Skip to content

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

On 27 March 2020 the parliament adopted the Covid-19 Act. This act enacts various economic support measures for entrepreneurs, sole proprietors, other small, medium-sized and large enterprises and banks. In terms of civil law, the Covid-19 Act, which will take the form of an omnibus act, introduces changes to contractual law in the field of leases and loans which are to be made in article 240 of the Introductory Act to the German Civil Code (Einführungsgesetz zum Bürgerlichen Gesetzbuch).

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.