Late Fees and Defalut of Payment in Lower Saxony: Landlord Rights

Loss of payment poses a major economic risk for private and commercial landlords. In Germany, in the event of rent debts for residential space, statutory default of payment (§ 286 BGB) occurs very quickly and automatically. However, strict consumer protection requirements apply to reminder fees.

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When Does a Tenant Default?

The rent must (provided there are no longer any special labor or social law regulations from the Corona period) be paid in advance according to statutory requirements, at the latest by the third working day of the current month. Following a ruling by the Federal Court of Justice (BGH), the receipt of payment on the landlord's account is no longer absolutely decisive: the transfer order must be made in good time by the third working day by the tenant.

If the landlord does not receive the payment on time, the tenant is automatically in default of payment – in this case, a reminder from the landlord is not even necessarily required to trigger legal consequences.

Limitation of Reminder Fees ("Late Fees")

In the US or the UK, high flat-rate late fees (in the sense of 50 or 100 dollars) are often common. The German legal system (BGB) does not provide for such arbitrary flat-rate penalties. A clause in a lease agreement that sets a flat fee of, for example, 25 euros for a returned direct debit or a reminder is legally invalid due to unreasonableness (§ 307 BGB).

What can be Charged?

1. Real Postage/Material: In the case of a written reminder, landlords may only charge the actually incurred damage ("postage, paper, envelope") as flat-rate "reminder fees." Customary in the industry, local courts in Lower Saxony accept values between 2.50 euros and 3.00 euros per reminder letter. The landlord's own personnel, administrative, or working time costs may not be billed.
2. Returned Direct Debit Fees: If a SEPA direct debit from the tenant's account fails due to insufficient funds, the pure bank charges debited to the landlord's bank may be passed on.

Demanding Default Interest (§ 288 BGB)

If the tenant is in default, the landlord may make an interest claim.

• Residential Rent (Consumer): The default interest rate is 5 percentage points above the base rate per year. (Note: If the base rate is set negative, this reduces the effective mark-up; the base rate is published semi-annually by the German Bundesbank).
• The interest debt begins to run on the day on which the tenant is in statutory default.

Timely Dunning and Termination

In order to legally prepare the way for termination (e.g., before filing an extraordinary termination without notice according to § 543 BGB due to reaching 2 months' rent arrears), a carefully documented dunning run is required. Although a reminder is not necessary for the actual occurrence of default; in order to legally warn the tenant or secure the eviction lawsuit, reminders should ideally be sent by registered mail (Einwurfeinschreiben).

Transparent Rent Collection with Landager

Create efficiency and security in the event of payment defaults: The Landager system tracks incoming payments on connected rental accounts and automates legally compliant reminder notices for landlords in Lower Saxony. This saves you time and prevents formulation and deadline errors.

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