There are several possible forms for the deposit:
1. Cash deposit:
According to § 550b
Abs.2 it can be agreed that the tenant hands over the deposit in cash
or wires the amount in question. The landlord must seperate the money from
his belongings and deposit it into a seperate current account which yields
at least the standard interest for deposits. The disadvantage for the landlord
is that there is virtually no security that no surprise withdrawal through
the landlord will occur.
2. Pawned savings book:
A savings book under the
tenants name is opened with a bank, containing the deposit. The savings
book is then handed over to the landlord. Banks will have necessary documents
for the detailed procedure on hand. The deposit will yield interest in
this form as well the tenant however is secured against the above mentioned
'surprise withdrawals' if and only if the bank documents require that the
tenant is informed before any withdrawals can be made.
3. Bank guarantee:
The tenant gives a bank
guarantee issued by his bank in which the institut guarantees to stand
in for possible monetary demands up to the amount that forms the deposit.
This form of guarantee however usually induces fees and reduces the credit
line of the tenant. Another negative aspect is that this form will not
yield any interest.
4. Joint account:
This way of deposit is rather
uncommon, since the landlord can not gain access to the deposit easily.
Only landlord and tenant jointly will be able to access the deposit.