Landlord must pay back fortune made on tenant's 800-mark deposit, court rules
If you’re renting in Germany, you’re almost always asked to put down a deposit (Kaution). But if you stay in the same house or apartment for a long time, what happens to that money? In one recent case, it made the landlord a small fortune - and now the renter wants it back.
800-mark deposit held for 60 years, now worth 115.000 euros
A court in Cologne recently ruled on an interesting case that might have major implications for other renters in Germany when it comes to the money given to landlords as deposits.
The case revolved around a couple who paid a deposit of 800 Deutschmarks for an apartment way back in 1960. The housing association invested the money in shares, while the couple stayed in the same apartment for the rest of their lives, leaving their deposit untouched for more than half a century
Fast forward to 2021, and the housing association is being sued by the couple’s daughter - whose parents recently passed away - for the current market value of the deposit: a whopping 115.000 euros.
Woman in Cologne sues housing association for shares bought with deposit
The court recently ruled that the plaintiff’s claim is in principle backed up by the rental contract, which back in 1960 stipulated that the housing association was allowed to invest the 800 marks in shares, but that at the end of the lease the tenant would receive back either the shares or the 800 marks.
When the tenancy ended in 2018, the couple’s daughter asked for the shares, but the housing association refused and instead paid back the 800 marks - a sum of 409,03 euros. The woman then sued for the shares to be handed over.
Tenants in Germany entitled to interest made on deposit
The German Civil Code enshrines the tenant’s right to income from their rental deposit, regardless of how it has been invested. The landlord is legally required to keep the deposit in a separate bank account, or they can invest the deposit, with the tenant’s permission. Any interest accrued on the deposit during the tenancy has to be paid out to the tenant.
In this case, the court ultimately ruled that the housing association did not have the right to choose how to pay back the deposit, and so the woman’s claim to the shares was justified. However, the decision is not yet legally binding, as the housing association may yet appeal.