Guiding principle
1. The landlord must not only keep the deposit paid to him separately from his own assets, but must also visibly invest it in a trust account in an appropriately labeled account ("rent deposit account").
2. The above obligation continues to apply even after the rental relationship has ended, until the final settlement of the deposit.
The case:
At the beginning of the tenancy, the tenant duly pays the cash deposit agreed in the lease to the landlord. The landlord deposits the deposit in a savings book that is not openly identified as a special account ("rent deposit account").
During the tenancy, the tenant finds out about this procedure and asserts a right of retention on current rents in the amount of the deposit.
This constellation leads to a lawsuit.
The judgment:
The regulation of § 551, para. 3, sentence 3 of the German Civil Code (BGB), according to which the landlord has to deposit a sum of money provided to him as security separately from his assets with a credit institution, is intended to ensure that the deposit is protected from the landlord's creditors. The deposit is treated as trust assets, which are to be protected separately from the landlord's insolvency and thus ultimately from the landlord's banks' lien.
However, this concern is only met by an investment that clearly shows the fiduciary character for each of the landlord's creditors. Accordingly, there is unanimous demand that the deposit be placed in a clearly designated special account ("rent deposit account"). If it is not identified as a special account, the savings book does not meet the requirements of § 551 para. 3 sentence 3 BGB.
The landlord's obligation to deposit the security deposit in a security deposit account continues to apply even after the end of the tenancy until the final settlement of the security deposit. Ultimately, both the tenant's need for security, which is covered by section 551 (3) sentence 3 of the German Civil Code (Bürgerliches Gesetzbuch, BGB), and the fiduciary obligation do not end with the end of the tenancy, but only with the return of the deposit.
If the landlord has not fulfilled the claim for a separate and appropriately labeled investment of the deposit, as in this case, the tenant has a right of retention on the rent in the amount of the deposit in accordance with §§ 273, 274 BGB.
Practical tip:
The landlord should handle the deposit paid by the tenant with care and must observe the above-mentioned ruling of the Federal Court of Justice. Ultimately, the tenant's rights go so far as to allow him to make the payment of the agreed deposit dependent on the naming of an insolvency-proof account. If the landlord fails to comply with the separation requirement, the tenant can refuse to pay the deposit or withhold current rents.
Reference:
BGH, decision of June 9, 2015 - VIII ZR 324/14, previous: LG Kiel, November 4, 2014 - 1 S 6/14; AG Kiel, November 22, 2013 - 120 C 150/13
The statements represent initial information that was current for the law applicable in Germany at the time of initial publication. The legal situation may have changed since then. Furthermore, the information provided cannot replace individual advice on a specific matter. Please contact us for this purpose.