Prolonging Period for Settling Utility Costs

Following the precedence of the BGH of July 27, 2011 (re VIII ZR 316/10), landlords and tenants are now in a position to agree upon an extension of the statutory settlement period of utility costs.


The landlord had died and now the estate manager has a dispute with the tenant about subsequent payment of utility costs. In August 2009, the estate manager settled the utility costs for the period June 2007 until December 2008. The parties previously agreed that as an exception the settlement period was to be extended from 12 to 19 months in order to arrive at a settlement period that tracks the calendar year. The contested settlement was for a payment of € 730. The tenant thumbed his nose at the estate manager and countered that the settlement period is illegal as it contradicts the clear wording of §556 III BGB.

The Federal Court of Justice fully agreed with the manager that the tenant has to pay this amount. The parties of rental contract may contract a onetime change the settlement period, thus the contested agreement is valid. It is generally correct that §556 III BGB determines a binding settlement period of one year. The next paragraph determines that differing agreements to the tenant’s disadvantage are null and void. However, this does not hinder an arrangement for an exceptionally longer period in order to arrive at the statutory period in one fiscal year. As long as this agreement serves both parties, there is nothing that can be held against it because the calendar year is the goal. Possible disadvantages for the tenant (delay in reimbursement or extended testing) are significantly compensated by according advantages (better overview when settling via calendar years).

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