North Rhine-Westphalia Security Deposit Laws: Guide for Landlords

The security deposit (Mietkaution) is a fundamental element of German rental law. In North Rhine-Westphalia, the federal provisions of the German Civil Code (BGB) apply, supplemented by case law from the Federal Court of Justice (BGH). Landlords who fail to comply with these rules risk having the deposit agreement declared void or facing compensation claims.

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Maximum Deposit Amount

Under § 551(1) BGB, the security deposit may not exceed three months' net cold rent (base rent excluding operating costs)

Tenants are entitled to pay in three equal monthly installments, with the first installment due at the start of the tenancy.

Agreements requiring a higher amount are void to that extent — though the tenant must actively reclaim any overpayment.

Investment Requirements Under § 551(3) BGB, the landlord is obligated to:

1. Keep the deposit separate from personal assets
2. Invest it at a credit institution — typically in a separate savings account with a three-month notice period
3. Earn market-rate interest on the deposit

The interest earned belongs to the tenant and is paid out together with the principal upon return of the deposit. Investing in higher-risk instruments (stocks, funds) without the tenant's explicit consent is not permitted.

Alternative deposit forms (if agreed in the lease):

• Bank guarantee (Bankbürgschaft)
• Pledged savings book
• Deposit insurance (Kautionsversicherung)

Return of the Deposit After the tenancy ends, the landlord has a reasonable period to inspect and settle accounts

Courts generally accept a timeframe of three to six months, depending on the complexity of outstanding items.

Permitted Deductions

A deduction for end-of-tenancy cleaning is generally only permitted if the tenant was validly obligated to clean upon departure and the apartment was left in an unclean condition.

Impermissible Deductions

• Normal signs of use and age-related wear
• Damage that existed at move-in
• Repairs qualifying as the landlord's maintenance obligation

Statute of Limitations

Best Practices for Landlords

• Create a handover protocol — detailed written record with photos at both move-in and move-out
• Maintain a separate deposit account — always keep a dedicated account
• Retain interest certificates — keep bank interest statements for the final settlement
• Respect deadlines — issue operating cost statements within 12 months after the billing period
• Do not offset without prior written notice

Landager helps you centrally manage deposit payments, returns, and deadlines with automatic reminders for due dates.

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