Federal Court of Justice, 11.07.2012, Case No.: VIII ZR 36/12
There is no statutory obligation for the tenant to provide the landlord with a security deposit.
A landlord’s claim for such a security arises only if the lease agreement includes a corresponding provision (contractual obligation).
According to § 551 (1) of the German Civil Code (BGB), the security deposit must not exceed the equivalent of three months’ net rent (excluding operating costs). Operating cost allowances or advance payments for operating costs are not included in this calculation.
If a higher security deposit is contractually demanded, the provision is invalid according to § 551 (4) BGB.
The landlord may require the security deposit in the form of a monetary payment, a bank guarantee, or a pledged savings account, among other forms.
If the deposit is to be made as a monetary payment, the tenant in residential tenancy law has the right to pay the amount in three equal monthly installments, according to § 551 BGB. The first installment is due at the start of the lease.
Recently, the use of a guarantee declaration has become more common, typically in the form of a “guarantee on first demand.” This type of guarantee allows the creditor to make a claim against the guarantor for repayment of the debt more quickly.
In a “guarantee on first demand,” the “defense of prior pursuit,” which requires the creditor to first seek payment from the debtor, is excluded. Therefore, the creditor can immediately approach the guarantor for payment.
The landlord’s obligation to return the deposit arises only once all outstanding damages or rental arrears have been settled.
Thus, there is no legally defined deadline for the return of the deposit; instead, the landlord has a consideration or review period, which case law has established to be between three and six months. During this period, the tenant’s claim for the return of the deposit is not yet due.
If there is an outstanding settlement of utility or operating costs, the repayment period may extend beyond six months.
It is also important to note that the landlord is not entitled to offset the deposit against claims unrelated to the rental agreement.
The Federal Court of Justice addressed this specific offsetting prohibition in the aforementioned decision.
Facts of the Case:
Tenants demand the return of the deposit from the landlord
The parties involved in the legal dispute argued over the return of a rental deposit. The plaintiffs were tenants of an apartment owned by the defendant, for which they had provided a deposit of €1,020 at the start of the lease.
After returning the apartment at the end of the tenancy, the plaintiffs unsuccessfully demanded the return of the deposit from the defendant.
Defendant offsets the deposit with claims assigned from another landlord
The defendant, however, offset the deposit against counterclaims from a previous tenancy of the plaintiffs for another apartment, which had been assigned to the defendant by the plaintiffs’ former landlord.
The District Court ruled in favor of the plaintiffs, and the Regional Court dismissed the defendant’s appeal. The defendant pursued their claim at the Federal Court of Justice (BGH) through a revision approved by the appellate court.
Judgment of the Federal Court of Justice:
The BGH also found no possibility for the landlord to offset the deposit
The Federal Court of Justice, like the lower courts, ruled that the defendant could not lawfully offset the deposit.
The BGH explained that offsetting is excluded beyond cases explicitly regulated by law or contract.
This is particularly the case when the nature of the legal relationship or the purpose of the owed performance makes offsetting incompatible with the principles of good faith.
In such cases, offsetting with non-related counterclaims is generally excluded when the claim arises from a fiduciary relationship.
The deposit serves only to secure claims from the specific rental agreement
The rental deposit serves exclusively to secure the landlord’s claims arising from the specific rental agreement.
The purpose of the deposit does not end simply when it is no longer needed to cover claims at the end of the lease but only with the return of the deposit to the tenant.
Source: Federal Court of Justice
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