Rental deposit: what Art. 257e CO allows and what it does not
The deposit is where too much is demanded most often, and what people argue about longest. The law is unusually clear all the same: three months’ rent at most, in an account in your name.
- Maximum (residential)
- Three months’ net rent, excluding service charges
- Where the money sits
- A blocked bank account in the tenant’s name
- Interest
- Belongs to the tenant
- Legal basis
- Art. 257e CO
The three rules that count
- 1For living accommodation the security may not exceed three months’ rent. Anything demanded beyond that is not owed.
- 2The money belongs in a bank account held in your name. A transfer into the agency’s own account does not meet the requirement.
- 3It is released with your agreement, by court decision, or once the landlord has gone a year from the end of the tenancy without raising a claim.
Deposit insurance instead of a blocked account
Instead of locking up cash you can take out deposit insurance. It usually costs three to five per cent of the sum secured each year and eases your liquidity during a move. It saves nothing, though: the premium is gone, and if the landlord claims, the insurer pays first and then comes to you for the money. It makes sense while your old deposit is still frozen. Running it for years does not.
A year after the tenancy ends, the bank releases the deposit on your request alone, provided the landlord has neither started proceedings nor gone to court. Because of that deadline, waiting sometimes beats negotiating.
These articles set out Swiss law in general terms and are not a substitute for legal advice on an individual case. Cantonal rules differ. In a dispute, contact the rent conciliation authority or a lawyer.