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Rental dispute in court: BGH strengthens landlords in settlement of damages on deposit

Rental dispute in court: BGH strengthens landlords in settlement of damages on deposit
Rental dispute in court: BGH strengthens landlords in settlement of damages on deposit

The tenancy has ended and the tenant has moved out. Disputes about the deposit often arise. In one case, the Federal Court of Justice ruled in favor of the landlord – with consequences for tenants as well.

Tenants and landlords often argue about the return of the deposit after the end of the tenancy. The Federal Court of Justice (BGH) has now strengthened the rights of landlords in the dispute over the settlement of damages via the deposit. They are actually allowed to offset claims for damages that have expired against their tenants’ deposit even if they have not exercised their right of replacement within the six-month limitation period, the Karlsruhe Senate stated in a ruling. The right of replacement allows landlords to demand monetary compensation for damages in the event of damage to their apartment instead of having the damaged item repaired.

In this specific case, a tenant had filed a lawsuit because her landlord had not paid her 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. Since the tenant believed that the claims had already expired, she sued for the return of the deposit – and was successful in the lower courts. The defendant landlord’s appeal against this was now successful.

The Federal Court of Justice overturned the judgment of the Nuremberg-Fürth Regional Court and referred the matter back to the court for a new hearing. The Regional Court had not sufficiently taken into account the mutual interests of the parties when agreeing on a cash deposit. The deposit serves precisely to secure the landlord’s claims, explained the Eighth Civil Senate, which is responsible for tenancy law, among other things. “After the tenancy has ended, the landlord should be able to satisfy himself in a simple manner by offsetting it against the claim for repayment of the deposit,” said the Federal Court of Justice.

Good news for some, bad news for others

From the perspective of the German Tenants’ Association, the ruling is “not a good decision for tenants, because this ruling ignores their interest in rapid legal certainty regarding their rental deposit balance,” said President Lukas Siebenkotten. Tenants cannot trust that their former landlord will not confront them with demands for compensation more than six months after they have moved out.

The question of potential claims in the event of damage to the rental property is often controversial, says Siebenkotten. “In the end, tenants have no choice but to file a lawsuit to enforce their claim for the return of the deposit if the landlord wrongfully retains parts of the deposit due to alleged damage to the apartment.”

The property owners’ association Haus und Grund welcomes the BGH’s decision. The Central Association of German House, Apartment and Property Owners said that it had granted private landlords practical flexibility. At the same time, however, it appealed to landlords to document all visible damage when the apartment was handed over and to settle the deposit quickly on this basis.

Exception only applies to “cash against cash”

In principle, landlords have six months after the return of an apartment to demand compensation for damage from their former tenants. There is one exception, however: if the claim could theoretically have been offset before the six months had elapsed, then offsetting is still possible later. One of the conditions for this is that there are two claims of the same type – in other words, “cash for cash” in the case of a cash deposit.

The question of the similarity of the claims played a central role in this case because, in the event of damage to the rental property, landlords can choose whether to demand monetary compensation or give the tenant the opportunity to restore the property to its original condition themselves. The latter is also known in legal terms as restitution in kind.

According to the Nuremberg-Fürth Regional Court, the landlord should have declared during the six-month limitation period that he was demanding compensation for damages in the form of monetary compensation. After all, only monetary compensation is equivalent to a cash deposit. The Federal Court of Justice now decided differently. It should therefore not play a role whether the landlord exercised his right to choose restitution in kind or monetary compensation within the time limit.

Source: Stern

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