Heritable building right; information on the appointment by the municipality

From the perspective of the landowner, the leasehold is a limited right in rem that is encumbered on his property. In principle, the leasehold is treated like a plot of land (so-called "right equivalent to a plot of land"). The building erected on the basis of a heritable building right is therefore considered an integral part of the heritable building right and not of the land. The owner of the building is therefore the leaseholder and not the landowner. The leasehold is usually granted for a certain period of time, often 99 years. If the leasehold expires, ownership of the land and the building are reunited.

The leasehold promotes housing construction and prevents land speculation. In practice, the leasehold is used as an instrument for marketing larger areas. The owners of land (often local authorities or church organizations) create the possibility of constructing buildings and houses by granting heritable building rights. This is advantageous for both the developer and the landowner. On the one hand, the acquisition costs for the building site are eliminated, while on the other hand the land remains the property of the municipal or church body and can be put to another use after the leasehold expires, the so-called reversion, including the existing building. Furthermore, the latter receives the ground rent for the duration of the leasehold.

The creation of a leasehold is based on a causal transaction under the law of obligations, in which the leaseholder undertakes to pay ground rent in return. The leasehold contract regulates the relationship between the landowner and the leaseholder and determines the content of the leasehold. The leasehold is created by entry in the land register.

The leasehold is documented in two land registers: As a charge on the property in the land register and as an independent right in the leasehold land register. The heritable building right is entered in the second section of the land register. It can only be created in the first ranking position. The ranking cannot be changed. This ensures that the heritable building right continues to exist in the event of a forced sale of the property.

Finally, the leasehold can be sold, inherited and encumbered in the same way as a plot of land, for example with mortgages (land charge and mortgage).

As payment for the provision of the land, the landowner generally receives a recurring payment from the leaseholder, known as ground rent, to which the provisions of the German Civil Code on real charges apply accordingly. As a rule, the ground rent consists of a recurring cash payment that is determined on the basis of a percentage of the land value at the beginning of the term. It usually amounts to between three and five percent of the land value each year and is adjusted at contractually agreed intervals - for example in line with the cost of living index determined by the Federal Statistical Office. At the end of the agreed term, the building (again) becomes the property of the leaseholder. If the leasehold expires, the terms contractually agreed between the parties apply, whereby the transfer of ownership of the building to the landowner generally leads to claims for compensation on the part of the leaseholder.