Security Deposit Account: How to Properly Invest and Return the Rental Deposit

EverReal Editorial Team. The same letting technology chosen by 450+ real estate companies. Last updated: October 2026.

Problem: The deposit is held in a current account, even though Section 551 of the German Civil Code (BGB) requires separate investment. Cause: The obligation begins as soon as money is provided to you as security, not just upon move-out. Premise: The deposit is temporarily held third-party money; invested separately and settled with receipts, it can be returned transparently upon move-out.

What is a deposit account, and what does the law require?

A deposit account is an account at a credit institution where you invest the rental deposit separately from your own assets. Section 551 BGB caps the deposit at three months' rent excluding itemised operating costs, permits the tenant to pay in three instalments, and allocates accrued interest to the tenant. The law does not specify a fixed repayment deadline; you are entitled to a reasonable examination period.

What the term means is explained in the glossary entry on rental deposits. Where the deposit fits into the overall process is shown in step 8 of Renting out an apartment: the complete process.

How high can the rental deposit be, and what happens if it is too high?

Section 551 (1) BGB sets the upper limit at three times the monthly rent excluding operating costs specified as a lump sum or prepayment. Usually, this corresponds to three months' net cold rent; only operating costs itemised in the contract as a lump sum or prepayment are deducted.

If more is agreed, Section 551 (4) BGB applies: Any agreement deviating to the disadvantage of the tenant is void. The Federal Court of Justice (BGH) has ruled that the tenant can demand back the portion exceeding three months' rent, regardless of whether the tenancy has already ended. The claim expires three years after the end of the year in which the tenant paid the excess amount (BGH, judgment of 1 June 2011, VIII ZR 91/10).

Which clauses in tenancy agreements are generally invalid can be found in Tenancy agreement template to copy: mandatory contents.

Setting up a deposit account: invest the deposit separately, interest belongs to the tenant

Section 551 (3) BGB stipulates how you must invest a sum of money provided to you as security. When setting up a deposit account, four points matter:

1. Where: at a credit institution. The contracting parties may agree on a different form of investment.

2. At what interest rate: at the interest rate customary for savings deposits with a three-month notice period.

3. Separately: in both cases, separated from the landlord's assets.

4. For whom: The interest belongs to the tenant and increases the security. With accumulated interest, the deposit may therefore grow beyond the upper limit.

Only in the case of living space in a student hall or youth residence is the obligation to pay interest on the security waived. The requirement for separation applies there as well.

The law prescribes an outcome: separated from the landlord's assets, with interest accruing to the tenant. Stiftung Warentest mentions two common methods: an account held by the tenant whose balance is pledged to the landlord, or a fiduciary trust account (Treuhandkonto) held by the landlord. Banks also refer to this as a rental deposit account (Mietkautionskonto). A current account used for rental income and personal expenses does not constitute a separate investment. Section 551 BGB does not address account fees; you clarify charges directly with the bank.

Why separation matters is shown in insolvency: The tenant can only reclaim their deposit from the landlord's insolvency estate if the landlord invested it separately from their own assets. Otherwise, their claim for repayment is merely an unsecured insolvency claim (BGH, judgment of 20 December 2007, IX ZR 132/06).

Calculating the rental deposit: a calculation example

Suppose the contract specifies a warm rent of 1,000 euros, including 180 euros of operating cost prepayments itemised as such:

1. Rent excluding itemised operating costs: 1,000 euros minus 180 euros = 820 euros.

2. Maximum deposit: 3 × 820 euros = 2,460 euros.

3. Partial payments: If the maximum deposit is agreed, the tenant is entitled to pay in three equal instalments of 820 euros each.

Calculated using the warm rent, the total would be 3,000 euros, which is 540 euros over the legal limit. If the tenant has paid 3,000 euros, they can reclaim the 540 euros. The decisive figure is always the agreed rent excluding itemised operating costs.

Payment in instalments: the tenant's right, even without a clause

If a sum of money is to be provided as security, the tenant is entitled under Section 551 (2) BGB to three equal monthly instalments. The first is due at the beginning of the tenancy—i.e., at the agreed start of the lease—and the subsequent instalments are due alongside the immediately following rent payments. If the contract demands the full sum in advance, it deviates to the disadvantage of the tenant, and the law declares such agreements invalid. Consequently, the security is only fully deposited in the account after the third instalment.

Returning the deposit: no fixed deadline, but a reasonable examination period

There is no statutory repayment deadline. The Federal Court of Justice grants the landlord a reasonable period after the end of the tenancy to decide whether and how to use the deposit to satisfy claims; only thereafter does the tenant's claim for repayment become due. How long this takes depends on the individual case; even more than six months can be necessary and reasonable. The legislature deliberately avoided setting a fixed deadline (BGH, judgment of 18 January 2006, VIII ZR 71/05). If an operating cost statement is pending, you may retain a reasonable portion until the end of the settlement period if an additional payment is expected. The operating cost statement must be communicated to the tenant at the latest by the end of the twelfth month following the settlement period (Section 556 (3) BGB). The portion you no longer need as security must be returned, along with any accrued interest.

Withholding the deposit: only what you can substantiate

You may only withhold amounts for claims to which you are entitled. The tenant is not responsible for changes resulting from the contractual use of the property (Section 538 BGB). Costs for cosmetic repairs are only considered if the contract contains a valid clause to that effect, as maintenance of the apartment is the landlord's obligation under Section 535 (1) BGB; the glossary explains cosmetic repairs. Claims for damages resulting from alterations or deterioration of the rented property expire six months from the date you receive the property back (Section 548 (1) BGB). When settling the deposit after move-out, you can, according to the Federal Court of Justice, generally still offset a claim for damages due to property damage against the deposit even if that claim is statute-barred (BGH, judgment of 10 July 2024, VIII ZR 184/23). Evidence of the condition is established on the day of handover: The glossary on apartment handover outlines the procedure, meter readings, and the handover protocol. How to mitigate default risks before signing the lease is covered in Identifying rental fraudsters.

With EverReal Go!: document the handover digitally

The EverReal Go! Plus package includes digital apartment handover with documentation and photos, alongside tenancy agreement templates and qualified electronic signatures. Plus costs a one-time fee of 59 euros including VAT per letting process, valid for six months, with no subscription. Listing on property portals requires the optional Flexible Advertising add-on, starting from 59 euros per 30 days including VAT; tiers vary by included portals, and all prices can be found in the pricing overview.

Sale of the property: the deposit transfers over

If you sell the rented property, the purchaser assumes the rights and obligations arising from the security deposit (Section 566a BGB). If the tenant cannot recover the deposit from the purchaser upon termination of the tenancy, the original landlord remains obligated to refund it. Therefore, clarify the transfer of the deposit with the buyer before the sale.

Alternatives to a cash deposit

Instead of cash, the tenant may offer a guarantee (Bürgschaft) or rental deposit insurance. For you, only the form of security changes; the upper limit under Section 551 (1) BGB continues to apply to the security itself. How rental deposit insurance works and what it means for landlords is explained in the article on rental deposit insurance.

Conclusion: deposit account, maximum amount, and repayment at a glance

The deposit secures your claims while remaining money held separately from your personal assets. When it comes to repayment, substantiated evidence is what counts: the deposit agreement in the lease and the documented condition on handover day.

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Legal notice. We do not provide legal advice. For specific legal questions, please consult a lawyer specialising in tenancy and residential property law or your local property owners' association, such as Haus & Grund. Legal status: 14 October 2026.

Sources.

• BGB, gesetze-im-internet.de, accessed on 14 October 2026: Section 535 (Landlord's maintenance obligation), Section 538 (Wear and tear from contractual use), Section 548 (Statute of limitations for landlord claims for damages), Section 551 (Limitation and investment of tenancy deposits), Section 556 (Settlement period for operating costs), Section 566a (Tenancy deposit upon property transfer)

• BGH, judgment of 18 January 2006, VIII ZR 71/05 (no statutory repayment deadline, reasonable examination period, withholding for anticipated operating cost claims), full judgment text (PDF)

• BGH, judgment of 20 December 2007, IX ZR 132/06 (segregation of deposit in landlord insolvency only with separate investment), full judgment text (PDF)

• BGH, judgment of 1 June 2011, VIII ZR 91/10 (reclaiming portion exceeding three months' rent, limitation period), full judgment text (PDF)

• BGH, judgment of 10 July 2024, VIII ZR 184/23 (offsetting a time-barred claim for damages against the deposit), full judgment text (PDF)

• Stiftung Warentest, Rental deposit and guarantee: amount, repayment, alternatives, article dated 14 September 2021, accessed on 14 October 2026 (two standard investment methods)

• Prices and scope of services of EverReal Go!: de.everreal.co/go/preise and de.everreal.co/go, accessed on 16 October 2026

• 450+ real estate companies: EverReal proprietary data, as of September 2026

Frequently Asked Questions

How high can the rental deposit be?

At most three months' rent excluding itemised operating costs, usually three months' net cold rent: Section 551 (1) BGB permits three times the monthly rent excluding operating costs itemised as a lump sum or prepayment. For a warm rent of 1,000 euros with 180 euros of itemised operating cost prepayments, that amounts to 2,460 euros and not 3,000 euros. Accrued interest may exceed this ceiling because it augments the security. If more was agreed, the tenant can reclaim the excess amount, regardless of whether the tenancy has already ended; the claim expires three years after the end of the year in which the payment was made (BGH, judgment of 1 June 2011, VIII ZR 91/10).

Do I have to set up a deposit account?

You must invest the deposit separately from your personal assets; a dedicated account is the usual route, though the law does not prescribe a specific banking product. Section 551 (3) BGB requires investment at a credit institution at the interest rate customary for savings deposits with a three-month notice period. The contracting parties can agree on a different investment form, but even then the funds must be held separately from the landlord's assets, and the interest belongs to the tenant. This is also critical in insolvency: The tenant can only recover the deposit from the landlord's insolvency estate if it was invested separately; otherwise, their claim is treated as a standard unsecured insolvency claim (BGH, judgment of 20 December 2007, IX ZR 132/06).

When do I have to return the deposit?

There is no statutory deadline. After the tenancy ends, you are entitled to a reasonable period to decide whether and how to use the deposit to settle claims; only thereafter does the tenant's claim for repayment become due. The Federal Court of Justice has ruled that the legislature deliberately refrained from setting a fixed repayment period, and in individual cases more than six months can be necessary and reasonable (BGH, judgment of 18 January 2006, VIII ZR 71/05). If an operating cost statement is pending, you may retain a reasonable portion until the end of the settlement period if an additional payment is expected. The portion no longer required for security must be returned.

May I withhold the deposit for renovations?

Only if you hold a justified claim. The tenant is not responsible for wear and tear arising from contractual use (Section 538 BGB), and maintenance of the apartment is the landlord's obligation under Section 535 (1) BGB. Cosmetic repair costs can therefore only be claimed if the tenancy agreement contains an effective clause to that effect. Claims for damages resulting from alterations or deterioration of the rented property expire six months from the date you receive the property back (Section 548 (1) BGB); however, when settling the deposit after move-out, you can generally still offset a claim for damages against the deposit even if that claim is statute-barred (BGH, judgment of 10 July 2024, VIII ZR 184/23). Any withheld amounts must be substantiated, ideally using the handover protocol recorded on move-out day.

What happens to the deposit if I sell the apartment?

The purchaser assumes the rights and obligations arising from the security deposit (Section 566a BGB). If the tenant cannot recover the deposit from the purchaser upon termination of the tenancy, the previous landlord remains obligated to repay it. Therefore, clarify with the buyer how the deposit will be transferred before completing the sale, and document it in writing.