Tenant deposit: rules and refunds

The deposit is the most-argued-about number in any tenancy, and almost every dispute comes down to the same thing: nobody wrote down what the flat looked like on day one. Here are the rules, and the paperwork that settles the argument before it starts.

How much can be charged

A residential deposit is capped at three months’ cold rent — the Kaltmiete, excluding the Nebenkosten advance. A contract asking for “three months’ warm rent” is asking for more than the law allows.

You may pay it in three equal monthly instalments. The first falls due when the tenancy begins, the other two with the following two rent payments. A clause demanding the whole amount before you get the keys does not remove that right.

The cap covers the deposit in all its forms taken together — cash, a savings account pledged to the landlord, or a bank guarantee. A landlord cannot take three rents in cash and then also ask for a guarantee on top.

How it must be held

The money remains yours throughout the tenancy. The landlord must keep it separate from their own assets, in an account that earns at least the interest of an ordinary savings account with a three-month notice period. The interest accrues to you and is paid out with the deposit.

Keeping it separate matters for a practical reason as well as a legal one: if the landlord becomes insolvent, a properly segregated deposit is protected from their creditors.

You are entitled to ask how and where your deposit is being held. If the landlord cannot show a separate account, you may withhold rent up to the amount of the deposit until they can.

What may be deducted

A deposit secures the landlord against your obligations under the contract. That is a narrower list than most people assume:

• Unpaid rent, including any that accrued during the notice period.
• An outstanding Nebenkosten balance once the annual statement is done.
• Damage you caused that goes beyond ordinary use — a cracked washbasin, a burn in the floor, a door someone put a fist through.
• Cosmetic repairs you were validly obliged to do and did not — but only if the clause in your contract is actually valid.
• Missing keys, and in some cases the cost of rekeying the building if the key is part of a locking system.

What may not

• Normal wear and tear. Faded paint, worn carpet in the hallway, small marks where furniture stood, limescale that comes off. You paid rent for the use of the flat; use shows.
• Repairs to things that simply aged out — a twenty-year-old boiler, a window seal at the end of its life.
• Work required by an invalid cosmetic-repairs clause — for example a rigid decorating schedule, or any such obligation where you received the flat unrenovated without adequate compensation.
• A flat-rate “cleaning fee” where you handed the flat back swept clean.

When you get it back

There is no fixed statutory deadline. The landlord is allowed a reasonable period after the tenancy ends to check the flat and settle accounts — in practice usually a few months, and in most cases three to six.

They may hold back a proportionate part of the deposit beyond that, but only for a specific, identified claim: typically a pending Nebenkosten reconciliation. Holding the entire sum for a year because a €120 heating balance is outstanding is not proportionate. The rest should be returned promptly.

If a deduction feels unfair

Work through it in order. Most disputes end at step two.

1. Get the itemisation in writing. A landlord who deducts has to say what for. “Repairs” is not an itemisation; an invoice or a quote per item is.
2. Compare it with the handover protocol. If a defect is listed on the move-in protocol you both signed, it cannot be charged to you on the way out. This is why the protocol is worth more than any argument you can make later.
3. Check for wear and tear. Ask specifically which items are claimed as damage rather than use, and why.
4. Check the age of what is being replaced. If a landlord replaces a fifteen-year-old carpet you damaged, you owe the residual value, not a new carpet.
5. Write a formal demand with a deadline. Set out what you dispute, name a date roughly two weeks out, and send it so you can prove it arrived.
6. Get help. A local Mieterverein membership costs less than most disputed deductions and includes legal advice. Legal-expenses insurance, if you have it, covers tenancy matters in most policies.

The paperwork that prevents all of this

Two documents decide almost every deposit case:

• A move-in handover protocol listing every pre-existing defect, signed by both parties, with dated photographs attached.
• A move-out protocol recording the state you left the flat in, again signed and photographed, together with final meter readings and the number of keys returned.

If your landlord does not offer one, write it yourself, take photos, and send it to them the same day asking them to confirm. An unanswered email with timestamped photos is far better than nothing.

Deposit checklist

1. Deposit is at most three cold rents, in all forms combined.
2. You paid in three instalments, or knew you could have.
3. You know where the deposit is held and that it earns interest.
4. Move-in protocol signed, with photos and meter readings.
5. Move-out protocol signed, with photos, readings and key count.
6. Any deduction itemised in writing, with invoices.
7. Retained amount is proportionate to a specific, named claim.
8. Formal demand with a deadline sent if the refund stalls.

Never rely on being present at the final inspection to remember what was said. Bring a printed protocol, fill it in together, and both sign it before you hand over the keys.

This guide explains common practice in the German rental market and is meant as orientation, not legal advice. For a decision that costs you money, check your own contract and, if in doubt, ask a lawyer or a local tenants’ association (Mieterverein).