Covid-19 coronavirus: The Covid-19 Act and its impact on real estate financings in Germany

In addition, a general moratorium for the fulfilment of contractual claims under material continuing obligations (wesentliches Dauerschuldverhältnis) is introduced – although this will not apply to lease and loan relationships –, under which a deferral of their contractually owed obligations will be granted to parties unable to meet these obligations due to the Covid-19 pandemic. The aforementioned changes will take effect from 1 April 2020.

The massive economic effects of the pandemic will also affect the real estate finance sector. Please refer to our client bulletin for more information on this subject and on the effects of the Covid-19 Act on real estate financings.

The objectives of this briefing are: 

• First, to set out the intervention in tenancy law which will result in repercussions to the lending relationship; 
• then, to show the consequences this intervention will have for the lending relationship as well as the related issues; 
• to offer parties a catalogue of recommended checks and actions for typical issues; and
• finally, to identify potential amendments to credit agreements that may be required, based on the rationale of the provisions of the Covid-19 Act for consumer loans.