Rental Deposit (Kaution) in Germany [Tenant’s Rights]

Key takeaways

• You can pay the rental deposit (Kaution) in three equal installments.
• The landlord has six months to return the security deposit. However, the landlord cannot withhold more money than needed. 

This is how you do it

• Never give the security deposit (Kaution) in cash. Either do a bank transfer, open a rental deposit account (Mietkautionkonto), or get a rental deposit guarantee or insurance.
• You should ask your landlord for proof that the deposit is in an account separate from their assets. You can use our sample letter for this.
• If your landlord doesn’t repay the deposit within six months, you can send a letter demanding a refund.

Table of Contents

What is a rental deposit (Kaution)?

When you rent a property in Germany, the landlord asks you to deposit a certain amount as security. This amount is the landlord’s financial security against damage to the rental property, missed utility bills, or rent payments. This amount is called a rental deposit (Kaution in German).

What is the maximum rental deposit (Kaution) the landlord can ask in Germany?

The rental deposit may not exceed three months’ cold rent (Kaltmiete) or rent, excluding additional costs. 

Example:

• Total rent (Warmmiete): 1000€
• Utility costs (such as heating, cleaning, etc.): 200€
• Cold rent (Kaltmiete): 800€
• Maximum rental deposit (security deposit) the landlord may ask: 2400€ (800 x 3)

When do you pay the rental deposit (Kaution)?

You (the tenant) have the right to pay the rental deposit in three monthly installments (§ 551 para. 2 BGB).

• The first installment is due when the tenancy starts.
• The second installment must be paid with the second month’s rent.
• The third installment must be paid with the third month’s rent.

NOTE: The landlord is not obliged to inform you about your right to pay the rental deposit in installments.

Example:

You signed the rental agreement on 10th May. The contractually agreed tenancy start date is 1st September. In this case, the first installment of the rental deposit (Kaution) is not due until 1st September. The following two installments will be paid at the beginning of the second and third months.

NOTE: It doesn’t matter when you actually move in the rental property. You must pay the rental deposit by the contractually agreed tenancy start date.

Tenant’s legal rights around rental deposits (Kaution) in Germany

• You pay the security deposit only if it’s mentioned in the rental contract.
• You are not obliged to pay the complete rental deposit in advance. You don’t have to worry if the landlord threatens you to terminate the rental contract, as the landlord cannot terminate the contract. Suppose the landlord refuses to hand over the property keys at the start of the tenancy. You can cancel the rental contract without notice and claim compensation from the landlord for the damages caused.
• You must pay the security deposit on time. Otherwise, the landlord can terminate your rental contract without notice. However, the outstanding rental deposit must be at least twice the cold rent (Section 569, Paragraph 2a of the German Civil Code).
• The landlord must invest the rental deposit in a credit institution at the usual savings interest rate. At the end of the tenancy, the landlord must return the deposit and the interest earned.
• The landlord must keep your rental deposit separate from their own assets. This ensures your deposit is safe in the event of the landlord’s insolvency.
• You have the right to ask your landlord for written proof of where your rental deposit is invested. You can use our sample letter to do this. Your landlord must inform you about this. If the landlord refuses or doesn’t respond, you can withhold rent payments up to the rental deposit amount. You must pay the rent withheld once the landlord provides the proof.

NOTE: You (the tenant) must keep the proof that the deposit was transferred at the start of the tenancy. If a legal dispute arises concerning the return of the security deposit, you bear the burden of proof that it was transferred in the first place.

How should you pay the rental deposit (Kaution) in Germany?

You have four ways to pay the security deposit.

• Do a bank transfer of the rental deposit (Kaution) to the landlord’s bank account.
• Pay the deposit in cash to the landlord (not recommended). You must ask for a receipt from the landlord. This is the proof that you paid a deposit.
• Open a “Rental deposit account (Mietkautionskonto).” The landlord receives a pledge that allows them to access the money in the event of damage. 
• Get a “Rental guarantee (Mietbürgschaft).” In this, someone guarantees to pay for the damage to the landlord on your behalf. Landlords usually don’t prefer this way of rental deposits. There are three types of rental guarantees in Germany.
  • Guarantee by the parents (Elternbürgschaft) or private individual (Privatbürgschaft): Your parents act as guarantors.
  • Bank guarantee (Bankaval): You pay the bank an annual fee. Banks usually don’t offer this service alone and ask you to open an account with them. This adds to the costs.
  • Rental deposit insurance (Mietkautionsversicherung): You pay an annual premium of between 3 and 5% of the rental deposit. The premium is non-refundable. The insurer issues a guarantee certificate (Bürgschaftsurkunde) that serves as security for the landlord. If the landlord claims legitimate damage, the insurance company pays the landlord. You must pay the insurance company the claimed amount.  

The simplest method of paying a security deposit is by bank transfer. Rental deposit insurance is useful for those who don’t have enough cash to make the bank transfer.

You can also take a short-term loan to pay the rental security deposit to the landlord.

What can you do if you don’t have money to pay the rental deposit (Kaution)?

You have the following options if you don’t have money to pay the rental deposit (Kaution).

• Get a loan from your friends or family
• Get a short-term loan.
• Use your credit card to pay part of the deposit.
• Take a rental guarantee.

When should the landlord return the rental deposit (Kaution)?

The courts generally grant the landlord 6 months to examine possible claims arising from the tenancy.  However, this is not a rigid deadline.

Here are some cases and the timeline by which the landlord must return the rental deposit (Kaution).

• Everything is fine: If there are no pending dues and the property has no defects when handed over, the landlord must return your deposit immediately. German federal court considers a few days as immediate.
• Unresolved claims: If there are unresolved claims, the landlord has 6 months to inspect and claim charges for property damages, if any. However, this is not a rigid deadline. The landlord must give your security deposit back as soon as the claims are settled.
• Utility costs: The landlord has up to 12 months to settle the outstanding utility bills. The landlord can only hold the deposit needed to cover the utility costs and must return the rest immediately. The amount the landlord can withhold should not be higher than three to four monthly utility bill advance payments.
• Ongoing disputes: The landlord does not have a specific deadline for paying your deposit back if there are ongoing disputes, such as legal disputes.

NOTE: Claims arising from the rental property expire after three years. This means you have three years to get the deposit back. These three years are known as the limitation period (Verjährungsfrist).

In the case of a rental deposit, the limitation period begins six months after the end of the tenancy or at the end of the year in which the claim arose.

Example:

• Your tenancy ends on 1st January 2024. 
• You can claim your rental deposit on 1st July 2024. 
• The limitation period begins on 1st January 2025. 
• You have until 31st December 2027 to get your deposit back.

To whom will the rental deposit be refunded?

The rental deposit is paid to the person listed as the tenant in the rental agreement and who paid the rental deposit. The same applies to the shared apartments in Germany (WGs).

Suppose your parents or grandparents paid the rental deposit on your behalf. In this case, they’ll receive the rental deposit.

In the event of the death of the tenant or the person who paid the security deposit, the legal heir receives the deposit. The legal heir must present the relevant documents as proof.

When can the landlord retain part or all of the rental deposit (Kaution)?

The landlord can retain full or part of the rental deposit in the following cases.

• There are outstanding bills at the end of the rental period.
• Rent payments are still outstanding.
• Additional charges, such as utility costs, still have to be paid.
• Defects were discovered when moving out.

The landlord must return the rental deposit (Kaution) without delay after the claims are settled. Moreover, the landlord cannot retain more money than needed. 

What can you do if the landlord doesn’t return your rental deposit (Kaution)?

Here are the steps you can follow if the landlord doesn’t return your deposit (Kaution).

• Send a letter requesting the refund of the rental deposit via registered mail. Set a reasonable deadline for the landlord to return the deposit. Make it clear in the letter that legal action will be taken in the event of non-payment. The letter should also ask the landlord to state why there is a delay in returning the deposit. You can use our sample letter to request the deposit back.
• Get support from the tenant’s association (Mieterverein): IF the landlord doesn’t refund the deposit or reply after your letter, you can get support from the tenant’s association. The membership fee is around 100€ per annum. They have no waiting period and support in settling the dispute out-of-court.
• Get support from a lawyer: If you cannot settle the dispute out-of-court, the only option is to take it to court. You must hire a lawyer specialized in tenancy law. If you have legal insurance, the insurance will cover the legal costs. Services like Klugo* and Conny help you (the tenant) settle legal disputes in tenancy. 

What happens to the rental deposit in case of the landlord’s insolvency?

Case 1: Landlord kept your deposit separate from their personal assets

According to Section 551 Paragraph 3 of the German Civil Code (BGB), the landlord must keep the rental deposit in an account separate from their personal assets. Suppose the landlord files for bankruptcy. In this case, your money is safe, and you get it back.

Case 2: Landlord kept your rental deposit in their personal account

However, suppose the landlord kept your rental deposit in their personal account. In this case, you risk losing your deposit if the landlord files for insolvency.

You should do the following to avoid such a situation.

• Ask the landlord for proof that your deposit is held in a separate account. You can use our sample letter to do so.
• If the landlord is bankrupt and didn’t keep your deposit in a separate account, you should immediately file a claim with the bankruptcy court. You should get support from a lawyer to do so. Services like Klugo* and Conny can help.

What happens to your rental deposit if the property is sold and you have a new landlord?

In the event of a change of ownership, the new owner assumes the rights and obligations of the previous landlord. The new owner must ensure that the previous landlord transfers your rental deposit (Kaution) to them. 

You should also ask the new owner for proof that your deposit is held in an account separate from their personal assets. You can use our sample letter for this. 

What happens to your security deposit if the landlord dies?

You don’t have to worry if your landlord passes away. The legal heir of the landlord inherits the property and the security deposit accounts. The heirs become your new landlord.

The heirs cannot use your rental deposit for any other purpose.

References

• https://deutschesmietrecht.de/kaution/65-kaution-zahlungsfrist.html
• https://www.mietrecht.com/mietkaution-zahlen/#wann-ist-die-mietkaution-zu-zahlen
• https://www.mietkautionsbuergschaft.de/mietkaution-rueckzahlung.html#fristen
• https://www.gansel-rechtsanwaelte.de/mietrecht/vermieter-zahlt-kaution-nicht-zurueck-das-koennen-sie-tun
• https://mieterengel.de/kaution-einbehalten-anwaltskosten/#Anchor5
• https://kautionsfrei.de/mietkaution-rueckzahlung#vermieter-auffordern
• https://www.zdf.de/nachrichten/ratgeber/kaution-rueckzahlung-faq-100.html
• https://wohnglueck.de/artikel/mietkaution-81915
• https://kautionsfrei.de/mietbuergschaft#vorgaben-hoehe
• https://www.klugo.de/rechtsgebiete/mietrecht/mieter/mietkaution