The rental deposit serves as security in case the tenant does not fulfil his obligations
In tenancy law, the deposit between the tenants is a frequent topic. In general, the landlord can demand a deposit from the tenant for every tenancy. This serves as security in the event that the tenant does not fulfil their obligations under the tenancy - for example, in the event of rent arrears, unfinished cosmetic repairs or outstanding utility bills. The regulations on deposits in tenancy law can be found in Section 551 of the German Civil Code (BGB).
Rental deposit may not exceed three net cold rents
Tenancy law regulates the maximum amount of a deposit of three net cold rents. If there are clauses in the (residential) tenancy agreement that set the deposit higher than this, they are invalid. Anything below this maximum amount can be determined individually by the tenants. In general, it is up to the landlord to decide whether or not to make use of this right. If no contractual agreements are made regarding the rental deposit, in the worst case scenario the landlord will be left completely empty-handed in the event of a claim. In the following, you will find out what requirements tenancy law places on a deposit and which points you must observe as a tenant or landlord.
The cover includes operating costs, compensation for use, compensation for damages, repair services and the rent itself
To secure claims that may arise from the tenancy, landlords can demand a security deposit from the tenant. However, they are not legally obliged to stipulate such a security deposit. The BGB only regulates the maximum possible amount of such a security deposit to protect the tenant, Section 552 BGB. Accordingly, the rental deposit may not be higher than three months' net cold rent. If there is a rent increase, the landlord cannot demand an increase in the security deposit. Such claims, which are covered by a security deposit, include operating costs, compensation for use and damages, repair services at the end of the tenancy as well as the rent itself. Colloquially, this security deposit is also known as a rent deposit. A rental deposit can be agreed between the two tenants in both residential and commercial tenancy law. It is important to know that there is no legal obligation for such a security deposit to be agreed in the tenancy agreement or in an annex. If no provision has been made in the tenancy agreement regarding the deposit, payment of such a deposit can no longer be demanded retrospectively. If the tenant has nevertheless paid without this knowledge, they can demand repayment of the rental deposit from the landlord. The rental deposit can be paid in three equal monthly instalments. If the landlord refuses to accept this instalment payment, the tenancy can be terminated without notice in accordance with Section 543 Paragraph 2 Number 1 BGB. The rental deposit can only be withheld or repaid after the tenancy has ended. Other options, such as "living off" the rental deposit, which means that you can stop paying the rent and let the landlord use the deposit, are not permitted.
Rental deposit must be invested separately from the landlord's private assets
The law stipulates that the deposit in cash must be insolvency-proof and must also be invested separately from the landlord's private assets. The tenant even has the right to demand proof of the lawful investment of such a rental deposit (BGH WuM 2008, 149). The reason behind this regulation is that the landlord may not simply allow the money to flow into his private assets, even if he were to become insolvent. In addition, the deposit must be invested in a deposit account and earn interest. If the landlord has failed to do this, the tenant is entitled to compensation for the resulting loss. He can demand compensation for the interest he has lost. In this case, the interest loss is calculated retrospectively for the period in which the deposit was not invested.
What needs to be considered when repaying the deposit?
In principle, repayment of the rental deposit and the interest earned may only be demanded once the rental property has been returned. In normal cases, the landlord must grant you this in full. This does not apply if the landlord raises claims, for example due to missing rent payments, unpaid utility bills or repairs that have not been carried out but agreed. In such exceptional cases, the landlord can deduct the necessary costs from the deposit amount or even withhold the entire rental deposit.
How long the landlord has time to check after the end of the tenancy is repeatedly the subject of court negotiations. In any case, he must have a reasonable amount of time to do so. What is meant by the term "reasonable" is not regulated by law. The judgements vary from two to even six months and sometimes even more. In its judgement, the Regional Court of Cologne considered a period of 3 months to be reasonable (LG Köln WuM 1984, 109), whereas the Local Court in Dortmund was of the opinion that a period of 2 months was reasonable and therefore sufficient for the landlord (AG Dortmund WuM 1981, 235). The majority opinion in case law is that a six-month retention of the rental deposit by the landlord can also be appropriate, whereby the Federal Court of Justice is of the opinion that the duration of the landlord's "consideration period" always depends on the individual case and can also fluctuate greatly.
Tenants can also help to ensure that the deposit and interest are paid out as quickly as possible. Outstanding rent or service charge payments as well as any arrears should be settled as quickly as possible. Ideally, the rented property should be returned in the condition stipulated in the contract. However, it is not uncommon for the landlord to unlawfully demand cosmetic repairs from the tenant. You can find out how you as a tenant can defend yourself against this, or even avoid a dispute right from the start, in one of the articles we have written for you on cosmetic repairs in tenancy law. An appointment to hand over the flat should be made at an early stage. At this point, it is very important that you draw up a handover protocol at such an appointment. This can help the tenant in the event of a dispute. If no defects are found during the joint inspection of the rented property, record this clearly in the protocol. If all these conditions are met, the tenant can expect the rental deposit to be paid out soon.
Under certain circumstances, the landlord may also claim the deposit before the end of the tenancy agreement
It sometimes happens in life that you may fall a little behind with your rent payments. In such a case, the landlord may not simply use the deposit to make up for the current arrears. Before After termination of the tenancy, the landlord may only legally draw on the rental deposit if his asserted claims have also been legally established, are undisputed or are obviously justified. This depends on the individual case. For example, the landlord is authorised to take such action if the tenant's financial circumstances have deteriorated significantly. This was confirmed by the judgements of the Regional Court of Halle NZM 2008, 685 and the Regional Court of Mannheim WuM 96, 269. If, in a disputed case, the landlord has recourse to the rental deposit during the tenancy, for example in the event of a justified reduction in rent, he can be forced by court order to pay this sum back into the deposit account. This also applies to a pledged savings book. As a tenant, you can obtain an interim injunction from the court in the event of unauthorised access to the rental deposit. However, if the landlord's access is justified, he can demand that the tenant replenish the rental deposit. As an alternative to a traditional cash payment of the rental deposit, you can propose a rental deposit guarantee or rental deposit insurance to the landlord as rental security.
Important Note: The content of this article has been prepared to the best of our knowledge and belief. However, due to the complexity and constant evolution of the subject matter, we must exclude liability and warranty. Important Notice: The content of this article has been created to the best of our knowledge and understanding. However, due to the complexity and constant changes in the subject matter, we must exclude any liability and warranty.
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Lawyers in Cologne provide advice and representation in tenancy law.