When a lease is terminated, the question often arises to what
extent the lessor can take recourse to the provided security
deposit. High courts had so far not decided, whether the lessor may
offset claims unrelated to the lease against the lessee's claim
for repayment of the security deposit, if claims under the lease
itself no longer exist. In its decision dated July 11, 2012, the
German Federal Court of Justice (BGH) now addressed this
In the absence of express agreements otherwise, the fiduciary
character of the rent deposit entails an implicit offset
prohibition in respect to other claims that do not originate from
the lease. The lessor is unable to offset such claims against the
lessee's claim for repayment of the security deposit even if at
the end of the lease, the security deposit is not required for
claims of the lessor under the lease.
The parties are in dispute about the repayment of a security
deposit. The plaintiffs were lessees of an apartment of the
defendant for which they had provided a security deposit. At the
end of the lease, the plaintiffs returned the apartment. By letters
dated March and July 2010, they asked the defendant to repay the
provided security deposit. The defendant refused repayment by
referring to (alleged) counterclaims from an earlier lease of the
plaintiffs, which the former lessor had assigned to the defendant.
The plaintiffs then filed an action and successfully asserted their
claim for repayment of the provided security deposit in the prior
instances. The BGH upheld these decisions.
CONTENT AND SUBJECT OF THE DECISION
According to the opinion of the BGH, the plaintiffs are entitled
to a repayment of the security deposit. The offset declared by the
defendant had no substance, since it was not permitted to offset
using claims that did not originate from the lease. It had
generally been accepted insofar that the offset was not possible
based on an implicit agreement or good faith, if the character of
the obligatory relationship or the intent and purpose of the owed
performance did not let the offset appear equitable. Therefore, it
was regularly not permitted to offset a claim resulting from a
fiduciary relationship against unrelated counterclaims. This also
applied to the rent deposit. Unless agreed otherwise in exceptional
cases, it served exclusively to secure claims of the lessor under
the specific lease. The predetermination for a specific purpose did
not end already when the security deposit was no longer needed for
claims at the end of the lease, but rather only when the security
deposit was returned to the lessee.
IMPACT ON DAY-TO-DAY BUSINESS
With the aforementioned decision, which should apply equally to
residential and commercial leases, the BGH explicitly rejected an
offset by the lessor using claims unrelated to the lease against
the lessee's claim for repayment of the security deposit. Such
an offset is therefore generally not permitted without the
At the same time, the decision illustrates the importance of the
existing security agreement for the use of the rent deposit. Even
though the rent deposit will, if the parties did not conclude an
explicit security agreement, cover all claims of the lessor under
the existing lease in cases of doubt. However, lessors should
absolutely insist on a clear contractual security agreement, in
order to avoid disputes about which claims are secured by the
security. This applies in particular if the rent deposit should in
exceptional cases also secure claims from other legal
relationships. If e.g. a new lease agreement is concluded between
the same parties of the lease after a termination, it should be
made clear in connection with the security agreement, if
applicable, that the rent deposit covers all obligations both under
the original and the new lease.
Originally published Autumn 2012.
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