name abbreviations instead of signatures could all trigger non-compliance. The consequence was severe: either party could prematurely terminate what was meant to be a long-term lease with statutory notice.

With the reform effective from 2025, commercial leases of more than one year now only require the text form, as defined in Section 126b BGB. Under this requirement, the content must simply be made available in a readable form, such as in an email or a PDF, with clear identification of the author.

Does this lead to genuine practical relief? Probably not There is a risk that lessors and lessees may now be even more likely to commit formal errors, mistakenly believing that the issue of form has effectively been resolved. For example, the parties must continue to ensure all essential contractual terms are recorded in the proper form. To the extent that this has been difficult in the past, it will remain difficult in the future. The parties will still need to ensure proper references to the lease agreement and any previous amendments when drafting addenda.

In addition, lessors and lessees run the risk that an exchange of emails could be interpreted as a binding agreement to amend the contract, rather than as a mere discussion of key points for a formal written addendum yet to be drafted in detail. The parties must therefore make it clear – even if by using appropriate standard phrases in emails – that the actual agreement has yet to be reached.

In conclusion, lessors and lessees must not underestimate the formal requirements, and should approach lease agreements, and amendments to lease agreements, with the same level of care as before. Only the process of formally concluding a lease agreement or amendment has been simplified, meaning that a joint signing appointment or postal exchange of physically signed copies of the agreement or amendment is no longer necessary. Commercial parties should establish clear internal processes to ensure consistent contract documentation.

Dr Jörn Bosse is a Partner at FPS, specialising in real estate law. He advises on project developments and asset management.

Real Estate Germany FPS