Provisional rent increase, works not carried out: claiming a refund with interest

A provisional increase of the main rent under section 18a MRG is tied to a specific maintenance work and to the landlord’s obligation to carry it out. If the promised works are not carried out, section 18a(2) MRG requires the additional amounts arising from the provisional increase to be refunded with appropriate interest.

The refund analysis therefore starts with the principle decision, the landlord’s undertaking and the actual course of the works. A short delay does not answer the question by itself. The key issue is whether the works named in the decision were commenced and carried out within the reasonable period applicable to the undertaking.

Keep the principle decision and provisional increase separate

Section 18a(1) MRG applies where an increase of the main rents is sought before maintenance work is carried out. The court or municipality under section 39 MRG first decides in principle whether the specifically identified work justifies an increase and during which period the costs may be covered from the main rents. That period may not exceed ten years.

The provisional increase does not follow automatically. Under section 18a(2) MRG, the landlord must undertake to commence and carry out the maintenance works named in the principle decision within a reasonable period. Only on that basis may the court or municipality set the start and amount of the provisional increase.

The article on main-rent increases under section 18 MRG covers the wider requirements and transaction assessment. This article focuses on the consequence of a breached performance obligation. An internal cost calculation or pending application is not an authorised provisional increase.

Review the performance obligation and reasonable period

The undertaking concerns the maintenance works named in the principle decision. The review must therefore compare the description, scope and status in the decision with the work file. A different package of measures cannot automatically satisfy the original undertaking.

Useful records include orders, commencement records, progress reports, invoices, acceptance records and correspondence with tenants. They show whether the work began, continued and departed from the specified scope. The legal assessment depends on the decision, undertaking and actual course of the works.

A mere change in timing therefore needs careful classification. The statutory refund consequence is linked to failure to comply with the obligation to carry out the works. Before claiming a refund, the relevant reasonable period must be established from the decision and procedure, together with the works that were due within it.

Record the additional amounts for each tenancy and period

The amounts to be refunded are the additional amounts arising from the provisional increase of the main rents. The file for each affected tenancy should therefore show the former main rent, the provisionally increased amount, the start of collection and the payments actually made on that basis.

The final rent-increase decision may use different furnishing categories for individual units than the provisional increase. Section 18a(2) MRG provides for payment of the resulting difference or refund of an excess amount. That reconciliation must be calculated separately from the refund caused by failure to perform the works.

A single building-wide balance makes review difficult. A useful schedule lists the tenancy, demand, payment, related work and refund status. The article on rent reserves in an apartment building addresses the preceding accounting and purchase review. This article deals with the specific refund arising from the provisional increase.

Make appropriate interest and supporting records traceable

Section 18a(2) MRG requires appropriate interest in addition to repayment of the additional amounts. The provision does not state a fixed percentage for this situation. The amount and relevant period must therefore be reviewed against the individual claim, payment records and legal classification.

A reliable calculation needs the demands, bank statements or payment confirmations, the decision on the provisional increase and records showing when the performance obligation was not met. Where amounts changed, each month or payment period should be listed separately. This keeps the principal amount distinct from the interest calculation.

Tenants should request the relevant records in an organised form, while owners should disclose how the additional amounts arose. The article on tenant correspondence in an apartment-building sale explains how personal records can be organised in a data room. Here the file should contain only information needed for the decision, payments and performance review.

Consider the refund alongside an order to carry out works

Section 18a(2) MRG expressly preserves the effect of section 6 MRG. Two questions must therefore be reviewed side by side: repayment of the additional amounts already collected under the provisional increase and enforcement of the outstanding maintenance work.

Under section 6 MRG, the court or municipality may, on application, order the landlord to carry out specified maintenance or improvement works within a reasonable period of no more than one year. A final order is an enforcement title under the provision. After the period expires without performance, the persons named in the statute may apply for appointment of a manager to carry out and finance the works where the statutory requirements are met.

The two routes have different purposes. A refund corrects amounts already collected. The section 6 route is directed at enabling or enforcing the work. The article on maintenance works in an apartment building covers classification and cost planning without replacing the separate refund analysis.

Allocate ownership-change and refund risk in the agreement

When an apartment building is sold during the provisional increase, the principle decision, performance obligation, construction progress and collection records must be handed over together. A clause about the renovation budget alone does not show which amounts were collected or whether the work began within the required period.

The transaction file should contain the principle decision, decision on the provisional increase, landlord undertaking, period records, building contracts, payment schedules and tenant correspondence about the work. The sale agreement should also state who organises the remaining work and how the economic allocation between seller and buyer covers a refund with appropriate interest.

An internal agreement does not remove the tenancy-law refund obligation. It allocates the risk between seller and buyer. The guidance on ownership changes in an apartment building addresses the handover of leases and management. The provisional increase requires the specific section 18a records and payment data as an additional file.

A review plan for tenants, owners and buyers

Start with the decision: Which work was identified, which period was set and what did the landlord undertake to do? Then establish the construction progress and timing from original records. Only after that should the payment stream for each tenancy be reconstructed.

The refund principal and appropriate interest should be shown separately. In an ownership change, the agreement, data room and handover add a second review layer. If the work remains outstanding, the parties should also assess whether a section 6 MRG application is appropriate. The apartment-building risk check can structure the available records for this initial review.

A refund claim should rest on the complete file. This makes it possible to distinguish an authorised provisional increase from an internal section 18 estimate and to identify the additional amounts connected to a failure to carry out the works.