2024-07-12 17:17:58
The tenant has moved out – but where is the deposit? Disputes often arise when landlords keep it. The Federal Court of Justice has now ruled on a 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 ruled on the question of whether a landlord could offset damages for the rental property against the rental deposit six months after a tenant moved out.
With his ruling, he gave landlords a boost. But when do claims for damages normally expire? And in which cases does an exception apply? The most important questions and answers at a glance:
In principle, landlords are allowed to keep their tenants’ deposits under various circumstances. “This could be an outstanding rent claim or back payments for operating costs,” says lawyer and tenancy law expert Beate Heilmann.
The money can also be withheld for cosmetic repairs that were not 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.
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.
After returning an apartment, landlords usually have six months to demand compensation for damage from their former tenants. However, the Civil Code provides an exception to the limitation period: if the claim could theoretically have been offset before the six months had expired, then the settlement 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.
The defendant landlord was successful in his appeal against the decision of the lower court. 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 Eighth Civil Senate, which is responsible for tenancy law, among other things, decided that landlords can offset claims for damage to a rental property that are actually time-barred against their tenants’ deposits even if they have not exercised their right of substitution within the six-month limitation period. This right of substitution allows landlords to demand monetary compensation for damage to their apartment instead of repairing the damaged property.
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,” says 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 home and property owners’ association welcomes the BGH’s decision. The Central Association of German Home, Apartment and Property Owners says that it has given private landlords practical flexibility. At the same time, however, it appeals to landlords to document all visible damage when the apartment is handed over and to settle the deposit quickly on this basis.