deposit

noun · Mietkaution

For residential lettings § 551 BGB caps the security at three months’ rent excluding any service-charge element, gives the tenant the right to pay in three monthly instalments, and obliges the landlord to hold the money separately from his own assets with the interest belonging to the tenant. English deposit also means the down payment on a purchase, which is Anzahlung, a different thing entirely.

Which translation, when

Mietkautionthe security: where the residential tenant provides security for the performance of his obligations, it may not exceed three times the monthly rent excluding the service costs shown as a lump sum or as advance payments, § 551 Abs. 1 BGB, so the cap is measured on the net rent alone and later rent increases do not entitle the landlord to top it up.

Raten und getrennte Anlagethe tenant’s protections: the tenant is entitled to pay a money deposit in three equal monthly instalments, the first due at the start of the tenancy, § 551 Abs. 2 BGB, and the landlord must invest the sum at the rate usual for savings deposits with three months’ notice, separately from his own assets, the returns belonging to the tenant; agreements departing from these rules to the tenant’s disadvantage are ineffective.

falsche Nachbarnthe other deposits: English deposit covers the down payment on a purchase, in German an Anzahlung, and the security paid into court or to a bank, a Hinterlegung or Sicherheitsleistung, while the criminal-law Kaution of bail is again different; only the tenancy security is the Mietkaution, and commercial lettings fall outside § 551 BGB altogether, so the cap and the instalment right do not apply there.

Why

Deposit in a residential tenancy is the Mietkaution, and German law regulates it more tightly than most systems. Section 551 Abs. 1 BGB caps the security at three times the monthly rent, and the base is the net rent, since service costs shown as a lump sum or as advance payments are expressly excluded; because the cap is measured at the start of the tenancy, later rent increases give the landlord no claim to a larger deposit. Abs. 2 gives the tenant a right the drafting of many contracts ignores: where the security is a sum of money he may pay it in three equal monthly instalments, the first due at the beginning of the tenancy and the others with the following rent payments. Abs. 3 governs what the landlord must then do with it, namely invest it at the interest rate usual for savings deposits with three months’ notice, separately from his own assets, with the returns accruing to the tenant, and any agreement departing from these provisions to the tenant’s disadvantage is ineffective. The commercial world is different: § 551 BGB applies to residential lettings only, so business leases know neither the cap nor the instalment right nor the statutory investment duty, and a translation that carries the residential rules into an office lease misstates the position. The English word finally needs sorting, because deposit does several jobs. The down payment on a purchase is an Anzahlung, money placed with a court or a bank as security is a Hinterlegung or a Sicherheitsleistung, and the release of an accused against security is bail, in German confusingly also called Kaution but a matter of criminal procedure. Only the tenancy security is the Mietkaution.

Typical mistakes

The cap of three months’ rent is measured on the rent excluding service-cost elements, § 551 Abs. 1 BGB, so calculating it on the gross rent produces an excessive deposit.
The tenant may pay in three instalments and the money must be held separately with interest for him, so a clause demanding one payment into the landlord’s account is ineffective.
Section 551 BGB governs residential lettings only, so applying the cap to a commercial lease describes rules that do not bind there.

What matters

Checking a German residential tenancy agreement: the clause should call the security Mietkaution, stay within three net monthly rents, leave the instalment right intact and reflect the landlord’s duty to hold the money separately.

Authority

§ 551 BGB

What the machine misses

The machine writes Anzahlung or a bare Kaution for deposit, one the down payment on a purchase and the other ambiguous between tenancy and bail, while residential practice says Mietkaution and § 551 BGB caps it at three net monthly rents with an instalment right and a separate-investment duty; the wrong word carries none of that protection.

See what the machine does with this clause →

Examples

a deposit of three months’ rent	eine Kaution in Höhe von drei Monatsmieten
payable in three instalments	in drei Teilzahlungen zu leisten
held separately from the landlord’s assets	getrennt vom Vermögen des Vermieters angelegt
a down payment on the purchase price	eine Anzahlung auf den Kaufpreis