The repayment date remains open
Section 16b(2) MRG generally links repayment to the end of the lease. Until then, keep the deposit, investment, rent account and possible damage claims separate.
Insolvency proceedings
Rental deposit after insolvency opens: repayment and set-off
Review a rental deposit in tenant insolvency: repayment under section 16b MRG, justified counterclaims and set-off under sections 19 and 20 IO.
Your insolvency law team
BRANDAUER Rechtsanwälte
Insolvency law, Salzburg and throughout Austria
We review the procedural status, contracts, payment records and security, then explain which legal question needs to be addressed next.
13 September 2026, Mag. Bernhard Brandauer, Rechtsanwalt
If a tenant becomes insolvent, the rental deposit does not disappear automatically. During the tenancy it remains security for justified claims arising from that tenancy. Once the lease ends, the parties must determine which amount must be repaid and whether a legally effective set-off is possible.
Section 16b(2) MRG requires the landlord to return the deposit and the interest earned without undue delay after the lease ends, unless it is used to satisfy justified claims arising from the tenancy. For an insolvent tenant, the opening-date and exclusion rules in sections 19 and 20 IO must also be reviewed.
This article addresses the tenant’s insolvency only. The landlord’s insolvency is a different situation and is outside this article.
Organise the deposit claim
Five review fields for repayment and set-off
The deposit, outstanding rent and damage claims belong in one file, but they require separate legal assessment.
| Review field | Legal basis | Documents | Core question |
|---|---|---|---|
| Deposit balance | Deposit, investment and interest under section 16b MRG. | Lease, handover record, savings book or payment proof. | What amount was actually provided? |
| End of lease Repayment | Section 16b(2) MRG links repayment to the end of the lease. | Termination, agreement, handover record. | Has the repayment claim become due? |
| Counterclaims | Only justified claims arising from the tenancy may be considered. | Rent account, invoices and damage evidence. | Which item relates to this tenancy? |
| Opening date | Section 19 IO preserves a set-off position existing at opening. | Opening order and timeline for both claims. | Did the claims already exist, even conditionally or on a deferred basis? |
| Set-off | Section 1438 ABGB and the limits in section 20 IO must be reviewed together. | Claim schedule, declarations and proof of receipt. | Which positions can legally balance each other? |
The table does not replace a review of the lease, procedural status and individual claims.
Initial review
What must be clarified first about the deposit?
The check organises the end of the lease, counterclaims and timing. It does not conclusively determine whether a set-off is effective.
Discuss the specific matter with the firm.
Has the lease ended or is its end clearly imminent?
Your answers
Review the documents
Document the end of the lease first
Without a reliable end date, the repayment claim cannot be placed on a timeline. Put termination, agreement, handover and the opening order into one chronology.
Calculate the repayment amount
After the lease ends, the deposit and interest must be returned without undue delay unless a justified tenancy claim remains. Calculate the repayment amount transparently.
Assess the counterclaim and deposit separately
A counterclaim must arise from the tenancy and be justified. Sections 19 and 20 IO must also be reviewed to determine whether the timing permits set-off.
Do not treat a general withholding as an account
A general withholding is not a transparent statement of account. Prepare a schedule of rent, damage, payments and the remaining deposit amount.
Establish the deposit claim and the end of the lease
Section 16b(2) MRG makes the end of the lease the central point for repayment. While the tenancy continues, the deposit remains security for justified landlord claims arising from that tenancy.
For an insolvent tenant, first determine whether the lease continues, has ended or is disputed. Termination, any agreement, return of the premises and key handover must be compared with the opening order.
The deposit claim belongs in the insolvent tenant’s asset overview according to its accrual and maturity. Section 16b(2) MRG does not create an immediate repayment claim while the lease is still running.
Prove the deposit, investment and interest
Prove the deposit, investment and interest
The lease and the payment or handover record establish the deposit amount. If a cash deposit was provided, section 16b(1) MRG generally requires the landlord to invest it with interest and to provide information about the investment on request.
The accounting file therefore needs the original deposit, investment form, interest earned, repayments and every prior adjustment. A single rent-account balance does not show these items completely.
The insolvency administrator should record the deposit as a separate claim and reconcile it with the landlord at the end of the lease. Tenancy documents and insolvency documents should be kept separately while remaining linked by their dates.
Review justified landlord counterclaims
Review justified landlord counterclaims
Section 16b(2) MRG permits the deposit to be used for justified landlord claims arising from the tenancy. Depending on the contract and facts, these may include outstanding rent or documented damage. A general withholding without allocation and account does not resolve the issue.
Each counterclaim must be broken down by legal basis, accrual, maturity and amount. Damage requires comprehensible evidence. Rent arrears must be calculated separately from the deposit and from payments already made.
A claim from another contractual relationship cannot be placed against the deposit without further review. Under the MRG, the deposit secures claims from the specific tenancy.
Place set-off under sections 19 and 20 IO on a timeline
Place set-off under sections 19 and 20 IO on a timeline
Section 1438 ABGB requires mutual and comparable claims for compensation. In a deposit case, the tenant’s repayment claim against the landlord typically faces a landlord claim arising from the same tenancy.
Section 19 IO does not exclude set-off merely because a claim was conditional or deferred at opening. The legal basis and timeline of the set-off position are decisive. Section 20 IO restricts set-off where the relevant position arises or is acquired only after opening and provides statutory exceptions.
For an ongoing tenancy, identify precisely when the repayment claim and each counterclaim arose. The fact that both amounts appear in the same rent account does not by itself prove an effective set-off.
Record the repayment balance and procedural step
Record the repayment balance and procedural step
After the lease ends, compare the deposit and interest with the justified tenancy claims actually established. Any credit balance is an asset claim of the insolvent tenant. If the counterclaim exceeds the deposit, the excess must be treated separately.
Record who prepared the account, which claim is accepted or disputed and when any statement was received. The insolvency administrator must review the effect on the estate and any other claims.
If the end of the lease, damage, deposit amount or set-off is disputed, the complete contract, payment and insolvency file should be reviewed before payment or booking.
Do not set off the deposit mechanically: Tenant insolvency, the end of the lease, justified rent or damage claims and the set-off date are separate review points. Only a transparent account shows what must be repaid or pursued.
FAQ
Common questions about a rental deposit in tenant insolvency
Does the insolvent tenant automatically lose the deposit? +
No. The deposit remains security for justified claims arising from the tenancy. After the lease ends, it must be returned with the interest earned unless such a claim remains.
May the landlord keep the entire deposit? +
Insolvency alone does not justify retaining the entire deposit. Section 16b(2) MRG permits justified claims from the tenancy to be considered, and their basis and amount must be documented.
What if the lease is still running? +
Repayment is generally linked to the end of the lease. Until then, keep the deposit, investment, ongoing rent and possible damage claims separately documented.
Does this article also cover landlord insolvency? +
No. Landlord insolvency is a different situation involving, among other provisions, section 16b(3) MRG. It requires a separate review.
Next steps
Review the lease and insolvency further
Lease in insolvency
Classify continuation, termination and outstanding performance in the tenancy.
Set-off in insolvency proceedings
Review mutuality, the opening date and statutory limits on set-off.
Creditors in insolvency proceedings
Organise the claim basis, procedural status and supporting documents.
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Topics
Rental depositTenant insolvencyLeaseSet-offRepayment
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