Security deposits in German tenancies are tightly regulated by § 551 BGB, and mistakes come directly out of the landlord's pocket.

The three ground rules

  • Cap: at most three months' net cold rent (Kaltmiete – base rent excluding utilities). Anything above is void to that extent.
  • Instalments: the tenant may pay in three equal monthly instalments, the first due at the start of the tenancy.
  • Investment: separate from the landlord's own assets, protected against the landlord's insolvency, at standard savings interest – with the interest accruing to the tenant.

Why the segregated account matters

If the deposit is not held insolvency-proof, the tenant may withhold rent up to the deposit amount, and in a landlord insolvency the deposit would otherwise vanish into the estate. A designated escrow account (Mietkautionskonto) is a legal duty, not a courtesy.

Returning the deposit

There is no fixed statutory deadline; courts accept a review period of roughly three to six months. For a pending utility statement the landlord may retain a proportionate part – never the entire deposit as a matter of routine.

Deposit tracking in eigentumwerk

Every tenancy record carries the agreed deposit, the escrow IBAN and the instalments received; the dashboard flags deposits above the three-month cap and outstanding instalments automatically.