Understanding the Importance of Rental Deposit Payments in Tenancy Law: Insights from Lawyer Michael Schädlich

In tenancy law, non-payment of an agreed rental deposit can also be an important reason for extraordinary termination of the rental agreement in accordance with Section 569 Paragraph 2a BGB. Lawyer and specialist lawyer for tenancy and condominium law, Michael Schädlich, from the law firm FELS Rechtsanwälte PartG mbB, Bayreuth, presents this problem area:

According to the legal requirements, an extraordinary reason for termination exists if the tenant is in arrears with the payment of the rental deposit in an amount that corresponds to twice the monthly rent. The benchmark for determining this amount is the agreed net rent of the contract. If a rental security that amounts to less than the sum of two net monthly rents has been agreed, the landlord’s statutory right to terminate the contract in accordance with Section 569 Paragraph 2a of the German Civil Code (BGB) does not apply. In this respect, it would be necessary to check whether there is the possibility of termination without notice on the basis of Section 543 Paragraph 1 BGB or ordinary termination.

According to the legal requirements, a tenant is entitled to pay the contractually agreed rental deposit in up to three monthly installments. It is therefore conceivable that a tenant falls behind on paying the entire rental deposit or only part of it.

If the tenant has arrears on both the rental deposit and the rent payments, these amounts may not be added together to justify arrears relevant to termination. The individual termination circumstances – termination due to arrears in rent deposits, termination due to arrears in rent payments – remain independent.

In the case of termination due to rent deposit arrears, termination is excluded if the tenant has paid the full rental deposit before receipt of the termination notice. A termination that was given due to rent deposit arrears will also become invalid if the tenant pays the rent deposit in full within the statutory grace period. In accordance with Section 569 Paragraph 3 No. 2 BGB, he has time to do this no later than two months after the eviction action becomes pending. However, the tenant must bear the full legal and court costs incurred up to that point.

The tenant cannot declare a set-off with regard to deposit arrears, since the rental deposit serves as security for the fulfillment of the tenant’s obligations under the rental agreement and is therefore actually payable to the landlord.

If the landlord terminates the contract solely because of the rent deposit arrears, even though there are additional rent arrears, it is sufficient if the tenant pays the rent deposit within the grace period for the termination to be ineffective.

However, if a landlord wants to avoid this legal remedy at all costs, he can also issue an ordinary termination in addition to the extraordinary termination without notice. The law does not provide for the cure of the ordinary termination within the statutory grace period.

If there is an emerging need for advice and complicated tenancy law issues that can quickly reach existential dimensions, I recommend engaging a specialized lawyer. Because the following applies: only those who recognize connections can create effective structures.