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CERHA HEMPEL obtains a landmark ruling that sets a precedent for the extensive liability of a lessee to pay damages in the event of its failure to notify a change of power

The Dispute Resolution Team at CERHA HEMPEL led by Hon.-Prof. Dr. Irene Welser has successfully represented a renowned global real estate investor and won in all instances.

The Dispute Resolution Team at CERHA HEMPEL led by Hon.-Prof. Dr. Irene Welser has successfully represented a renowned global real estate investor and won in all instances.

Using "crystal clear" language, the Supreme Court accepted the arguments underpinning the legal opinion of CERHA HEMPEL's litigation team led by Hon.-Prof. Dr. Irene Welser, thus strengthening the hand of property owners. In a decision whose significance far exceeds the individual case (4 Ob 128/20g), the Supreme Court has ruled in favour of protecting landlords from possible damage incurred from the disposal of their property if tenants – as legal entities – are culpable in failing to comply with their notification obligations.

The legal background to this is as follows: lessees organised in the form of a legal entity are required to inform the lessor of significant changes to their shareholder structure. In most cases, the lessor is subsequently entitled to charge a significantly higher rent as a consequence of a so-called "change of power"; for instance, a complete takeover of the company or a change in the majority controlling the company.

In this case, a well-known international company failed over the course of several years to inform the lessor of the change of power. Therefore, the rent was not raised, and the apartment building was sold at far too low a price a number of years after the change of power had occurred. The owner, who had been kept in the dark about the change of power, used the wrong rent – because it had not been raised – as the basis for calculating the yield.

The seller, who was successfully represented by CERHA HEMPEL, claimed damages for the reduction in the proceeds resulting from the miscalculation of the purchase price. If the lessee had complied with its legal obligations, the seller would have calculated the true value of the property using the correct, higher yield and would therefore have obtained a far higher price for the property when selling it. The claim was upheld in all three instances following a complex procedure for the taking of evidence. The landmark decision is yet another major success for the CERHA HEMPEL Litigation Team.

"This success before the country's highest court underscores our expertise as a leading law firm specialising in the sound legal processing and successful judicial enforcement of claims under commercial law", says Hon.-Prof. Dr. Irene Welser (Head of the Contentious Business Department).

The team at CERHA HEMPEL advising on the case consisted of lead partner Irene Welser, partner Holger Bielesz and senior associate Anton Gorton.