The tenant has moved out – but where is the deposit? Disputes often arise when landlords keep the security deposit. The Federal Court of Justice is now ruling on a specific case.
Tenants and landlords often argue in court about the rental deposit. One such case has now made it to the highest German civil court. The Federal Court of Justice (BGH) in Karlsruhe is today deciding on the question of whether a landlord was allowed to offset damages for damage to the rental property against the rental deposit six months after a tenant moved out. When do these claims normally expire? And in which cases does an exception apply? The most important questions and answers at a glance:
When can a landlord keep the deposit?
In principle, landlords are allowed to keep their tenants’ deposits under various circumstances. “This can be an outstanding rent claim or additional payments for operating costs,” says lawyer and tenancy law expert Beate Heilmann to the German Press Agency. The money can also be kept for cosmetic repairs that have not been carried out – provided that these were agreed upon in the rental agreement. “And then there are claims by the landlord for damage to the rental property, which also play a role in the BGH proceedings.”
Such claims for damages often cause disputes between tenants and landlords, says Heilmann, who is chairwoman of the German Bar Association’s Tenancy Law and Real Estate Working Group. It is attractive for landlords to offset the disputed claims against the deposit, as it is then up to the tenant to sue for repayment. As in the case that the Federal Court of Justice is now dealing with.
What is this specific case about?
In this specific case, a tenant had filed a lawsuit because her landlord had not paid back the rental deposit of around 780 euros after she had moved out. He justified this by saying that he was offsetting the deposit against claims for damages to the apartment. However, since the landlord did not settle the bill until more than half a year after the tenant had moved out, the tenant believed that his claims had already expired. She sued for the return of the deposit – and was successful in the lower courts.
When do a landlord’s claims for damages expire?
After returning an apartment, landlords usually have six months to demand compensation for damage from their former tenants. However, the German Civil Code provides an exception to the limitation period: if the claim could have been verifiably offset before the six months had expired, then offsetting is still possible later.
One of the conditions for this exception is that there are two “similar” claims – in other words, “cash for cash” in the case of a cash deposit. This is important here because if the rental property is damaged, landlords can choose whether to demand immediate monetary compensation or give the tenant the chance to restore the property to its original condition themselves – a so-called restitution in kind. However, only monetary compensation is of the same type as the cash deposit and can be offset against it.
What impact could the ruling have?
The question before the Federal Court of Justice is whether the defendant landlord should have notified the tenant within the six-month period that he was demanding compensation for damages in the form of monetary compensation – and not in kind. A tenant-friendly ruling could also have consequences for apartment and house owners. If damage occurs to the rental property, they may then have to make similar claims within the limitation period in the future so that they can offset them against the deposit. They would therefore have to notify the tenant no later than six months after the tenant moves out that they are demanding compensation for damages in the form of monetary compensation.
Source: Stern
