LEGALITIES OF THE DEPOSIT

PURPOSE

The deposit is a safety net for the landlord to rely on in case you have moved out but

  • You have not paid the due rent
  • There are damages in the apartment/house which were caused by you and must still be repaired (this includes the so-called “Schönheitsreparaturen”, see below)
  • To cover for any payment of differences between monthly side cost lump sum and actual side cost.

No legal stipulation orders a tenant to provide a security deposit, but there is no law against. The law simply restricts the utilization of the deposit.

Outstanding Rent Payment

Please be aware that it is considered braking the law if you wish to balance the outstanding deposit repayment by withholding the last rent. These are separate debts.

Damages

Normal wear and tear is not considered damages. However, there is a certain judgement as to what extent a damage is still wear and tear. Let’s assume you have scratched the parquet flooring significantly around the dining table because you have not put protection under your chairs’ legs, then the damage claim will be the cost for polishing of the floor. Broken glass-ceramics, holes in tiles are all damages which the landlord is entitled to recover from you. However, if you moved into an apartment which was not newly painted, you won’t need to paint when moving out. German law also works with the so-called “Schönheitsreparaturen”. You will have come across the term when signing the lease agreement. The term comprises all necessary renewals that can be dealt with with paint, wallpaper or some plaster. This includes: papering of walls and ceilings, painting and whitewashing of walls and ceilings, painting the radiators, including heating pipes, painting the doors from the inside, painting the window from the inside and painting the front door from the inside.

More information can be found here, but in German only: https://www.finanztip.de/mietvertrag-schoenheitsreparatur/

The stipulations around the “Schönheitsreparaturen” are tricky. And if they are ineffective the law applies - which is beneficial to the tenant. The Red Relocators will check if the stipulations in your contract are valid, but we won’t correct them if they are not. We, therefore, recommend to have us screen your lease agreement again shortly before you move out, so that you receive a first indication of doubt before contacting an expensive lawyer.

Side cost

You are paying the so-called side cost (“Nebenkosten”) as a monthly lump sum to the landlord to avoid huge payments by the end of a year. These payments are used to cover the exact costs of the landlord which he does pay on behalf of you. Examples are the cable connection for Internet & TV, wage disposal, maintaining of the heating system including chimney cleaning, electricity for the staircase and garden walkways, gardener, property tax, sometimes water, and a couple of more. There are strict rules as to what the landlord can allocate to the side costs. Since the landlord will only receive the invoices of all the respective service providers late in the year, he will only then know whether the lumps um agreed will have fully covered your consumption. He is thus allowed to keep a distinctive amount of the deposit to cover for any probable due payment.

NATURE

  • Cash Deposit: If you pay it to the landlord, he needs to set-up a separate account for the money with normal conditions regarding interest and maximum 3 months cancellation period. The landlord needs to inform you on a yearly basis about the interest gains. Legally, the money is yours. Any interest gains will be credited to you. You can simply not withdraw the money.
  • Rent Savings Account: If you create an account yourself you will be giving the title to the landlord. There are two alternatives on how to hand over the title to the bank account:

- Lock flag: money can be withdrawn only in case both landlord and tenant agree so (seldom agreed by the landlord)

- Garnishment: the landlord is allowed to withdraw once he issued a garnishment. In this case, the landlord would first invoice you with the claimed amount, and only in case you don’t pay, he will use the deposit to cover himself.

More info, but in German: http://www.immonet.de/umzug/umzugskosten-mietkaution-sparbuch.html

This is the most common practice. You just go to your bank and ask them to create a “Mietkautionskonto”, bring the copy of the lease agreement and the bank will do all the rest – it’s their day-to-day business. You will be handed a so-called “Verpfändungsurkunde” which entitles the landlord to make use of the money and which you need to provide to the landlord on the date of the handover.

  •  Bank Guarantee: In this case, your bank guarantees that you will be paying against any claim of the landlord and if you don’t, they will.
  •  Securities (seldom)

The most common form is the Cash Deposit.

AMOUNT

Maximum 3 cold rents

Can be paid in three installments spread over the first three months after moving in (with the first being due with the handover of the apartment/house)

Consequences of non-payment

If you don’t pay the agreed installments, the landlord can terminate the lease agreement.

REPAYMENT

There is no fix legally set period as to when the landlord is obliged to repay the deposit. Usually, keeping the deposit longer than actually needed does not give the landlord any benefit since he cannot make use of the money. A usual period is 6 months.

During the handover of the apartment/house, you will agree on outstanding repairs. You will be granted a reasonable period to carry out the repairs yourself (or hire a professional to do so). Again, there is no fixed period; however, 4 weeks are usually considered sufficient.

It is wise, to agree on a walkthrough a couple of days before you are actually moving out so that there is agreement on what has to be done. Since the walls are vital, you should take any pictures off the walls to show their current status. Such a walkthrough can, however, only give a guideline – if the true status of the apartment only displays once all furniture is gone, the landlord can still request renewal of the paint.

Bot handover protocols, the one you sign when moving in and the one you sign when moving out are vital to avoid fights over the apartment’s status.

If the 6 months pass without the landlord paying you back the money you should send a regular reminder and set a period within in which you request payments. Only after that, the landlord would be in default and you could claim payment.

If you believe an amount was withhold against the agreement, you have to claim the money within 6 months latest. Same period if you repaired something although you did not have to and you claim that the landlord pays for the work done.

I can't follow up with the Deposit repayment

If you are moving abroad there are usually so may things to manage that you may forget about the repayment of your deposit. Especially, when it will not be paid within the next couple of months. Be sure your new bank account number is noted, and that the full amount is repaid in accordance with your rental contract.

 

DISTRICT PROFILES

Bremen

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Hanover

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Berlin

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Cologne

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Frankfurt

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Header Photo (c) I-vista  / PIXELIO