Late Fees and Arrears in Bremen: Default Interest and Eviction

Tenant rent arrears represent one of the highest financial risks to landlords. While foreign jurisdictions often allow steep punitive late fees to discourage delayed payments, German law strictly prohibits punitive penalties in residential tenancy. In Bremen, landlords rely on the provisions of the German Civil Code (BGB), utilizing default interest, formal dunning fees, and ultimately eviction to manage non-paying tenants.

Disclaimer: This guide provides general legal information for educational purposes only and does not constitute legal advice. Always consult a licensed attorney in Bremen for advice specific to your situation. Information last verified: March 2026.

When Does "Default" Occur?

Automatic Default for Rent Payments (§ 286 II BGB)

By standard German law, the monthly rent is due implicitly by the third working day of the month (unless explicitly agreed otherwise). Because this payment date is fixed directly to the calendar, the tenant enters automatic default (Verzug) immediately once the third working day passes without payment.

A formal written warning or reminder (Mahnung) is not legally required for the tenant to enter default status on the base rent.

Default for Utility Bills

For other irregular payments—such as a request for backpay following an annual utility reconciliation (Betriebskostenabrechnung)—the tenant generally only enters default 30 days after receiving the invoice, or immediately after receiving an explicit payment reminder following the due date.

Allowable Default Interest

Under § 288 BGB, a landlord holds the right to charge default interest (Verzugszinsen) starting from the first day the tenant enters default status.

Calculation Example: If the Bundesbank sets the base interest rate at 3.62% (as of early 2025), the total allowable default interest for residential rent arrears would be 8.62% per annum.

Dunning Fees and Penalties

Because German courts routinely view arbitrary late fees as an "unreasonable disadvantage" for residential tenants, the rules regarding charging fees for reminder letters (Mahngebühren) are stringent constraint:

• First Reminder: The initial payment reminder is generally expected to be issued free of charge.
• Subsequent Reminders: Landlords may charge a flat, reasonable processing fee—typically between €2.50 to €5.00 per reminder letter—for the second and third reminders to cover postage and paper.
• Actual Damages: If a landlord can irrefutably document actual higher damages caused by the delay (such as bank overdraft fees incurred because the rent didn't arrive), they can claim those exact costs against the tenant.
• Punitive Fines Prohibited: Any flat "Penalty Fee" (e.g., "$50 if rent is late") written into a residential lease is completely void and unenforceable in Germany.

Eviction for Rent Arrears

While landlords cannot heavily fine tenants, they hold a powerful tool regarding contract termination when significant arrears accumulate.

Extraordinary Termination Without Notice (§ 543 BGB)

A landlord can issue an immediate eviction notice (fristlose Kündigung), legally terminating the contract without observing any standard notice period, under two specific debt conditions:

1. Two Full Months: The tenant owes the equivalent of two full months' rent consecutively.
2. Cumulative Debt: Over a period extending beyond two months, the tenant has paid rent late or short, resulting in a cumulative outstanding balance equal to or greater than one full month's rent.

Warning Not Required: Crucially, unlike behavioral lease violations, severe rent arrears do not require the landlord to send a formal warning letter (Abmahnung) prior to issuing the immediate eviction termination.

The "Grace Period" Loophole (Schonfristzahlung)

German law provides tenants a one-time lifeline under § 569 BGB. The immediate eviction triggered by rent arrears becomes retroactively ineffective if the tenant pays off the entire outstanding debt (or if a public welfare authority pledges to cover it) within two months of the landlord filing an eviction lawsuit (Räumungsklage) with the court.

Crucial Landlord Strategy: To protect against the tenant using the "Grace Period" loophole, landlords should always issue an "Ordinary Termination" alongside the "Extraordinary Termination Without Notice." While the grace period payment nullifies the extraordinary immediate eviction, courts generally uphold the ordinary termination—meaning the tenant must still vacate the property within the standard 3-9 month notice period.

Statute of Limitations

Note: The three-year period begins at the end of the calendar year in which the claim arose.

Best Practices for Landlords

• Monitor Payments Closely: Check your accounts on the 4th working day of the month.
• Consistent Reminders: Although not required to trigger default interest, sending a prompt, polite reminder immediately helps prevent minor omissions from spiraling into legal battles.
• Calculate Interest Fairly: When filing a formal claim, accurately calculate the 5 base points above the Bundesbank rate.
• Use the Dual Termination Method: If rent arrears surpass the two-month threshold, terminate the lease both extraordinarily and ordinarily simultaneously.

How Landager Can Help

Manually tracking missing rent across multiple bank accounts is prone to error and delay. Landager provides Bremen landlords with automated rent monitoring, immediately flagging delayed payments. The platform automatically generates legally viable, non-punitive reminder notices (Mahnungen), helping you assert your rights under BGB without violating residential protection limits.

Back to the Bremen Landlord-Tenant laws Overview.