Maintenance and replacement investments in rental housing – OGH decision falls in the grey area of rental law

Conflicts between tenants and landlords take on particular urgency when essential tenant needs, such as a functioning heating system or hot water, are permanently compromised because the heating system or the hot water boiler is defective. This often leads to the question of who must bear the cost of the largely expensive replacement investment. The Supreme Court (OGH) had to decide a while ago (GZ 1 Ob 183/12m of 13.12.2012) on disagreements in a rental apartment within the full scope of the Rent Law (MRG) or the housing association-like Housing Benefit Act (WGG). Specifically, the hot water boiler was defective due to age and its replacement was paid for by the tenants (costs around €1,000), as the landlord had refused to pay the installation contractor’s bill. Referring to the (alleged) contractual obligation of the landlord to replace the defective device, the tenants subsequently reduced their monthly rent payments (a reduction of €100 per month), whereupon the landlord sought to terminate the tenancy by demanding the missing portion of the rent.

The tenancy agreement stipulates that the tenants are obliged to maintain and repair the apartment and all furnishings, including heating and hot water systems. The tenant’s obligation to maintain the property is limited accordingly by the wording, as the landlord must cover any serious damage to the property or the removal of a significant health hazard. In addition to this clause, which corresponds to the landlord’s statutory maintenance obligations, the contract stipulates that normal wear and tear (of the property) is the responsibility of the landlord.

In the absence of a precise contractual agreement, the landlord is not liable for the replacement costs.

The question of the cost of replacement in connection with the replacement of a defective boiler falls within a so-called gray area for the OGH, as it is not a serious damage to the building for which the landlord must bear the costs of its removal. From a tenant perspective, however, the question arises as to whether the maintenance obligation also includes replacement, especially if the defect in the device was not caused by the tenant, but is based on time-related wear and tear. The OGH came to the decision that in the absence of an express contractual agreement, the costs for the replacement of a defective hot-water boiler must not be borne by the landlord, and that the tenant – if he or she has accepted payment as in the concrete case – does not have an immediate right to replacement. A contractual clause stating that the normal wear and tear of the apartment and furnishings is at the expense of the landlord is not specific enough to require the landlord to bear the costs. Therefore, the maintenance/care duty imposed on the tenant in the rental agreement also includes the replacement of the irreparably damaged hot water boiler.

No claim for rent reduction after the defect is rectified

The reduction in the rental price announced by the tenants and actually implemented of approximately €100 per month, which is tantamount to compensating for the costs incurred for replacing the boiler, is also unjustified for another reason. A potential claim for a reduction in the rental price is only valid for the duration of the defect or the reduced usability of the property. Even if the problem is resolved by the tenant, in the absence of continued use of the apartment, no reduction in the rental payments for subsequent months is possible.

With its decision, the OGH sheds light on a grey area of tenancy law. Not least from a tenant’s perspective, it becomes clear that clear regulations in the tenancy agreement are advisable in order to avoid having to bear the costs of unpleasant, and often costly, replacement investments associated with essential home improvements. Should this nevertheless occur, it should be remembered that upon termination of the tenancy, recovery claims for useful expenses can still be made. From the landlord’s perspective, it is gratifying that the tenant’s self-repair of the defect cannot automatically result in losses for the landlord – for example, in the form of offsetting replacement costs with the future rent.

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