A German security deposit is capped at three months' cold rent, has to sit apart from the landlord's own money, and earns the tenant interest while it waits. The tenant can also insist on paying it in three installments instead of one. None of this is negotiable away in a standard residential lease, and two of the most common mistakes, capping against the wrong rent figure and paying it back on a made-up deadline, both come from treating the deposit as an informal side agreement rather than a line item with its own rules.
The cap runs off Kaltmiete, not the rent you actually invoice
Section 551 BGB limits the deposit to three times the monthly Kaltmiete, the net cold rent, before the Nebenkosten advance payment is added. Landlords who quote a deposit against the all-in Warmmiete are asking for more than the law allows, and a tenant who challenges it will win.
| Line item | Amount (EUR/month) |
|---|---|
| Kaltmiete | 950 |
| Nebenkosten advance | 180 |
| Warmmiete (what gets invoiced) | 1,130 |
| Deposit cap (3 x Kaltmiete) | 2,850 |
Not 3,390. The Nebenkosten line never enters the calculation, which is the same Kaltmiete/Nebenkosten split the Nebenkostenabrechnung runs on.
Where the money has to sit
The deposit has to be held getrennt von seinem Vermögen, separate from the landlord's own assets, typically in a savings account opened in the tenant's name or pledged to them, protected if the landlord becomes insolvent. It accrues interest at the customary rate for a savings account with three months' notice, and that interest belongs to the tenant, added to the deposit over the life of the tenancy. Current rates make the actual euros small, but the obligation is not optional just because it is now cheap to ignore. A rising share of tenancies swap the cash deposit for a Kautionsversicherung or a bank guarantee instead, which sidesteps the escrow question entirely but is a different instrument with its own premium and terms.
Three installments, tenant's choice
Section 551(2) gives the tenant the right to split the deposit into three equal monthly payments: the first due when the tenancy starts, the other two alongside the next two rent payments. A landlord can accept a lump sum if the tenant offers one, but cannot make full payment a condition of handing over the keys.
Getting it back
There is no statutory deadline for returning a deposit. Case law treats roughly six months after move-out as a reasonable outer bound for a straightforward tenancy, but a landlord is also entitled to withhold a proportionate amount until the final Nebenkostenabrechnung is settled, and that statement itself has up to twelve months after the billing period ends to be issued. In practice the deposit return is often gated by that unrelated administrative deadline rather than by anything the tenant did.
What can actually be deducted: unpaid rent, damage beyond normal wear from contractual use, and any Nebenkosten balance still owed. Normal wear does not count, and rigid repainting-schedule clauses that try to shift Schönheitsreparaturen onto the tenant have been struck down by the BGH often enough that they are not a safe line to lean on.
Why it belongs on the lease record
On REPM, the deposit is a field on the lease, next to base rent and service charge, not an entry in a separate account ledger somewhere else. The Kaltmiete it has to be checked against is the same number the lease already stores, and the Nebenkostenabrechnung that can delay the return sits on the same tenancy. If your onOffice or Excel setup already tracks Kaltmiete and Nebenkosten as separate figures, as most do, the deposit cap is one multiplication away rather than a separate lookup.
See it against your own leases. Start a free REPM Lite trial at app.repm.cloud and add a tenancy with its deposit, rent and service charge on one record.
FAQ
Can a landlord require the deposit in one payment?
No. Section 551(2) BGB gives the tenant the right to pay in three equal monthly installments starting at the beginning of the tenancy. A landlord can accept a lump sum if the tenant offers it voluntarily but cannot make full upfront payment a condition of the lease.
Does the deposit cap include the Nebenkosten advance payment?
No. The cap is three times the Kaltmiete, the net cold rent only. The Nebenkosten advance payment is not part of the calculation, even though it is part of what the tenant pays monthly.
How long does a landlord have to return the deposit?
There is no fixed statutory deadline. Courts generally treat up to around six months as reasonable for a straightforward case, and a landlord may withhold a proportionate amount pending the final Nebenkostenabrechnung, which itself can take up to twelve months to be issued after the billing period ends.
Does the deposit have to earn interest?
Yes, for a standard residential tenancy, at the customary rate for a savings account with three months' notice, unless the parties agree otherwise in a commercial lease. The interest is the tenant's, added to the deposit balance over the tenancy.