According to the previous legal situation, rental properties that fall within the full and partial scope of application of the MRG could only be effectively limited if the time limit was agreed in writing in the rental agreement and — if the rental property (main or sub-rent) is an apartment — the fixed-term lease is entered into for at least three years or longer. According to previous legislation, it was irrelevant whether the landlord was a private individual or an entrepreneur.
As part of the current tenancy law amendment, legislators want fixed-term rental contracts for apartments to become less attractive. For apartments, the shortest possible is time limit Now basically no longer three, but five years.
Exempt Apartments are covered by this change if their Landlords not as “entrepreneurs” is to be regarded within the meaning of the Consumer Protection Act; then the three-year minimum period of time continues to apply1.
An entrepreneur is anyone who is not a consumer within the meaning of the Consumer Protection Act. A company within the meaning of the Act is “any permanent organization of independent economic activity, even if it is not aimed at profit.” Distinguishing whether the landlord is an entrepreneur or not requires a practical assessment on a case-by-case basis. According to case law, the following evidence supports the landlord's entrepreneurial status:
In a decision, the Supreme Court considered the private house owner (still) as a consumer when in his house no more than five rental items be added to stock.3
Corporations, employment and economic cooperatives, etc. are entrepreneurs by virtue of their legal form4; this will probably also apply to this aspect of tenancy law.
The decisive date for the (non) existence of entrepreneurial status is the time of conclusion of the contract. If the landlord is not an entrepreneur at this point in time, then a period of three years is permitted.5 This is emphasized in the legislative materials in this wording. However, if the fixed-term tenancy is extended, the entrepreneurial status could intervene if this has occurred in the meantime.
They are newly completed residential rental agreements affected. Care should be taken in particular with extensions existing, fixed-term residential rental contracts required, as these are also covered by the amendment to the law! The provision is also applicable in the event of tacit renewal.
What applies if the agreed time limit is too short?
A clause that contains a time limit that is too short is ineffective. This results in an indefinite rental agreement, meaning that the tenant is then subject to “protection against dismissal” for rental agreements in the full and partial area of application of the MRG (Sections 29 and 30 MRG).
We would be happy to advise you on your rental agreement and the time limit provided for in it.
Johannes Reich-Rohrwig
1 Section 29 (1) Z 3 MRG nF.
2 RIS Justice RS0065317.
3 Supreme Court 3 Ob 547/93.
4 § 2 UGB.
5 RV 269 BLGnR 28th GP, 9th
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