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Signing a contract - Do's and Don'ts

From Indians in Magdeburg - A Guide for Students

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Important: Never sign anything (agreement, contract, form, etc.) unless you know its exact contents. Many times new students sign a subscription or other contract for a "free magazine" or other similar free gifts, only to discover later that now they will have to pay for a product or a service they did not know about. A lot of times the people selling you these products/services are getting paid based on the number of people they get to sign up for the said product/service. This is why they may not be completely honest about the nature of the contract or very forthcoming about the details. Always read (or get someone to translate it for you) before you sign.

Rent agreement (Mietvertrag)[edit]

When an apartment is rented a Mietvertrag (rent contract) is signed. This contract contains details about the apartment, in addition to the rights and obligations of tenant and landlord. Most of information given in this section comes from this article.

Contents of a Mietvertrag[edit]

A normal Mietvertrag should contain the following details:

  • length of the agreement
  • rent amount
  • amount of additional costs (heating, water, garbage disposal etc.)
  • term of notice (3 months is normal)
  • amount of deposit (and the interest it earns)
  • an agreement on redecoration when you move in or move out (you only decorate once)
  • conditions for rent increases
  • in the case of furnished rooms, an inventory of all items (check in the presence of the landlord whether all the items are in good order. If damaged, have this documented in writing, so that you don't have to *pay for the damage when you move out)
  • the general house rules (which also define the repairs that the landlord is responsible for and those which you have to pay for).

Once the contact is signed both parties are legally bound by it. Before signing, it is therefore essential to carefully read and understand the document even though they are usually long and difficult to read. Be aware that German landlords will expect the contract to be observed to the letter (which is true for any agreement you make in Germany!). However, there are legal protections which can limit the validity of certain clauses within rent contracts (generally to your favour).

Legal help and advice[edit]

If you do not understand parts of the lease or if you feel that unusual conditions are being imposed, get advice from a German colleague/friend/teacher. The university also provides legal help to students. For more information, read: Legal advice/assistance for students.

It may also be worthwhile to join the local Mieterschutz-Verein (Tenants' Association) to get immediate advice and professional support. If a conflict between tenant and landlord arises, a Mieterschutz-Verein can represent the tenant's interests. After being a member of a Mieterschutz-Verein for a few weeks, you are usually covered by a legal expenses insurance policy to cover future problems pertaining to rental matters.

Mieterschutz-Vereine can be found in most towns and cities. Besides direct legal advice, they also offer information brochures about tenancy agreements. You can find your local association in the telephone directory under Mieterverein or contact the Deutscher Mieterbund - DMB (national tenant association):

Deutscher Mieterbund

Tel. 0221/94077-0

E-mail: info@mieterbund.de

Internet: www.mieterbund.de

Deposits (Kaution)[edit]

Most landlords ask for a deposit ( Kaution) which is refunded when you move out, along with interest earned. However, if damage has occurred to the accommodation the landlord is allowed to withhold the sum required to repair it from the deposit.

The deposit can legally go up to three months basic rent ( Kaltmiete) plus 16% VAT. However, many landlords only require a deposit equivalent to 1 or 2 months of rent. The landlord must ensure that you receive the current rate of interest for the whole rental period. The deposit should therefore not be paid to the landlord directly but into a joint savings book with interest. In this way, you can prevent the landlord from keeping the money without your agreement and you will earn the interest. Your bank will give you detailed information.

Rent & Communal charges[edit]

Rent ( Miete), is the amount paid to the landlord every month. This is the Kaltmiete (cold rent) plus the extra costs such as garbage disposal, street and house cleaning costs, heating and water costs. All of these costs together are called Warmmiete (warm rent).

Additional costs depend on the apartment and its location and are individually detailed in the contract. Additional costs such as heating, gas, water and electricity costs are usually dependent on personal usage and are paid monthly at a predetermined fixed rate. Meters are read yearly and you are refunded by or pay extra depending on what you have used.

Other additional costs (such as garbage disposal, street and house cleaning) depend on the size of the apartment. In some cases, especially in old apartments, this can also apply to some of the individual costs stated above. For example, if a house doesn't have individual measurement of heating for each apartment, then the total cost is split between the apartments according to their relative size.

Most landlords expect rent to be paid by automatic bank transfer or standing order; this is usually specified in the contract. Some landlords require you to have insurance to cover them in the event of damage to their own property or liability for adjoining properties. These policies cover personal effects ( Hausratsversicherung) and personal liability ( Haftpflichtversicherung).

Rules & regulations (Hausordnung)[edit]

A lease will also contain general rules which apply to you as a resident tenant. In larger apartment blocks with numerous tenants, these rules are often summarized in a separate Hausordnung (house rules). Among other things, they normally stipulate that between 22:00-07:00 and 13:00-15:00 excessive noise is prohibited. In some cases, they also regulate who is responsible for cleaning joint-facilities like staircases, entrance areas, and basement on particular days.

Take into account these rules form part of your contract; breaking them can give your landlord the legal right to kick you out of the apartment. This can come as a bit of a shock to foreigners coming from less "regulated" countries, but do not be surprised if your housewarming party causes complaints from your new (and very angry) neighbours. Depending on how relaxed your fellow tenant are, this can go to extremes, one Frenchman told us how he was astonished to receive a letter from his landlord threatening eviction because two different neighbours had complained that they has seen him disposing of his rubbish without carrying out the correct separation for recycling!

  • House care taker: In houses with a number of tenants, there is often a Hausmeister (caretaker) and Hausverwaltung (manager). The caretaker and manager are responsible for keeping everything running and organising repairs.
  • Winter Service and Street Sweeping: If there is no caretaker then residents are legally obliged to remove snow and ice from in front of their house during winter. This is generally stated in the rent contract. If tenants are responsible for removing snow and ice then they are liable for all injuries incurred if they fail to meet their obligations. In some regions the streets also have to be swept once a week.
  • House Pets: Whether or not pets may be kept in an apartment must be discussed with the landlord and should form part of your rent agreement. If a tenant wants to have a pet in the flat where they already live then the rent contract or the landlord should be consulted to see if this is allowed. House pets are dogs, cats, birds, hamsters, etc.

Notice period[edit]

There are certain periods of notice valid for rental agreements. This period applies if either you or the landlord wish to terminate the rental agreement. However, the landlord cannot cancel the rent contract without a reason.

The legal period of notice on open-ended rent contracts is three months. The longer you live in a property, the longer the notice period. Any different conditions must be stipulated in the lease or separately in writing. In some cases, landlords will want you to sign a contract which only runs for a predetermined number of years. We've heard of cases where the landlord drew up a 5 year contract and tried to force a tenant wanting to terminate his contract to keep the apartment for the whole rest of the agreed period! It is recommend to never sign such a rental agreement, but if you do get into a situation like this, you should immediately contact your local tenant's association. In many cases, such contracts are not permitted and are therefore not legally binding.

Redecoration (Rennovierungsarbeiten)[edit]

Your contract should state who is doing what type of redecoration and when. Redecoration includes such things as the painting of walls and the replacement of carpets. Many landlords don't want to redecorate before a new tenant moves in and therefore require the tenant to do so, in this case there are two options:

  • (a) You redecorate the apartment when you move in. In this case, the apartment has been given over without redecoration ( unrenoviert). You're therefore not obliged to redecorate when you move out, and it is up to you to decide whether or not you want to do so when you move in.
  • (b) You redecorate the apartment when you move out. In this case, the apartment must be handed over redecorated (i.e. with freshly painted walls etc.), giving you the advantage of not having to do so when you move in. In this case, your contract will require you to redecorate when you move out (or risk losing your deposit).

Since it is far more fun to redecorate an apartment you're going to live in than one that you just want to get out of, many people prefer to rent an apartment without redecoration. This also gives you the advantage of being able to redecorate the apartment the way you like it.

Defects and liability[edit]

Before moving into rented accommodation, make an appointment with the landlord to inspect it for any defects (scratches, stains, wear and tear, damage etc.). Write everything down, even if damage appears very slight. Otherwise you may find you will be charged for the repairs or your deposit will not be repaid to you in full when you move out. The list of defects and damage must be signed by the landlord and kept by you.

When you move out the same kind of appointment should be made with the landlord or manager to verify defects and damage. If the accommodation is in a noticeably worse condition than at the start of the tenancy the landlord may retain the deposit paid by the tenant in part or in full. Otherwise, you should prepare a written document of the transfer stating that the apartment has been transferred without defects or damage and that the deposit should be repaid in full.

It is advisable to have a German friend/colleague with you during the transfer who knows the procedure and can make sure there are no linguistic misunderstandings.

House keys[edit]

Another important part of your lease is the listing of keys you've been given. Make sure you receive all keys stated in the document. If you lose any keys to your home, you will be held liable for having the locks changed, and if you loose a key to a common area, you will probably have to pay for new keys for your neighbours as well! Be careful, normally you cannot just make copies of keys in a shop, as many modern keys are numbered and you need a permission from the landlord to make a copy.

Phone/Internet contract[edit]

What you need to know about German phone contracts [1][edit]

  • All German contracts have an automatic renewal clause

A customer may sign a 12- or 24-month contract, but in reality, they actually signed a never-ending contract. It always rolls over, unless you take steps to actively terminate it. The common person in Germany may not know much about German law, but knowledge of this renewal clause is considered obvious.

  • Contract termination must be in writing

If you wish to terminate your contract, you must submit a termination notice to the company. And it has to be in writing. Strictly speaking, an email is not considered ‘in writing’ under German law. Some offices allow emails for termination, but you need to be careful and make sure they will accept it. Termination must be in writing and then faxed or sent through registered mail with a return receipt requested.

  • Early termination requires substantive cause

If you move to a location where the services are not provided you can terminate the contract 90 days after providing notice. Which means you still have to pay for three more months. The shortest wait period is 90 days, and that’s considered fast under German law. Also, you need to submit proof that the cause for early termination exists.

  • Customers are responsible for proving the termination notice is received

The burden of proof that the termination was received by the company is on the customer. If the termination does not reach the company, it’s considered the customer’s fault. That’s why it’s so important to request a return receipt for your termination notices.

  • Most companies expect bill payments within 10 days of issuance
  • Unpaid German bills will follow you into your country

The debt gets sold to a collection agency and you will be contacted by them wherever you go.

Tips to prevent problems with your contract [2][edit]

  • Provide an email address you regularly check to receive bills immediately
  • If you don't have an automatic transfer set up, transfer money to companies directly at the banks on post rather than going to the phone shop
  • Consider online banking or using automatic withdrawal to pay automatically
  • Always ask for a receipt and save all your records
  • Also, check to see how far back your bank statements go. Some companies only go back 12 months, which means you have to save bank statements after bill payments in a folder on your computer
  • Don't hesitate to contact a lawyer for help. The university also provides legal help to students. For more information, read: Legal advice/assistance for students.
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