BGH overturns termination without notice due to missing bank guarantee

If you don't pay a cash deposit, you'll be fired - but not for not providing a guarantee!

Tenancy law is often dry, but this ruling brings a breath of fresh air to an old dispute: Can a landlord terminate a tenancy without notice if the bank guarantee for the deposit is missing? The clear answer from the Federal Court of Justice (BGH): No! This is only possible if the cash deposit is outstanding. So if you don't provide a directly enforceable guarantee at the start of the tenancy, you don't have to stand outside the door with your suitcases packed - at least not without further ado.

The case: A tenant was supposed to pay a deposit of 4,400 euros - not in cash, but with a bank guarantee. This was not forthcoming, but the landlady handed over the keys anyway. A short time later: termination without notice - and eviction proceedings. The reason: The tenant was in default with the "security deposit" (Section 569 (2a) BGB). The lower courts ruled in her favor. But the Federal Court of Justice (BGH) waved her off - with a ruling that provides clarity for tenants and landlords alike.

Cash deposit yes - surety no: what exactly does the law protect?

What many people do not know: Termination without notice due to a missing rental deposit is only permitted under strict conditions - i.e. if the cash deposit has not been paid in accordance with Section 551 BGB. The BGH emphasizes: The standard expressly refers to "an amount", which can only mean divisible cash payments - i.e. the classic cash deposit in installments.

A guarantee is not money, but a promise by a bank to pay in an emergency. And this is exactly what protects the landlord - but not in the same way as real money in the account. Anyone asking for a guarantee must not at the same time pretend that it has to be "paid" like cash.

The legislator wanted clarity - and not a mess of terminations

The BGH also looks at the original purpose of the provision: Landlords should be protected from tenants who ignore their payment obligations right from the start. But anyone who agrees to a guarantee instead of money has agreed to a different mechanism - and bears the consequences.

Particularly clear: A landlord does not have to hand over the apartment before the guarantee has been declared. If he does so anyway, he cannot invoke termination without notice simply because the guarantee is missing. Otherwise he would be in breach of the principle of good faith: He hands over voluntarily - and then terminates immediately? That would be legally contradictory.

And what can landlords do now?

Of course, this does not mean that landlords are powerless in the absence of a guarantee. The BGH refers to other ways:

• Ordinary termination according to § 573 BGB for breach of duty.
• Termination without notice according to § 543 BGB in case of serious doubts about solvency.
  But there is no such thing: The quick exit button in accordance with section 569 (2a) BGB if "only" a guarantee is missing. So it's finally clear: this paragraph protects landlords from empty accounts - not from empty promises.

It was high time!

Section 569 (2a) of the German Civil Code (BGB) was not invented so that landlords could take a shortcut to terminate the lease just because they were in too much of a hurry to hand it over. Anyone who opts for a guarantee is opting for trust - in the tenant and the bank.

And let's be honest: what kind of rental market would it be if incomplete bureaucracy could lead directly to eviction? Then every second move would soon be a legal drama.

If security is really decisive - then it is better to pay in cash and clearly regulated. Everything else remains a matter of interpretation. And in the end, it's not your gut feeling that decides, but the BGH.