Rental deposits in an Austrian apartment-building purchase: Section 16b MRG, custody, transfer and accounting

Buying an apartment building does not make tenant deposits part of the purchase price or ordinary operating cash. A deposit secures claims under a specific tenancy. The buyer therefore needs to know which deposit belongs to which unit, where it is held and which records support a later repayment.

Section 16b MRG regulates the investment and return of cash deposits. It does not set out the practical handover process for a change of ownership. Buyer, seller and property manager therefore need a separate schedule covering amount, holding method, actual interest, any use and the accounting process after closing.

Read Section 16b MRG separately from the purchase agreement

Section 16b(1) MRG permits a deposit for future claims arising from the tenancy. If the deposit is provided as money, the landlord must invest it in an interest-bearing savings book. Another form of investment is possible if it offers equally good interest and equal security. The deposit must also remain clearly separate from the landlord's own assets.

Section 16b(2) MRG requires the deposit to be returned without undue delay after the tenancy ends, together with the interest actually earned from its investment. Justified claims arising from the tenancy may be deducted. The OGH has stated that a landlord relying on counterclaims must specify them by legal basis and amount. This later tenant accounting is separate from the internal purchase-price accounting between seller and buyer.

The purchase agreement should therefore do more than state that deposits exist. It should record each tenancy, holding method, supporting records, economic allocation and cooperation required for later repayment. The article on effective-date settlement in an apartment-building purchase explains the wider allocation of payment flows.

Document the deposit balance for every tenancy

The relevant unit is not the building as a whole but the individual tenancy. For every apartment and commercial unit, the lease, amendments, start date, agreed deposit, payment record and holding evidence should be brought together. If part of the deposit was used or returned, that movement also needs a record.

A current rent roll may contain a deposit amount. It does not automatically prove receipt or legally protected holding. Buyers should reconcile the rent roll with the tenant ledger, bank statement, savings book or other permitted investment record. The topic page on rent rolls and lease agreements explains the evidence chain for the wider portfolio.

Sellers should identify discrepancies as open items. An amount appearing only in an old spreadsheet must not be treated as confirmed cash. The parties should decide whether the discrepancy is resolved before closing or whether the agreement provides for later delivery, retention or a specific seller obligation.

Evidence holding, pooled accounts and actual interest

Section 16b MRG does not provide for a guessed standard interest rate. The relevant figure is the interest actually generated by the chosen investment. For a savings book, the current statement matters. For another investment, the records must show interest, security, deposit protection and separation from the landlord's assets.

A property manager may operate a pooled account. That does not remove the need to allocate each amount to the relevant tenancy. The manager should be able to show the allocation, interest calculation and movements since the last statement. A total without a tenant-level schedule makes later accounting difficult.

Before closing, the parties should determine who delivers the holding records, who provides missing interest information and how the incoming manager receives access. This is a different issue from the general takeover of bank accounts and powers. The article on taking over apartment-building management after closing covers that broader interface.

Closing: transfer value, evidence and responsibility

The economic effective date, price payment, registration of title and practical management handover may occur on different dates. The purchase agreement should therefore state when the deposit balance is allocated to the buyer and when practical custody changes. A number in a handover record is not enough if savings books, account access or allocation schedules are missing.

A useful schedule includes a reference number, unit, tenant, original amount, current value, holding method, interest record, movements and document reference. Buyer and seller should confirm only values that have actually been checked. Discrepancies should identify a responsible person and a delivery date.

The handover and effective-date topic sets out the other timing points in an apartment-building handover. Deposits also require a specific rule on who will provide the records and cooperate when a tenancy ends after closing.

Prepare the later accounting after the tenancy ends

Repayment of a deposit generally becomes relevant only after the individual tenancy ends. The buyer must therefore be able to identify the held amount and the interest actually earned months or years after the purchase. The handover file cannot end with closing.

Justified claims arising from the tenancy must remain separate from general purchase-price claims. Damage, rent arrears or open service-charge questions do not automatically justify using the deposit. Each issue requires its own legal and accounting review. A blanket set-off against the purchase price hides the facts of the individual tenancy.

The agreement should name the contact person, document location, access to historic statements and deadline for producing missing records. The buyer should pass this information to the new manager. The apartment-building risk check can help organise open handover and tenancy issues before a consultation.

Special cases: missing records and a tenant change

If a savings book is missing or the bank statement conflicts with the rent roll, the deposit should not be estimated. The original lease, payment route, earlier accounts and management records should first be secured. The parties can then decide whether a bank inquiry or a contractual safeguard is needed.

If a tenancy ends around the ownership change, repayment, an inspection record and open claims may overlap. The seller and buyer should regulate who communicates with the tenant, who obtains records from the former manager and how an internal balance is adjusted. An unclear purchase clause should not undermine careful tenant accounting.

If the landlord becomes insolvent, the protection in Section 16b(3) MRG also matters. This is another reason to keep deposits separate from ordinary assets. A general statement that a deposit is safe does not replace review of the actual holding method.

Closing checklist for the deposit handover

Before the handover is signed, the buyer and seller should assign a reference number to every unit. The deposit schedule should record lease and amendments, agreed amount, payment, current balance, holding method, interest record, movements and open questions. All documents should carry the same effective-date status.

The purchase agreement also needs rules for missing records, discrepancies, access to historic management data, later repayment and a change of property manager. A clause stating that all tenant deposits are transferred does not answer these questions.

The data-room completeness check supports the document review. It does not replace review of individual deposit records. The buyer should receive a file that can be continued after closing rather than a single unverified total.