September 26, 2026, 4:21 am | Read time: 3 minutes
The security deposit for an apartment is often a financial burden at the start of a lease but can be a small windfall upon moving out—provided the landlord doesn’t withhold it. But what if that’s exactly what happens? myHOMEBOOK spoke with a lawyer about the circumstances under which withholding the deposit is permissible.
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What is the purpose of a security deposit?
Generally, the security deposit paid upon moving in serves as a form of financial security. It ensures that landlords and property owners are not left with unpaid claims from the rental agreement. A similar principle applies to rented cars or garden equipment.
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In which cases does a security deposit apply?
In many cases, the deposit covers any rent arrears or outstanding utility costs. It can also be used to cover damages to the apartment caused by the tenant. If the damages are too extensive, the tenant may have to pay extra.
If the lease agreement includes cosmetic repairs that the tenant did not perform, the property management can also use the deposit in this case.
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Attorney Nicole Mutschke adds in a conversation with myHOMEBOOK: “Even if the tenant does not return the apartment on time at the end of the lease and still owes money, the deposit can be used for that.”
The Federal Court of Justice decided in 2024 that damage claims can still be offset against the deposit even after the statute of limitations has expired. This applies even if the landlord did not explicitly demand money as compensation for the damage within the limitation period.
According to the attorney, it is important that the management or owner only deducts as much money from the deposit as is actually needed to cover damages or dues. Simple wear and tear in the apartment is not a reason to withhold the deposit.
When can’t the deposit be withheld?
If withholding a deposit does not fall into one of the aforementioned cases, a court usually decides on the individual case. In fact, there are other examples where property management attempts to withhold tenants’ money—Nicole Mutschke also reports:
“In a case before the Paderborn District Court (Case No. 51 C 35/22), a landlord wanted to deduct money from the deposit for around 200 drill holes, among other things. However, the court did not see this as a ‘drill hole excess.’ The holes were distributed across walls and ceilings of eight rooms and could have been caused by furniture, decoration, or lighting.” Mutschke further explains that the deposit of 1,410 euros was eventually returned to the tenants. Only 10.50 euros were deducted for a broken mailbox lock.
Important: Cases like this do not imply that tenants are always allowed to drill 200 holes. Rather, such examples clearly show that it can be worthwhile for tenants to legally clarify whether the management is really allowed to withhold the money in individual situations.