Real Estate

Questions and answers about the rental deposit

Tenants and landlords often discuss the deposit when moving out. Some issues can be avoided if tenants consider a few things before moving in.

The deposit for a new apartment or a new house is a big chunk of money that you have to raise when you move. And landlords and tenants like to argue about the amount when moving in, the way it is created or the deductions from it when moving out. What is legal?

Does the tenant have to pay a deposit?

Only if it is contractually agreed. The landlord is not legally obliged to raise a deposit, as Ulrich Ropertz from the German Tenants’ Association explains. “The legislator only gives him the opportunity.” The deposit is included in all standard rental contracts.

How much can the deposit be?

The deposit may not exceed three times the net rent. This is regulated in § 551 Civil Code (BGB). If a higher sum is noted in the rental contract, this is limited to the maximum permissible amount.

Amount of the rent deposit according to § 551 BGB: “If the tenant has to provide security for the landlord to fulfill his obligations, this (…) may not exceed three times the monthly rent without the operating costs shown as a flat rate or as an advance payment.”

Does the tenant have to pay the deposit all at once?

No. Three installments are permitted. According to § 551 paragraph 2 (BGB): “If a sum of money is to be provided as security, the tenant is entitled to three equal monthly installments.” The first installment is due at the beginning of the tenancy, the other installments with the subsequent rental payments.

The tenants do not have to meet the requirement to pay the deposit before the rental begins. This is not allowed. But be careful: If the deposit is not paid on time, this can justify termination without notice.

What forms of deposit are there?

The most common is the so-called cash deposit, in which the tenant transfers the money to the landlord or hands it over in cash. Another option is a deposit account that the tenant opens himself. He pledges the savings book to the landlord as rent security. “The advantage is that the interest – even if only a few at the moment – goes to your own account and you can choose the bank yourself,” explains Julia Wagner from the owner association Haus & Grund Germany in Berlin.

A surety bond is also possible. A bank guarantees the amount of the deposit here, but charges fees from the tenant. Or the tenant takes out surety insurance: instead of himself, insurance guarantees the service.

Important: If the landlord creates a rent deposit account, this must be done separately from the landlord’s other assets. According to the German Civil Code (BGB), the bank must invest the sum of money as a savings investment with a bank with three months’ notice and at the usual interest rate. The tenant is solely entitled to the income generated from the system.

Can the tenant propose an alternative type of deposit?

In principle, the tenant must adhere to the type of deposit specified in the contract. However, this can be negotiated when the rental contract is concluded.

Can a rent increase result in a higher rent deposit?

No. If the net rent is increased, the deposit agreed in the rental contract remains. A rent increase does not justify an increase in the deposit.

Can a landlord subsequently request a rent deposit?

A rental deposit must be agreed in the rental agreement. If this has not been done, the landlord cannot simply request it. Incidentally, there is no law that requires the tenant to deposit a deposit.

What are the deadlines for repayment?

There is no fixed period in which the rental deposit must be paid back. However, landlords can make claims for damages within six months of the tenant moving out. After this period at the latest, the deposit should be repaid with interest.

In individual cases, however, this can vary – if disputes are still open. In addition, the landlord can withhold at least part of the deposit until he has settled the operating costs. How much he can withhold depends, among other things, on how much has been billed in previous years.

What do I have to watch out for to get my full deposit back?

Ropertz recommends that tenants should keep the receipt of the deposit paid carefully so that they can prove that they have paid the deposit in case of doubt. In addition, the apartment must be returned in accordance with the contract. The main point of contention is usually that the apartment is not in a proper condition. But be careful: The landlord must not request a complete renovation of the apartment.

What can the landlord use the deposit for?

The landlord must make a deposit separately from his assets. He may only use these after the tenancy has ended. And only if there is a legitimate claim. If, for example, the tenant is behind with his rent, the landlord cannot simply access the deposit. In case of doubt, the claim must be enforced legally – because the landlord may only collect the deposit if there are undisputed claims.

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