Tenants do not normally want to pay too much when making pre-payments for operating costs, as this would effectively give the landlords an interest-free loan. On the other hand, landlords do not want to end up financing their operating costs in advance by making pre-payments too low. According to Section 560(4) of the Civil Code, both parties to a rental agreement can therefore unilaterally demand a reasonable level for the pre-payment of operating costs after an account settlement, so that the pre-payments by the tenant are as close as possible to the actual costs. Many landlords also add a flat-rate security surcharge of about 10% as a buffer for future cost increases. Until now, this was usually accepted.

In future, however, such a flat-rate security surcharge will no longer be so easy to enforce. In a September 28 2011 ruling,(1) the Federal Court of Justice decided that according to Section 560(4), an adjustment of pre-payments for operating costs is "reasonable" only if based on the actual probable costs which arise in the current financial year. The court states that the basis for any adjustment of pre-payments is the last operating cost statement. The landlord cannot impose an abstract security surcharge which is not justified by specific anticipated cost increases for individual operating costs. Nonetheless, anticipated developments in future operating costs may be taken into account when forecasting the amount of the operating costs in the current year. Increases in the operating costs are an important factor – if not the decisive factor – for any change in the operating costs; so, if there are specific reasons to expect such increases, they can certainly be taken into account. However, if the landlord wants to increase the account results from the previous year by a general security surcharge of 10% in order to allow for possible cost increases, and to adjust the pre-payments accordingly, this is no longer possible. This would go further than the landlord's justified interest in not having to finance the tenant's share of the operating costs in advance. Only if price increases are specifically expected for certain parts of the operating costs (eg, energy prices) can this be included in the calculation of the pre-payments – but only after taking into account the ratio between the affected operating costs and the total operating costs.

In future, landlords will therefore be entitled to increase pre-payments only by a one-twelfth of the amount which had to be charged in arrears for the previous year. Any additional increase should at least be justified briefly and verifiably, because it will be possible to demand a security surcharge only in exceptional cases (eg, if price increases are certain and the amount can also be estimated reliably).

For further information on this topic please contact Kerstin Thiel at SIBETH Partnerschaft by telephone (+49 89 38 80 80), fax (+49 89 38 80 81 01) or email ([email protected]).


(1) VIII ZR 294/10.