Severability clause in a rental agreement: when is it invalid?

Tenancy agreements are often drawn up in the following way: A pre-printed form contract is possibly supplemented in detail and signed by the contracting parties. The question often arises afterwards as to whether an agreement in the rental contract is actually valid or invalid. The severability clause is often incorrectly mentioned in this context, as in most cases tenancy agreements fall under the General Terms and Conditions Act. This is because most tenancy agreements contain standardized clauses (GTCs) and are not individually negotiated. This article explains what GTCs are, when the GTC Act applies and when the severability clause makes sense. It concludes by looking at what needs to be considered when using them.

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What is a severability clause?

The severability clause is a legal instrument that aims to preserve the integrity and enforceability of contracts. Originating from the Latin word "salvare", which means "to save" or "to preserve", this clause serves to maintain the validity of the rest of the contract, even if individual components should be invalid or unenforceable. Its primary purpose is to prevent an entire contract from being declared invalid due to the invalidity of individual clauses. This is particularly relevant if specific contract contents could lose their validity due to legal changes or court decisions. 

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What are the GTCs? And what needs to be observed?

In this article, we assume that the landlord is the user of the GTCs, i.e. the person who draws up the contract.

"AGB" stands for "General Terms and Conditions". These are pre-formulated contractual terms and conditions that cover various aspects of the tenancy, such as the rights and obligations of the tenant and landlord, rent payments, regulations on operating costs, pet ownership, renovation obligations, termination provisions, etc.

In order to protect the consumer, i.e. also the tenant, there are regulations in Sections 305 to 310 of the German Civil Code (BGB) on the structuring of legal obligations through general terms and conditions. These regulations ensure that the tenant is not unreasonably disadvantaged. If the landlord writes something into the contract that is contrary to good faith (acting fairly and honestly, with the interests of the other party in mind), then this clause is invalid. The landlord cannot therefore invoke this contractual provision, even if the tenant has signed it.

The landlord can even be liable for damages if he uses invalid general terms and conditions and the tenant suffers damage as a result, for example because the tenant did not immediately recognize the invalidity and therefore paid unjustified amounts or waived rights.

According to § 306 BGB applies:

1. If general terms and conditions have not become part of the contract in whole or in part or are ineffective, the rest of the contract remains effective.

Meaning: If certain parts of the General Terms and Conditions (GTC) of a contract are invalid or do not form part of the contract, the rest of the contract still remains valid.

2. The invalid provisions shall be replaced by the statutory provisions.
3. The contract is invalid if adherence to it would represent an unreasonable hardship for one of the contracting parties, even taking into account the legal changes.

This means that the contract, even if parts of it are invalid, is protected by GTC law.

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When does a contract fall under the GTC Act?

Whenever a landlord uses forms that are intended for at least one application, these are general terms and conditions (GTC). Even if there are gaps or possible additions in the sample contract, this does not automatically lead to an individual agreement, especially when it comes to points such as the rental period, rental price or deposit, as these are excluded from the GTC content control anyway due to the freedom of contract.

If the landlord uses a printed rental agreement form, these are always general terms and conditions. Contracts can be written by computer, typewriter or by hand. The landlord cannot circumvent the control by regularly writing in the contract form by hand, for example:

 "The tenant must renovate the apartment when moving out." 

This clause remains verifiable and is ineffective because it was not negotiated but prescribed by the landlord. 

Even if the landlord only writes the clause into his rental agreements from memory, it is a general business condition. It is sufficient for the clause to have been intended for use in at least three cases. It also constitutes general terms and conditions if one of two alternative clauses is ticked or if the form text contains a request to delete unwanted parts.

Some landlords ask the tenant to sign that they have had sufficient time to read, check and familiarize themselves with the contract before signing it and that they agree with all of its provisions. Such a blanket declaration has no meaning. It is also not sufficient for negotiation if the tenant has only accepted the disputed clause after lengthy explanations from the landlord.

Occasional formulations such as: 

"All provisions of this contract have been discussed between the parties and negotiated separately ..." 

cannot exclude the GTC characteristic. Negotiation does not exist, for example, if the contractual terms were only read out, discussed or their meaning explained, as this does not change the fact that these terms were imposed unilaterally. This also applies if the other contracting party declares its consent to the clauses.

The law only does not apply to such clauses if the landlord can prove that they were negotiated and included in the contract at the tenant's request.

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What if a contract that falls under the General Terms and Conditions Act contains a severability clause?

If a contract that falls under the General Terms and Conditions Act nevertheless contains a severability clause, this can put the tenant in a worse position. This is because the severability clause results in an inadmissible contractual clause being converted into the legally most obvious correct form, which is not necessarily the most favorable for the tenant.  

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When are contracts considered individually negotiated?

General terms and conditions do not exist if the content of the clause has actually been negotiated in detail between the tenant and landlord. Negotiation means more than mere bargaining. It presupposes that the landlord informs the tenant about the content and scope of the clause, e.g. points out a deviation from the statutory regulation, and gives the tenant the opportunity to influence the content of the clause. Simply explaining the clause is not sufficient. Only the negotiated provision is deemed to be an individual clause; the other contractual clauses provided by the landlord remain general terms and conditions.

Special regulation:

Form rental agreements can be divided into different categories depending on their intended use, in particular residential and commercial rental agreements. Commercial leases relate to the rental of commercial properties such as offices, stores or warehouses and are subject to special regulations that give the contracting parties more freedom than residential leases.

As commercial leases are not consumer contracts, clauses that would be inadmissible in residential leases may be effective here. When reviewing general terms and conditions, all statements made by the user are taken into account, including assurances or technical provisions in the appendix. The decisive factor is how an average tenant who is not legally trained would understand the information .

Example: Suppose the landlord adds a technical regulation to the rental agreement, such as instructions on how to properly ventilate the rented rooms. In addition, the landlord verbally explains that this regulation is important to prevent mold growth and assures that the tenants will not have any problems with mold if they follow the instructions.

When reviewing the GTC, both the written provision and the landlord's verbal assurances would be taken into account. It would be examined whether these provisions and promises are fair and in accordance with the statutory provisions and whether they do not unreasonably disadvantage the tenant.

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The General Terms and Conditions Act does not protect the user of the clause, but only its contractual partner from unreasonable disadvantages. 

The following applies to individual contracts:

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"If a part of a legal transaction is void, the entire legal transaction is void if it cannot be assumed that it would also be carried out without the void part."

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For this reason, the myth surrounding the severability clause is not entirely false. In the case of an individually negotiated contract (more common in commercial contracts), the severability clause can retain its effectiveness. However, there are a few things to bear in mind when formulating it.

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Severability clause: What do I need to consider?

• Invalidity if the wording is too general: If the clause is worded too vaguely, it may itself be subject to legal challenge. If the wording is too broad, the clause may be declared invalid, which undermines the legal stability of the contract.
  

• Ambiguities in the interpretation: Imprecisely worded clauses can lead to different interpretations. These ambiguities can provoke legal disputes, which can complicate the implementation of the contract and lead to lengthy legal disputes.
  
  
• No cure for invalid provisions: The severability clause cannot cure the invalidity of individual contractual provisions. It merely ensures that the validity of the remaining parts of the contract is not affected. This means that ineffective components are not automatically replaced by legally permissible ones, which can lead to loopholes in the contract.
  
  
• Compliance with statutory provisions: The clause must be formulated strictly in accordance with statutory provisions. Violations of mandatory statutory provisions or the maintenance of immoral contractual components can render the entire clause invalid.

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Why then at all? The advantages of the severability clause

The severability clause offers significant advantages for landlords and tenants, helping to increase stability and legal certainty in tenancies:

• Protection of the entire contract: The clause guarantees the validity of the entire rental agreement, even if certain parts should become invalid. This is crucial for maintaining the structure and integrity of the contract.
  
  
• Legal certainty and avoidance of disputes: The clause reduces the risk of protracted legal disputes and minimizes uncertainties that could result from the interpretation of invalid or problematic clauses. This creates a clear and reliable basis for the business relationship between the parties.
  
  
• Maintenance of the tenancy and protection of the parties' interests: The clause allows the tenancy to continue despite invalid provisions and ensures that the fundamental interests of both parties remain protected. This safeguards the economic and legal expectations of the contracting parties and ensures the continuity of the contractual agreements.

These aspects illustrate the importance of the severability clause as an instrument for ensuring legal conformity and preventing potential conflicts.

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In short, landlords and tenants should ensure that the severability clause in tenancy agreements:

1. Clearly defines which parts of the contract it applies to.
2. Specifies precisely how the validity of the other parts of the contract is ensured.
3. guidelines for the adaptation or replacement of invalid clauses in order to avoid legal loopholes.
4. Not formulated too broadly in order to ensure compliance with legal regulations and avoid abuse.
   

In summary, the severability clause offers an important safeguard in individually negotiated tenancy agreements by preserving the validity of the rest of the agreement despite invalid individual clauses. Nevertheless, many tenancy agreements are subject to the General Terms and Conditions Act, which strictly examines prefabricated clauses for fairness and appropriateness and thus makes the severability clause superfluous or even obstructive. Landlords and tenants should ensure that all contractual conditions are clearly and legally formulated in order to avoid misunderstandings and legal conflicts. 

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