Rent deposit

If defects arise in a rented property for which the tenant is neither responsible nor has to remedy at his own expense, he may deposit the rent with the office designated by the canton. Upon successful deposit, the rent is deemed to have been paid. The option of depositing rent thus gives the tenant a means of exerting pressure on the landlord to remedy the defect in the rented property.

Requirements for rent deposits

However, the right to deposit rent does not mean that the tenant can directly deposit the rent with discharging effect as soon as defects are discovered. Rather, the deposit is linked to various formal requirements. The tenant must first notify the landlord of the defect, request the landlord in writing to remedy the defect and set a reasonable deadline for doing so. At the same time, the landlord must be threatened in writing that the future rent due will be deposited if the defect is not remedied within the deadline. If the landlord complies with this written request and rectifies the defect or initiates the rectification of the defect within the set period, a rent deposit is not permitted. Only if the landlord allows the deadline for rectification to pass unused can the tenant deposit the rent (including ancillary costs) due in the future, which he must notify the landlord of in writing. If the deposit is made correctly, the tenant is not in default of payment.

Initiation of arbitration proceedings

If the tenant has deposited the rent, he must also submit a request for arbitration to the arbitration authority within 30 days of the due date of the first deposited rent. If the tenant fails to do so or if the request for conciliation is submitted late, the deposited rent must be returned to the landlord.

If the tenant reaches the conciliation authority in good time, a conciliation procedure is carried out. An attempt is made to reach an agreement between the parties. If no agreement is reached and the conciliation proceedings are followed by court proceedings, the rent remains deposited and the tenant can continue to deposit the rent due in the future.

Amount of the rent deposit

The amount of the deposit is not dependent on the severity of the defect. This means that even for a minor defect, the entire rent could be deposited over a longer period of time. The deposited rent can therefore rise to a considerable amount. This can not only lead to an imbalance between the rent already deposited and the presumed costs of remedying the defect, but also to financial hardship for the landlord.

Request for precautionary measures

An application by the landlord to the court for precautionary measures may provide a remedy in such a case. With such a request, the judge can demand that part of the deposited rent be released and/or that the maximum amount that can be deposited in future be limited. However, the mere disproportion between the costs of remedying the defect and the deposited rent is not sufficient for this. Rather, the issuance of such a precautionary measure requires that, in addition to the existence of a favourable prognosis for the main proceedings, the landlord is threatened with a disadvantage that cannot be easily remedied and that there is urgency. The landlord must therefore demonstrate its serious financial situation as a disadvantage as well as the urgency by means of concrete evidence so that the court restricts the tenant’s ability to deposit during the ongoing court proceedings. In many cases, this is likely to prove difficult for private homeowners and practically impossible for institutional investors. As a result, in many cases there will continue to be an unsatisfactory disparity between the amount deposited and the alleged defect. It must therefore be clarified on a case-by-case basis whether an application for a reduction in the deposit amount is likely to be successful.