In Germany, a rental deposit (MietKaution/Kaution) is a sum of money that you pay when you move into an apartment. It's usually equal to three months' rent (they can't ask for more), that the landlord holds onto while you're living in the property.
This deposit acts as a kind of insurance for the landlord and is protected by law. Your landlord can only use your deposit in specific cases:
You haven't paid the rent that is due
There are damages to the apartment caused by you and need to be repaired
To pay for any differences in operational costs such as heating and water (warm rent), which are estimated in the Nebenkosten (ancillary costs) until the end-of-year bill arrives and adjusted accordingly.
What should I know when paying my deposit?
Your deposit is only due at the beginning of your rental period and not immediately after signing the contract.
Your deposit should be secured in a separate account that neither you nor your landlord can access during your rental. This is to prevent your landlord using it to pay for a holiday or using it at all. When the lease ends and you both agree on the condition of the property, your landlord should then return the deposit, minus any deductions for damages or outstanding ancillary costs.
For added protection, Deutscher Mieterbund (The German Tenants’ Association) suggests that you ask for a receipt from your landlord proving that they have received your rent deposit.
How long after I move out can I expect my deposit back?
In Germany, there is no legal deadline for when your deposit should be paid back, so don't expect it immediately when you hand back the keys.
Landlords can take some time to check the state of the apartment for damages, ensure that your rent payments were up-to-date and calculate your heating and water bills, once the latest utility bills are available.
You should expect your deposit back in 1-3 months. It can, however, take up to 6 months, which is kind of the unofficial maximum length they can hold on to your deposit, it rarely should take longer.
Beware of anyone asking you to pay your deposit upfront before you move in and receive the keys. This, unfortunately, is a common scam, that leaves you out of pocket and with no trace of your future "landlord".