Property is often the most substantial asset in an inheritance. At the same time, they present challenges for heirs. When the owners of a property die, ownership automatically passes to the heirs. However, this automatic transfer of ownership raises a number of questions – whether regarding the amendment of the land register, the management of the property within the community of heirs, or decisions on the use, administration or disposal of the property. Below, we provide an overview of selected legal aspects relating to inherited property and explain the role played by a notary in this context.

1. Transfer of ownership by law

Upon a person’s death, their estate – including the property registered in their name in the land register – passes in its entirety to the heir or heirs (§ 1922 BGB (German Civil Code) – known as ‘universal succession’). No separate deed of transfer is required for this. With the automatic transfer of the property, the heirs also assume all the rights and obligations of the previous owner of the property. That is to say, they take on any mortgages and rights of residence registered in the land register, as well as any existing tenancies.

The automatic nature of the acquisition also implies that inheritance tax may be payable. Given this, it makes sense to clarify any tax-related issues in the event of inheritance. German Land transfer tax (‘Grunderwerbsteuer’), however, is not triggered by the acquisition of a property forming part of an estate (§ 3(2) GrEStG (‘Land Transfer Tax Act’)).

Externally, the transfer of ownership of a property forming part of an estate only becomes apparent once the ownership details have been amended in the land register (‘Grundbuch’). This amendment to the land register must be initiated by the new owner(s) and does not take place automatically.

2. The Land Register Amendment

But how do I, as an heir, get entered in the Land Register? In fact, it must be initiated by the heir(s). There is no legal obligation to amend the Land Register following a succession. However, it is generally advisable to do so in order to ensure that the new ownership structure is correctly reflected in the land register. Without this correction, delays may arise in connection with subsequent dispositions of the estate property (e.g. sale or creation of a mortgage), and administrative problems may occur in the management of the property (e.g. when settling ongoing costs such as council tax).

But what documents are required for a land register amendment? This depends on the individual case:

• If there is a notarised will or a corresponding inheritance agreement drawn up by the deceased person (= testator), from which the heirs to the property can be identified beyond doubt, the land register can be amended on the basis of these documents. A notary is not required for this. You simply submit a request for the transfer to the Land Registry office responsible for the property in question.

• If there is no notarised will or inheritance agreement, you will first need a certificate of inheritance (‘Erbschein’) that formally confirms the order of succession. You can apply for such a certificate of inheritance at the probate court or a at a notary’s office. Once the certificate of inheritance has been obtained, it can then be used to initiate the transfer in the land register. For this, you may contact the relevant land registry office (‘Grundbuchamt’) directly. Sample letters for this purpose can be found online.

• A special case is the transfer of a property by way of a bequest (‘Vermächtnis’) which will follow specific rules and differs based on the kind of bequest. 

If you take action promptly after the death, you may even save money: If you apply for an amendment of the land register within two years of the death, no fee is charged for this (No. 14110, Note 1, Paragraph 1 GNotKG (Schedule to the Notaries’ Fees Act)). Once this period has expired, land register fees apply, which depend on the value of the property.

3. Special issue: Community of heirs & estate property

If several people inherit a property, a community of heirs is formed (§ 2032 BGB (German Civil Code)). In this case it is also possible to have the register updated. However, the respective heirs are then entered into the land register as a ‘community of heirs’ (‘Erbengemeinschaft’). The respective shares of the inheritance are not shown in the register.

In this situation – at least until the community of heirs is dissolved – decisions regarding the property must be taken jointly, although a distinction must be made between the different types of measures. A distinction must be made between (i) measures of ordinary administration, (ii) measures of necessary administration and (iii) measures of extraordinary administration (§§ 2038, 2040 BGB (German Civil Code)):

• Measures of ordinary administration are the common case. These relate to the day-to-day use or maintenance of the property (e.g. renovation work, entering into new tenancy agreements) and require a simple majority decision within the community of heirs based on the shares of the estate.

• Measures of necessary administration arise in emergencies where immediate action is required (also known as emergency management – e.g. a roof blown off by a storm, a burst pipe). In such cases, an individual co-heir may act without a majority resolution.

• Measures falling under extraordinary administration require a unanimous resolution by the heirs. This includes all dispositions concerning the estate’s property, i.e. the transfer, sale or encumbrance of the estate’s property.

A community of heirs may continue to exist for years or even decades. However, decision-making within such a community is prone to disputes and may also be time-consuming. In many cases it will therefore make sense to dissolve the community of heirs. This process is known as the division of the estate (‘Erbauseinandersetzung’ – §§ 2042 ff. BGB (German Civil Code)).

4. Sale of an estate property or division of the estate

Depending on the individual case, an estate property is often subsequently sold to a third party or taken over by one or more co-heirs of the community of heirs, with the other heirs withdrawing from the community:

• The property may be sold as soon as the heirs have been identified and entered in the land register or can prove their right to have inherited. The sale of the property must then be notarised (§ 311b BGB (German Civil Code)). If the property is held by a community of heirs, all co-heirs must give their consent (see above).

• If one or more co-heirs wish to take over the property from the estate, the question arises as to how this can be achieved most effectively and cost-efficiently. In effect, this constitutes the division of the estate. There are various options for this, depending on whether and to what extent there is agreement on the matter. The simplest approach in such cases is what is known as ‘buy-out’, i.e. the other co-heirs withdrawing from the community of heirs (often in return for a cash payment). 

Conclusion: A number of legal issues may arise when acquiring a property left as part of an estate. Seeking advice at an early stage and receiving structured support can help to minimise risks, avoid disputes and achieve legally sound solutions – whether in relation to the correction of the land register, the sale of the property, or the subsequent division of the estate amongst the heirs.