Terminating a Tenant for Rent Arrears in Germany 2026

Last updated: 29 August 2026 · Reading time approx. 9 minutes

Your tenant misses two months' rent, you terminate without notice, you file for eviction — and shortly before the hearing the benefits office transfers the entire arrears. The termination is gone, the tenant stays, and you carry the cost. That outcome is avoidable, and it takes a single extra sentence in the termination letter. This article explains what level of arrears entitles you to terminate, how the German grace-period payment (Schonfristzahlung) works, why it does not touch an ordinary termination, and what the shortfall costs over a full year.

What level of arrears carries a termination without notice

§ 543 Abs. 2 Satz 1 Nr. 3 BGB (German Civil Code) sets out two alternatives, and one is enough. For residential lettings, § 569 Abs. 3 Nr. 1 BGB tightens the first of them.

Alternative	Provision	Requirement
Two consecutive due dates	§ 543 Abs. 2 Satz 1 Nr. 3 lit. a BGB, for residential lettings supplemented by § 569 Abs. 3 Nr. 1 BGB	Default „für zwei aufeinander folgende Termine mit der Entrichtung der Miete oder eines nicht unerheblichen Teils der Miete" — for two consecutive due dates with the rent or a not insignificant part of it. In residential lettings that part is only not insignificant „wenn er die Miete für einen Monat übersteigt", i.e. if it exceeds one month's rent. Exactly one month's rent is below the threshold.
Two months' rent accumulated over a longer period	§ 543 Abs. 2 Satz 1 Nr. 3 lit. b BGB	Default over a period „der sich über mehr als zwei Termine erstreckt" in an amount „der die Miete für zwei Monate erreicht" — arrears reaching two months' rent, built up from any number of partial shortfalls.

Two things make this easier than landlords often assume. First, arrears require no prior warning and no cure period: § 543 Abs. 3 Satz 2 Nr. 3 BGB expressly exempts this case. Second, a justified balancing charge from the service charge statement counts towards the arrears like rent.

Payment before the letter arrives ends it. § 543 Abs. 2 Satz 2 BGB: „Im Falle des Satzes 1 Nr. 3 ist die Kündigung ausgeschlossen, wenn der Vermieter vorher befriedigt wird." If the money arrives before your letter is received, the termination is not merely curable — it never comes into existence. Check the account on the day you send it, not on the day you decide.

The Schonfristzahlung: the tenant's built-in second chance

This is where landlords lose cases. Under § 569 Abs. 3 Nr. 2 Satz 1 BGB the termination without notice becomes retroactively ineffective if the landlord is paid „spätestens bis zum Ablauf von zwei Monaten nach Eintritt der Rechtshängigkeit des Räumungsanspruchs" — at the latest two months after the eviction claim becomes pending — covering the rent due and the compensation due under § 546a Abs. 1 BGB, „oder sich eine öffentliche Stelle zur Befriedigung verpflichtet" (or a public body undertakes to pay). Three points are routinely underestimated:

The clock starts when the eviction claim becomes pending, not when the termination is served. Four or five months can easily pass in between — months in which nothing is being paid.
An undertaking by a public body is enough. No money need have moved at that point.
Compensation for continued use counts too. The tenant must settle the rent due and the compensation under § 546a Abs. 1 BGB, so the amount is not frozen at the level it had when you terminated.

There is one limit. Under § 569 Abs. 3 Nr. 2 Satz 2 BGB the cure does not apply „wenn der Kündigung vor nicht länger als zwei Jahren bereits eine nach Satz 1 unwirksam gewordene Kündigung vorausgegangen ist" — if a termination cured this way already preceded it less than two years ago. The grace-period payment therefore works once every two years: with a repeat offender the second termination without notice can no longer be cured. Record the date of the first cured termination; for two years it is worth real money.

The costly mistake: terminating without notice only

The grace-period payment removes the termination without notice — and nothing else. If the same letter also declares an ordinary termination in the alternative under § 573 Abs. 1, Abs. 2 Nr. 1 BGB, that termination survives even though the arrears were paid. The Federal Court of Justice (Bundesgerichtshof, BGH) has confirmed this repeatedly since 2018 (see the case-law section below). A letter without that fallback throws the whole case away.

The ordinary termination does, however, have different requirements:

Point	Termination without notice	Ordinary termination
Provision	§ 543 Abs. 2 Satz 1 Nr. 3 BGB	§ 573 Abs. 1, Abs. 2 Nr. 1 BGB
Tenant's fault	Default required — and under § 286 Abs. 4 BGB the debtor „kommt nicht in Verzug, solange die Leistung infolge eines Umstands unterbleibt, den er nicht zu vertreten hat" (is not in default while performance fails for a reason he is not responsible for)	expressly required: the tenant must have breached his obligations „schuldhaft nicht unerheblich" — culpably and not insignificantly
Effect	immediate end of the tenancy	ends only after the notice period of § 573c BGB
Grace-period payment	cures it (§ 569 Abs. 3 Nr. 2 BGB)	does not affect it

The notice period follows § 573c Abs. 1 BGB: termination is permissible „spätestens am dritten Werktag eines Kalendermonats zum Ablauf des übernächsten Monats" — by the third working day of a month, effective at the end of the month after next — and for the landlord it extends „nach fünf und acht Jahren seit der Überlassung des Wohnraums um jeweils drei Monate", by three months each after five and after eight years:

Tenancy in place for	Notice period	Termination on the 3rd working day of March takes effect
up to 5 years	3 months	31 May
over 5 up to 8 years	6 months	31 August
over 8 years	9 months	30 November

Formal defects that sink the whole case

In practice a termination for arrears fails more often on form than on the amount owed. Four points, each fatal on its own:

Written form. § 568 Abs. 1 BGB: „Die Kündigung des Mietverhältnisses bedarf der schriftlichen Form." E-mail, messenger or a notice on the door will not do.
State the ground in the letter. For the termination without notice, § 569 Abs. 4 BGB requires: „Der zur Kündigung führende wichtige Grund ist in dem Kündigungsschreiben anzugeben." Itemise the arrears by month and amount.
The same applies again to the ordinary termination. Under § 573 Abs. 3 BGB the grounds for the legitimate interest must be stated in the letter; „andere Gründe werden nur berücksichtigt, soweit sie nachträglich entstanden sind" — other grounds count only if they arose later. Adding reasons afterwards is blocked.
All tenants, all landlords. Where several people are party to the contract, the declaration must come from every landlord and reach every tenant.

Worked example: what a defaulting tenant costs

A flat has been let for three years at €900 net rent plus €220 service charge prepayment — €1,120 in total. From January the tenant pays nothing. By early March the threshold of § 543 Abs. 2 Satz 1 Nr. 3 lit. a BGB is met; you terminate without notice and, in the alternative, ordinarily. With three years of tenancy the ordinary termination takes effect on 31 May. The tenant does not leave, you sue, and the flat is vacated at the end of August.

Item	Calculation	Amount
Total rent per month	€900 net rent + €220 prepayment	€1,120
Rent shortfall January to May	€1,120 × 5	€5,600
Compensation for continued use June to August (§ 546a Abs. 1 BGB), also unpaid	€1,120 × 3	€3,360
Deposit set off	€900 × 3	−€2,700
Repairs and cleaning after the tenant leaves	estimate	€2,500
Burden before court and legal fees	€5,600 + €3,360 − €2,700 + €2,500	€8,760

Two lessons. First, the real damage does not arise in the month you terminate but in the months that follow — every month of proceedings costs a full month's rent here. Second, if the tenant pays the sum then due in May, then without an ordinary termination in the alternative the entire case is lost and the clock restarts. How much deposit you may take and when you can set it off is covered in our article on the amount, investment and settlement of the rental deposit.

Tax: rent that never arrived is not income

Unlike a trading business, income from letting under German law creates no receivable that you would later write off. Under § 11 Abs. 1 Satz 1 EStG (Income Tax Act) income is received „innerhalb des Kalenderjahres […], in dem sie dem Steuerpflichtigen zugeflossen sind" — in the calendar year in which it actually flows in. What never flowed is not declared in the Anlage V (the German tax schedule for rental income); there is no deductible „rent shortfall" because there was no taxed income in the first place. Where the remaining items belong is set out in our guide to completing the Anlage V.

Three consequences for the annual accounts: the cost of the proceedings and of putting the flat back in order remain deductible expenses. If the tenant or an authority pays later, that payment is declared in the year it arrives, even where it economically belongs to the previous year. And for a longer vacancy after the eviction, a property tax remission for rent shortfall can absorb part of the burden.

What the courts have decided

The statute does not say what happens to an ordinary termination declared in the alternative when the termination without notice falls away through a late payment. That is exactly what decides the case — and the VIII. Civil Senate of the Federal Court of Justice (Bundesgerichtshof, BGH) has answered it in a line of decisions it expressly reaffirmed in 2024.

BGH, judgment of 19 September 2018 – VIII ZR 231/17

The leading decision (reported in the official BGHZ collection) settles both halves. First, the grace-period payment operates retroactively: the legislator created „die gesetzliche Fiktion […], dass […] die zuvor durch eine wirksam erklärte fristlose Kündigung wegen Zahlungsverzugs […] bewirkte Beendigung des Mietverhältnisses rückwirkend als nicht eingetreten gilt" — the tenancy is „als ununterbrochen fortstehend zu behandeln", treated as having continued unbroken. Second, an ordinary termination declared in the alternative or as a precaution is to be construed as intended to „in allen Fällen Wirkung entfalten […], in denen die zunächst angestrebte sofortige Beendigung des Mietverhältnisses […] fehlgeschlagen ist" — to take effect in every case in which the intended immediate end of the tenancy has failed. In practice: the fallback needs no elaborate wording, it only needs to be in the letter.

BGH, judgment of 23 October 2024 – VIII ZR 106/23

The Berlin Regional Court had repeatedly declined to follow that line. The Senate quashed the judgment and held in its headnote that settlement within the grace period has „lediglich Folgen für die auf § 543 Abs. 1, 2 Satz 1 Nr. 3 BGB gestützte fristlose, nicht jedoch für eine aufgrund desselben Mietrückstands hilfsweise auf § 573 Abs. 1, 2 Nr. 1 BGB gestützte ordentliche Kündigung" — consequences only for the termination without notice, not for an ordinary termination based on the same arrears in the alternative. That limited effect corresponds to „dem eindeutigen Willen des Gesetzgebers", the unambiguous will of the legislator, which a judge bound by law may not replace with a solution of his own. For landlords this is the decision to rely on in 2026: the position is settled and will stay settled absent a change in the statute.

BGH, judgment of 29 June 2016 – VIII ZR 173/15

If the social welfare office or job centre pays the rent late, that does not automatically help the landlord. An authority „die im Rahmen der Daseinsvorsorge staatliche Transferleistungen erbringt, wird nicht als Erfüllungsgehilfe des Mieters tätig" — it does not act as the tenant's agent for performance. The tenant is then not responsible for the delay, and without responsibility there is no default under § 286 Abs. 4 BGB and therefore no termination under § 543 Abs. 2 Satz 1 Nr. 3 BGB. The Senate does, however, open the general clause: good cause under § 543 Abs. 1 Satz 2 BGB may lie „auch — unabhängig von einem etwaigen Verschulden des Mieters — allein in der objektiven Pflichtverletzung unpünktlicher Mietzahlungen" — in the objective breach of persistently late payment alone, irrespective of fault, where the overall balancing makes continuation unreasonable. Among the relevant factors it names whether the landlord is „in besonderem Maße auf den pünktlichen Erhalt der Miete angewiesen […], beispielsweise weil er daraus seinen Lebensunterhalt bestreitet oder hiermit Kredite bedienen muss" — particularly dependent on punctual rent, for instance because he lives on it or services loans with it. If you are leveraged, say so concretely in the letter.

Frequently asked questions

Is exactly one month's rent in arrears enough to terminate without notice?

Not under § 543 Abs. 2 Satz 1 Nr. 3 lit. a BGB. In residential lettings § 569 Abs. 3 Nr. 1 BGB requires the outstanding part to exceed one month's rent. Exactly one month's rent falls below the threshold.

Do I have to send a warning first?

Not for arrears: § 543 Abs. 3 Satz 2 Nr. 3 BGB exempts this case from the requirement of a cure period or warning. A payment demand with a deadline is still worth sending — it documents the arrears and supports the culpability element of the ordinary termination later.

How often can a tenant buy his way out?

Once every two years. § 569 Abs. 3 Nr. 2 Satz 2 BGB excludes the cure where a termination cured in the same way preceded it less than two years earlier.

Does an unjustified rent reduction count as arrears?

Yes, where the tenant could have recognised with ordinary care that no right to reduce existed. The BGH has expressly rejected a milder standard of care; the detail is in our article on rent reduction from the landlord's perspective.

Do I get anything for the period after the termination?

The claim exists: under § 546a Abs. 1 BGB you may demand „für die Dauer der Vorenthaltung als Entschädigung die vereinbarte Miete" — the agreed rent as compensation for the period of withholding — and further damages remain possible under subsection 2. Whether it is collectable is another question, which is why every month you shorten the proceedings counts.

Shortfall, deadlines and costs per property in one place

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Sources

§ 543 BGB (termination without notice for good cause) — Gesetze im Internet (retrieved on 29 August 2026)
§ 569 BGB (residential supplements, grace-period payment) — Gesetze im Internet (retrieved on 29 August 2026)
§ 573 BGB (ordinary termination by the landlord) — Gesetze im Internet (retrieved on 29 August 2026)
§ 573c BGB (notice periods for ordinary termination) — Gesetze im Internet (retrieved on 29 August 2026)
§ 568 BGB (form and content of the termination) — Gesetze im Internet (retrieved on 29 August 2026)
§ 546a BGB (compensation for late return) — Gesetze im Internet (retrieved on 29 August 2026)
§ 286 BGB (default of the debtor) — Gesetze im Internet (retrieved on 29 August 2026)
§ 11 EStG (receipt and expenditure) — Gesetze im Internet (retrieved on 29 August 2026)
BGH, judgment of 29 June 2016 – VIII ZR 173/15 (authority not the tenant's agent for performance; persistently late payment) — full text (PDF) at the Bundesgerichtshof (retrieved on 29 August 2026)
BGH, judgment of 19 September 2018 – VIII ZR 231/17 (retroactive effect of the grace-period payment; ordinary termination in the alternative) — full text (PDF) at the Bundesgerichtshof (retrieved on 29 August 2026)
BGH, judgment of 23 October 2024 – VIII ZR 106/23 (grace-period payment does not cure the ordinary termination) — full text (PDF) at the Bundesgerichtshof (retrieved on 29 August 2026)

This article offers general orientation and does not replace individual tax or legal advice within the meaning of § 3 StBerG. Whether a termination holds in a given case depends on the specific facts — the example figures are illustrations, not a forecast.