- Rental deposit is in the form of shares nothing unusual
- Instead of 800 DM it should now be 115,000 euros give
- Housing company just want Pay 409.03 euros
- New legal situation § 551 BGB is applicable
- Shares are to be transferred
The story began in the days of the Deutsche Mark. Now, 60 years later, a woman from Cologne is suing her former housing association for bail. The landlord had mutually invested the amount in shares, which developed splendidly over the decades. And after the end of the lease: The housing company does not want to pay out the mega sum. The Cologne district court (AG) had to tackle the spectacular case.
Rental deposit in the form of shares is not uncommon
When renting an apartment, landlords often ask for payment of a fee Deposit. This is permitted by law and is for security reasons. Often, however, a debate about the repayment breaks out after the end of the tenancy. However, the landlords cannot simply transfer the deposit to their own account, but must create it for the tenants. And separate from your own assetsso that the money is not lost in the event of bankruptcy or insolvency.
Before you as a tenant* agree that the rent security goes into shares or funds, you should be aware that depending after price development, not only income flows, but also the deposit itself can be at stake.
Once the tenancy has ended, you as the tenant can request the return of the deposit, in this case the shares. If, in the best-case scenario, their value has multiplied in recent years, a legal dispute is inevitable. It was the same in the Cologne case.
Instead of 800 DM there should now be 115,000 euros
The court decided that instead of the original rent deposit of 800 DM, the woman is now entitled to the gigantic sum of 115,000 euros in the form of shares (Judgment of July 19, 2022, Az.: 203 C 199/21).
And this was the story: In 1960, the plaintiff’s parents, who had died in the meantime, rented an apartment in Cologne, on the east side of the Rhine, from GAG Immobilien AG, the city’s largest housing company. Both sides agreed to pay a deposit of 800 DM as security for the rent, which the housing company then invested in its own shares. The shares were managed by an extra trustee.
The rental agreement also contained an option clause in favor of the housing association. At the end of the tenancy, she was to decide whether to issue the shares or pay out the nominal value of 800 DM to the tenants.
Housing association only wants to pay 409.03 euros
In 2005, the parents moved to another apartment in the same housing association. In the newly concluded rental agreement, the payment of a deposit of EUR 409.03 (equivalent to DM 800) was again agreed.
They also agreed that the security deposit from the previous rental agreement should be transferred. From 2005 onwards, the housing association then paid out annual sums of money, which it offset against the rent, as agreed. The dividend, which the company recorded precisely in the tax certificates sent, totaled almost EUR 6,000 gross up to 2017.
After the end of the lease in 2018, the daughter demanded the surrender of the shares. The housing association rejected this and referred to the right to choose agreed in the first lease. The housing company only paid out the deposit, amounting to 409.03 euros.
New legal situation of § 551 BGB is to be applied
Wrongly so, as the AG Cologne has now decided. The court spoke to the woman 115,000 euros in shares (as of December 2021). As a reason, the court had to go into the history of the tenancy.
In 2005, the parties involved concluded a completely new rental agreement. This no longer expressly provides for the housing association’s right to vote. It can therefore be assumed that the old conditions for the deposit should also be updated in the new lease. After these statements by the court, the landlord thought he was already on the road to victory. But far from it.
Because the court discovered a paragraph that contradicted this. The housing company cannot invoke the right to choose, since such an agreement is not possible due to the provision of the Section 551 of the Civil Code (BGB) be ineffective.
Shares are to be transferred
This regulation stipulates that the tenants are always entitled to the income from a deposit, regardless of the chosen form of investment. The earnings include the shares, not only the dividends paid out, but also any price gains, according to the Cologne AG.
The fact that § 551 BGB did not yet exist in 1960 does not lead to a different result. Since the parties involved had agreed to transfer the rental security, the only thing that mattered was the time when the new contract was concluded. However, in 2005, at the time of the new contract, § 551 BGB already existed.
Therefore, the woman does not have to be satisfied with the payment of the 409.03 euros, but can also demand the surrender of the shares. At the time the lawsuit was filed, these had a market value of EUR 115,000. So far, the judgment of the AG Cologne is not yet final. It therefore remains to be seen whether the housing association will appeal the decision, which is to be expected.
Once again, the popular saying is true: “In court and on the high seas you are in God’s hands”. It was really not to be expected that the Cologne court would find a way to award the tenant’s share package. It remains to be seen how this beautiful court story will end.
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