Mietkaution: The § 551 BGB Cap, How It Must Be Held, and Getting It Back

Almost every German residential lease asks the tenant for a Kaution, a security deposit, before the keys change hands. The amount, how it has to be paid, and how it has to be held while the tenancy runs are not left to the lease to decide. § 551 BGB fixes all three, and every part of that statute exists to protect the tenant rather than the landlord.

This page works through the cap on how large a deposit can be, the right to pay it in instalments, the separate account requirement and where the interest goes, what a landlord can and cannot deduct when the tenancy ends, and what happens if the landlord fails to keep the deposit separate or becomes insolvent.

Information last verified on 20 July 2026. This page provides general legal information and does not constitute legal advice in an individual case.

The cap: three months' Nettokaltmiete

§ 551 Abs. 1 BGB limits a residential security deposit to at most three times the monthly rent, and it specifies which rent that means: the Nettokaltmiete, the base rent before any lump sum or advance payment for operating costs is added. A lease that tries to calculate the cap against the warm rent, the total including utilities, is calculating it against the wrong number.

This cap applies regardless of how the security is structured. Whether the lease calls it a Kaution paid in cash, a bank surety (Bürgschaft), a pledged savings account, or some other form of security, § 551 Abs. 1 limits the total value of whatever security the landlord can demand to three months' Nettokaltmiete.

Worked example

A tenant renting a flat at 900 euro Nettokaltmiete a month, with a further 200 euro in advance service charge payments on top for a 1,100 euro total, faces a deposit cap based on the 900 euro figure alone. The maximum lawful deposit is 2,700 euro, not 3,300 euro. A lease demanding a deposit calculated against the full 1,100 euro warm rent is asking for more than § 551 permits for that part of the demand.

The right to pay in three instalments

Where the deposit takes the form of a cash payment, § 551 Abs. 2 BGB gives the tenant a right that many leases do not spell out: the tenant can pay it in three equal monthly instalments rather than as a single lump sum at signing. The first instalment falls due at the start of the tenancy, and each further instalment falls due together with the ordinary rent payment for the following two months.

Using the example above, a 2,700 euro deposit could be paid as three instalments of 900 euro, the first alongside the first month's rent, and the remaining two alongside the following two months' rent, rather than as a single 2,700 euro payment up front. A lease clause demanding the full deposit before the tenant moves in conflicts with this right and cannot override it.

Alternatives to a cash deposit

Cash is the most common form a Kaution takes, but § 551 does not require it. A tenant and landlord can agree instead to a third party bank surety (Bürgschaft), where a bank promises to pay the landlord up to the agreed amount if a claim arises, or to a pledged savings account in the tenant's own name that the landlord can draw on only under agreed conditions. Some tenants also use a commercial Kautionsversicherung, a deposit insurance policy, which pays an ongoing premium instead of tying up a lump sum.

Whichever form is chosen, the same three month Nettokaltmiete cap applies to its value, and the instalment right in § 551 Abs. 2 is specifically about a cash deposit, so a tenant choosing a bank surety or an insurance product instead is negotiating a different arrangement, not exercising that particular statutory right.

How the deposit has to be held

§ 551 Abs. 3 BGB requires the landlord to place a cash deposit at a bank, at the interest rate ordinarily paid on savings accounts with three months' notice of withdrawal, unless the parties agree a different form of investment instead. Whichever form is used, the deposit has to be kept separate from the landlord's own assets, and the resulting interest belongs to the tenant and is added to the deposit itself, increasing its value over time.

One exception narrows this: for housing in a student or youth dormitory specifically, the landlord is not obliged to pay interest on the deposit at all. Outside that narrow category, a lease that lets the landlord simply keep the deposit in a general business account, mixed with other funds and earning no separate interest for the tenant, does not meet the statutory standard.

What happens if the landlord fails to segregate the deposit, or becomes insolvent

A landlord who deposits the money into an ordinary account instead of a segregated one has already broken § 551 Abs. 3, even if nothing else goes wrong during the tenancy. A tenant who discovers this can ask the landlord to correct it and move the funds into a properly separated account.

The real danger of a mixed account shows up if the landlord becomes insolvent. A deposit that has genuinely been kept separate from the landlord's own assets is generally recoverable as the tenant's own property rather than simply another claim against the landlord's estate. A deposit that was never segregated, by contrast, is much harder to recover intact, since it has effectively become indistinguishable from the landlord's general funds and the tenant may end up competing with the landlord's other creditors for whatever remains. This is one of the clearest practical reasons to keep records of where a deposit was actually placed, rather than assuming the statute enforces itself.

Getting the deposit back: no fixed deadline, but not an open one either

Unlike the twelve month statement deadline that governs the annual service charge statement, § 551 BGB sets no fixed number of days or months for returning the deposit once a tenancy ends. That gap is filled by case law rather than a statute, and it is worth being direct about that rather than inventing a precise figure the law does not actually set.

The Bundesgerichtshof has repeatedly held that the landlord is entitled to a reasonable period after the tenancy ends to check whether any claims exist against the deposit, before the tenant's return claim becomes due at all. In practice, courts and commentators commonly describe that reasonable examination period as somewhere between three and six months for a straightforward tenancy with no outstanding issues. Where the final year's service charge statement is still outstanding, the landlord can lawfully hold back a reasonable portion of the deposit for materially longer, until that statement is settled, rather than being forced to release the whole amount immediately. The Bundesgerichtshof addressed this specific interaction between the deposit and an outstanding service charge reconciliation in its decision of 18 January 2006, case VIII ZR 71/05.

What this means in practice is that there is no single number to quote as the deadline. A tenant with no outstanding disputes and no pending service charge statement can reasonably expect the deposit back well within six months. A tenant whose final year's utilities have not yet been reconciled should expect the landlord to hold back a proportionate amount, tied specifically to that outstanding reconciliation, for longer than that.

What can and cannot be deducted

A landlord can deduct from the deposit for genuine, provable damage beyond ordinary use, unpaid rent, and a reasonable reserve for an outstanding service charge reconciliation. What a landlord cannot deduct for is normal wear and tear.

§ 538 BGB states this plainly: changes or deteriorations to the dwelling brought about through contractually intended use are not something the tenant has to answer for. Scuffed paint from years of ordinary living, worn carpet in a well used hallway, or small marks from furniture placed where furniture is meant to go fall on the landlord's side of that line, not the tenant's. A landlord who tries to deduct for this kind of ordinary ageing of the dwelling, rather than for actual damage the tenant caused, is deducting for something § 538 already allocates to the landlord.

A useful test is whether the change or wear would have happened anyway through the intended, everyday use of the dwelling over the length of the tenancy. If so, it is not deductible. Genuine damage, holes in walls beyond what hanging pictures would cause, burns, breakage, or missing fixtures, sits outside that protection and can properly be charged against the deposit.

What a tenant can do if a deposit is wrongly withheld

A tenant who believes a deduction is unjustified, whether because it is really ordinary wear and tear or because the landlord is simply sitting on the deposit well past a reasonable examination period, can formally demand an itemised accounting and a deadline for repayment before escalating further. Since a return claim is a normal civil claim, it is also subject to the ordinary limitation period under § 195 BGB, which is a separate question from how long the landlord may reasonably delay before that claim even becomes due.

For the rules governing the annual utility statement that often explains why a landlord is holding part of a deposit back, see the service charge statement. For the rules on ending the tenancy itself, see ending a tenancy. General background on German tenancy law is at German law explained.

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