Bavaria Late Fee and Default Interest Rules for Landlords

Germany does not permit punitive late fees of the kind common in many other countries. Under the German Civil Code (Bürgerliches Gesetzbuch - BGB), which has been in effect since 1 January 1900, landlords in Bavaria may charge statutory default interest and modest administrative costs when tenants pay late. However, persistent non-payment triggers one of the landlord's most powerful tools: the right to immediate lease termination.

When Does a Tenant Default

Rent is legally due in advance by the 3rd business day of each month (§ 556b BGB). A tenant is automatically in default - without any formal reminder - once this deadline passes without payment (§ 286 BGB).

Note (BGH VIII ZR 222/15): A tenant fulfills their obligation by initiating the transfer (Leistungshandlung) by the 3rd working day with sufficient funds. The arrival of the funds in the landlord's account (Leistungserfolg) after this date does not constitute a default.

1. Default Interest (§ 288 BGB)

Once a tenant is in default, the landlord has a statutory right to charge default interest. Interest begins to accrue on the 4th working day of the month:

• The base rate is recalculated by the Deutsche Bundesbank on January 1 and July 1 each year
• Interest is calculated precisely on the overdue amount for the exact number of days late
• No separate "penalty fee" structure exists - interest is the only statutory recovery mechanism

2. Reminder Fees (Mahngebühren)

Landlords may charge reasonable administrative costs for sending formal reminders, subject to strict AGB control (§ 309 No. 5 BGB):

• First reminder: The landlord is legally entitled to claim the reasonable costs of the very first reminder sent after the deadline as default damages, as the tenant enters default automatically by the calendar (§ 286 Abs. 2 Nr. 1 BGB).
• Subsequent reminders: A flat fee limited to actual material costs (postage and paper), typically €1.00 to €2.50 per reminder, is accepted by courts. Personnel and administrative costs for drafting the reminder cannot be included.
• Excessive fee clauses in leases (e.g., €5.00 or higher) are frequently declared void as they exceed the expected damage and unfairly disadvantage the tenant under Germany's standard terms rules (AGB-Recht).

3. Immediate Termination for Non-Payment (§ 543 BGB)

The most significant consequence of persistent late payment is the landlord's right to terminate the lease without notice:

Grounds for Immediate Termination

A landlord may terminate immediately if the tenant:

1. Is in arrears for two consecutive months with the full rent or a significant portion, OR
2. Has accumulated arrears totaling two months' rent over a longer period

The Cure Right (Schonfristzahlung)

Even after valid immediate termination, a residential tenant can cure the termination by paying the full arrears within two months after being served with the eviction lawsuit—filed at the local Amtsgericht (District Court)—under § 569(3) BGB:

• This cure right can only be used once every two years
• It does not apply to commercial tenants
• Best practice: Always deliver an ordinary termination (ordentliche Kündigung) simultaneously as a fallback, in case the tenant exercises the cure right

For more on the eviction process, see our Eviction ProcessPreview unavailable guide.

Best Practices for Landlords

1. Monitor payments closely - Check rent receipts on the 4th business day each month
2. Send reminders promptly - Document all communications in writing
3. Calculate interest accurately - Use the current Bundesbank base rate
4. Don't rely on late fee clauses - Stick to statutory default interest and actual material costs to avoid voided clauses
5. Act decisively on persistent default - Consult an attorney as soon as the two-month threshold approaches

How Landager Helps

Tracking late payments across multiple properties, calculating precise default interest, and knowing when the threshold for immediate termination is reached can be complex

Landager syncs with your bank account, automatically identifies late rent payments, calculates day-accurate interest, and generates compliant reminder letters - alerting you instantly when legal escalation thresholds are crossed. Back to Bavaria Landlord-Tenant Laws OverviewPreview unavailable.

How Landager Helps

Landager tracks lease terms, rent collection tracking, and automated late interest calcs - making it easy to stay compliant with Bavaria regulations.