Investor Guide to Europe 2014
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TYPES of oWnERSHIP
Î
Sole ownership (freehold)
•
Sole ownership
(Alleineigentum)
is the most common form of
freehold title in land. Subject to general restrictions imposed by
law or rights of third parties such as tenants, neighbours etc.
the sole owner has full control of the land and any buildings on
it. This includes in particular the right to use the land and its
buildings in the most absolute manner, the right to receive the
benefits of it, as well as the right to encumber and the right to
dispose.
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Co-ownership and joint owners
hip
•
A freehold title in an undivided part of land can be held by
more than one person as co-owners
(Miteigentümer)
. Each co-
owner is entitled to separately dispose of its share of land.
•
Several persons can also hold an undivided part of land in joint
ownership
(Gesamthandseigentum)
, e.g. in the event that they
are organized as a civil law partnership or as an association
without legal capacity. Each of the joint owners is entitled to
a share of the jointly held property; however, the joint owners
can only dispose of the property jointly.
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Condominium ownership and part-ownership
•
Under the German Condiminium Act
(Wohnungseigentumsge-
setz, WEG)
, separate absolute ownership of a self-contained
unit in a building may be acquired, either in the form of condo-
minium ownership
(Wohnungseigentum)
where residential
premises are concerned, or as part-ownership
(Teileigentum)
where premises are not used for residential purposes. Such
ownership consists of individual absolute ownership with
regard to the self-contained unit and proportional ownership
with regard to those parts and installations of the building that
are not subject to individual ownership, such as the founda-
tions, external walls, staircases, etc.
Î
Hereditary Building Rights (Leasehold)
•
In accordance with the German Hereditary Building Rights Act
(Erbbaurechtsgesetz, ErbbauRG)
, land may be encumbered
in such a way that the beneficiary acquires the alienable and
inhereditary right to own a building on or below the surface of
the land. This form of legal estate in land is called a hereditary
building right
(Erbbaurecht)
and subject to the statutory provi-
sions governing absolute ownership.
•
Hereditary building rights can be granted by the owner of
the land. Such hereditary building rights are usually granted
for long terms between 30 and 99 years. Usually the benefi-
ciary of the hereditary building right has to pay a ground rent
(Erbbauzins)
to the owner of the land. The owner of the land
becomes the owner of the building(s) and is obliged to pay
compensation to the beneficiary of the hereditary building
right upon termination of the hereditary building right.
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Cadastral map and land register
Easements and other encumbrances
•
Under German law a real estate property may be affected by
the following encumbrances which need to be registered in
section II of the land register of the encumbered property :
- Hereditary building rights
(Erbbaurechte)
encumbering
the land;
- Ground easements
(Grunddienstbarkeiten)
by virtue of
which the owner of one plot of land may use another plot
of land or demand that certain activities or rights are not
exercised on the other plot of land;
- Usufructs (
Nießbrauchrechte)
, enabling the beneficiary
to derive profit or benefit from a property;
- Limited personal easements
(beschränkte persönliche
Dienstbarkeiten)
entitling a certain person to use the
encumbered property for certain purposes;
- Rights of pre-emption
(Vorkaufsrechte)
;
- Conveying rights to recurrent payments or services
(Reallasten)
, granting a right to recurring payments or
services to the beneficiary.
Property charges
•
Real estate property may be encumbered by mortgages
(Hypotheken)
and land charges
(Grundschulden)
which have to
be registered in section III of the encumbered property’s land
register. A mortgage encumbers land by allowing the mortga-
gee recourse against the land as a security for an existing or
future debt based upon an underlying personal claim of the
mortgagee. A land charge encumbers the land by allowing the
land charge holder recourse against the land in principle inde-
pendently of any underlying personal claim. As a land charge
is independent from the underlying claim (but only connected
to a specific claim by contract – the so-called security purpose
agreement
(Sicherungszweckvereinbarung))
, land charges are
the preferred collateral in real property financing. Both mor-
tgages and land charges may be granted in either certificated
or non-certificated form.
Public building encumbrances
•
Public building encumbrances are provided in favour of public
authorities. Public building encumbrances are generally not
registered in the land register itself but in a special public
building encumbrances register
(Baulastenverzeichnis)
which is
maintained by the local building authority. Since public building
encumbrances registers do not exist in the federal states of
Bavaria and Brandenburg, public building encumbrances are
registered in the land registers in these two federal states.
•
Public building encumbrances serve the purpose that parti-
cular demands of public building law, namely such beyond
the existing public building law, are met. In many cases the
issuance of a building permit is made conditional to the crea-
tion of a public building encumbrance by the applicant.
aCQuISITIon PRoCESS:
KEY STaGES
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Types of transactions: asset Deal and Share
Deal
•
Real Property can be acquired by direct purchase of title to
the asset itself (asset deal) or by purchase of shares in the
entity which holds title to property (share deal). Asset deals
are often perceived as being less complex than share deals
PRoPERTY LaW
