Tenant turnover in an apartment building: handover records, investment reimbursement and open claims

When a tenant moves out of a unit in an Austrian apartment building, several legal questions arrive at the same appointment. The rented premises must be returned, a condition has to be recorded, the deposit is expected to be paid out, outstanding rent or service charges must be reconciled, and a reimbursement claim for the departing tenant's improvements may exist under section 10 MRG or section 1097 of the Austrian Civil Code. If these threads are not separated cleanly on the day of return, evidence is lost and a later dispute will turn heavily on the state of the file.

For an apartment building with many tenancies, a second dimension applies. Every tenant turnover feeds back into the rent roll, the running income forecast and the data room of a later sale. Handover records, investment reimbursement agreements and open claims are therefore not merely a matter between the outgoing tenant and the property manager. They are building blocks of the property file that can decide whether a representation in a share or asset sale agreement actually holds up.

Return duty and the condition owed at the end of the tenancy

When the tenancy ends, the tenant must return the premises. Section 1109 of the Austrian Civil Code requires the return in the condition in which the premises were received, with ordinary wear and tear resulting from contractual use excluded. Drawing the line between usual use and damage is a case-by-case exercise, and precisely for that reason the handover record becomes the central piece of evidence. Conditions that are not documented cannot be reliably reconstructed years later.

For flats within the full scope of the Austrian Tenancy Act, the maintenance rules add a further layer. The landlord's maintenance duty for serious defects of the building or for general parts is separate from the tenant's return duty for the rented unit. The tenant is not liable for defects that were properly reported and that fall within the landlord's sphere. The article on maintenance works in an apartment building sets out those boundaries in detail.

Deliberate changes by the tenant, in particular material improvements within the meaning of section 9 MRG, create a separate legal situation. They may have been made with or without the landlord's consent, they may be subject to reinstatement or expressly permitted in the lease. Before any return, it is therefore worth checking the lease, side agreements and the notice file so that the condition owed can be defined precisely for the handover.

What a supportable handover record actually delivers

A handover record has three functions. It captures the actual condition of the rented premises on the day of return, it documents the transfer of keys and installations together with meter readings, and it defines the open dispute field. It is neither an assumption of liability nor an acknowledgement, but a snapshot of a point in time. Prepared with care, it keeps any later dispute manageable. Filled in poorly, the dispute shifts to memory and assertion.

In practice, a structure that treats rooms, fittings, floors, sanitary items, heating, electrics, windows and doors, dedicated installations and general areas separately has proved reliable. Complaints are named but not assessed legally, because the question who is responsible for a defect cannot usually be decided at the kitchen table. Time-stamped photos, a meter list and a complete list of returned keys are essential. For flats with a cellar compartment, parking space or ancillary areas, a dedicated line for each is the standard.

For an apartment building with a structured data room, the record belongs directly in the property file. It allows the property manager to spot recurring patterns and it helps document the promised starting condition for a later reletting. Buyers can see whether a flat was actually taken back in the condition that the rent roll implies. Collecting these records lifts the data room beyond a simple list of leases.

Investment reimbursement under section 10 MRG: conditions, deadlines, write-down

Within the full scope of the Austrian Tenancy Act, the principal tenant of a flat may claim reimbursement under section 10 MRG for expenditure on material improvements made in the last twenty years before the end of the tenancy, provided the improvements remain effective and useful beyond the tenancy. The counterparty is the landlord. The catalogue in section 10(3) MRG covers in particular the installation or household-oriented modification of water, electricity, gas, heating and sanitary systems including central heating installations, the renewal of a heating boiler or hot-water boiler present at the start of the tenancy that has become defective, the merger with an adjoining flat offered for letting, the complete renewal of a defective floor and other equally material improvements.

The claim is reduced by an annual write-down. For the core equipment items under section 10(3) items 1 and 3 the write-down is one tenth per completed year, for expenditure supported by public subsidies it follows the term of the subsidy, otherwise it is one twentieth. Section 10(2) MRG excludes the claim where the landlord justifiably refused consent, tied consent to a reinstatement duty, or was prevented from either response because the tenant failed to notify the intended material change.

The formal requirements are strict. Section 10(4) MRG requires a written notice to the landlord accompanied by the invoices, failing which the claim is lost. The deadlines are fourteen days after conclusion of a consensual termination agreement, fourteen days after service of a tenant's notice of termination on the landlord, and otherwise two months from the date on which the eviction order becomes final, or with earlier return, at the latest upon return. Formal defects do not automatically lead to loss under section 10(4a) MRG if the landlord issues a request for rectification and the tenant complies in time. For court enforcement, section 10(5) MRG applies: it is possible if the tenant names a successor tenant ready to satisfy the claim within six months after return, or as soon as the landlord otherwise lets or exploits the premises. A waiver in advance is invalid under section 10(7) MRG.

Further tenant claims under section 1097 of the Civil Code

Not every sensible investment in a rented flat falls under section 10 MRG. For expenditure outside the catalogue or for tenancies outside the full scope of the Tenancy Act, section 1097 of the Austrian Civil Code remains the governing basis. It refers to the principles of unauthorised agency and distinguishes between necessary expenditure, which the landlord must reimburse, and useful expenditure, whose reimbursement follows the benefit rules of unauthorised agency. Section 10(8) MRG expressly confirms that further claims under sections 1097, 1036 and 1037 of the Civil Code remain unaffected.

The cut-off in section 1097 of the Civil Code is short. Tenant reimbursement claims for such expenditure must be pursued in court within six months of return of the premises at the latest, otherwise they lapse. For the tenant, this means that a mere announcement after handover is not enough if no agreement is reached. For the landlord, it means legal certainty once the period has genuinely elapsed.

Within the partial or exempt areas of the Tenancy Act, the picture shifts. Freely negotiated lease clauses may narrow or exclude the reimbursement of expenditure, subject to mandatory law. For apartment buildings with a mixed scope status, a unit-by-unit assessment carried out in parallel with the rent roll analysis is therefore useful. The rent roll and leases page shows how this allocation fits into the property file.

Deposit, set-off and open landlord claims

A deposit provided under section 16b MRG must be invested by the landlord in a fruit-bearing way and returned after the end of the tenancy including interest, save to the extent it is used to satisfy open or genuinely disputed claims arising from the tenancy. For the return, it is essential that the counterclaims are specifically identified, substantiated in amount and legally attributable. Generic retentions without a proper settlement create additional disputes and are difficult to defend.

Landlord claims typically arise from unpaid rent, unpaid service-charge balances, damages for damage to the premises or reinstatement costs for unauthorised changes. For damage and expenditure claims, section 1111 of the Austrian Civil Code applies as a cut-off: they must be pursued in court within one year after return of the premises, otherwise they lapse. Waiting after the return costs the position even where the damage is well documented. Service-charge questions are additionally governed by the cut-offs of section 21 MRG.

In practice, a separated settlement pays off. The deposit is quantified, the counterclaims are set out by ground and amount, and the balance to be paid out follows from that calculation. Open rent and service-charge positions should be quantified separately and supported by records for the relevant accounting period. The data room completeness check helps benchmark open turnover files before a representation in the sale contract attaches to them.

Reletting, successor tenant and the effect on the permitted rent

A tenant turnover is rarely just a return. A successor tenant is often already in place or being sought. Section 10(5) item 1 MRG gives the outgoing tenant a right within six months after return to name a successor tenant ready to satisfy the reimbursement claim to the landlord. If the improvement is satisfied by the new tenant, section 10(6) MRG treats the reimbursed expenditure as not made when the permitted principal rent is set. Ignoring this interplay can lead to a later rent review.

Setting the new rent therefore requires clean documentation of whether and to what extent the successor tenant or the landlord satisfied the earlier claim. If there is no such reimbursement, the limits of section 16 MRG apply without restriction, and the amount paid by the landlord may be shown in the principal-rent statement to the extent the statutory conditions are met. These points belong to the preparation of every reletting, not to a later step before an arbitration board.

Where the flat is not relet immediately, other questions arise. The article on vacancy in an apartment building covers the handover of vacant units and the assurances to a buyer. In an active transaction, the timing of the return, the state of any reimbursement negotiation and the planned reletting must be reconciled with the effective date in the sale agreement. The rent roll plausibility check helps map the effect of a turnover on the income forecast.

Tenant turnover in the sale agreement, the data room and the effective date

A tenant turnover that takes place between signing and closing is a classical contractual point. The seller remains the landlord until the effective date and is responsible for return, deposit settlement, investment reimbursement and reletting under the lease and the Tenancy Act. The buyer has an interest in ensuring that these events do not undermine its position. Common provisions cover the allocation of the deposit at the effective date, the treatment of an ongoing reimbursement claim under section 10 MRG and the treatment of a signed successor lease including the rent level.

The data room of an apartment building with many tenancies should contain the last years of turnovers in an organised way: consensual termination agreements or notices, return records, deposit settlements, notices and agreements under section 10 MRG, invoices for investment reimbursement, ongoing disputes, court settlements and the leases of the respective successor tenants. Without these building blocks, confirmations in the deed lose their basis. The handover and effective date page brings the linked economic points together.

Before a binding statement, a structured look at open turnovers pays off. The apartment building risk check orders documentary status and timing pressure. The handover and effective date checklist assists in preparing the handover documents. The allocation of rents, service charges and deposits around the closing date belongs in the effective-date settlement.