German property problems

23 posts in this topic

Posted

Hi,

My father inherited a block of 4 flats in frankfurt a few years ago. He sold 2 and put 2 in his childrens names but gave himself the niessbrauch recht over the 2 flats. We gave him the vollmacht because he was spending most of his time over there and we are not german speakers and didnt really want to get involved.

Unfortunitly he is in disputes with the other owners regarding management fees and the long and short of it is i am now getting letters here in london from the german court saying i need to pay 10 000 euro because he lost a recent court case. My father is 73 and we havent seen eye to eye for a while but this is now putting serious strain on the relationship.

I was wondering if anyone could give me advice on how to fix this mess becasue it looks like discussions with my father are not working and will need to take matters in my own hands.

He has niessbrauch recht but i am thinking of selling one of the flats to pay for this. i understand it is possible to do this but the new owner will have to accept the fact that they can get rid off him and he can enjoy the benefits of the flat till he dies. The flats are worth around 250 k euro any idea on what its worth with a 73 year old?

Also could anyone give me an idea how open i am to debt in another eu country. the other owners have decided to only aim the case against me instead of my brother and sister because i gues i am in the eu and they are in south africa. Can a baliff come to my uk residentail adress and take my belongings? Will it effect my credit rating in the uk?

Any help / advice would be appreciated. I have tried to contact a lawyer in the uk and germany but they didnt seem to be interested and i am starting to seriously stress out about this.

Thanks in advannce

roland

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Posted

well hi roland i glanced through your post but found it painful to read because of too few capital letters too many spelling errors and a shortage of apostrophes but no doubt a Toytown expert or two with more knowledge of German property law and less of an interest in good english than i have will reply to you with pretty good advice but in your shoes i think id think along the lines of if 1 flat is worth 250 k euro and 1 German lawyer costs a lot less than that then maybe i should consult one provided that he or she can understand the prose style youve adopted

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Posted

Sorry buddy i just didn't have time for a spell check. Thanks for the heads up anyway!

I have already tried a lawyer in the U.K. and Germany and they weren't that interested.

I also don't have much money to pay out for lawyers fees so i want to make sure i am not wasting my time and money.

Any advice would be much appreciated

-R

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Posted

No need to actually read the post as the basic problem is one that only a qualified German lawyer can deal with. You may have to fork out some money to avoid forking out more.

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Posted

The following English-speaking lawyers advertise on Toytown and offer advice on real estate law:

Dr. Eckhart Jung and Claudia O'Hara-Jung

They are located close to Munich (in Bavaria), but it shouldn't make much difference that your property is in Frankfurt (in Hesse).

Having said that, there can be differences in law between German states, so if you decide to go with the Jungs, you might want to clear that point up.

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Posted

Hi Roland,

There are guidelines for valuing a property where a Niessbrauch is in place. It's a bit of an actuarial-type exercise, and I don't know the full details of it, but you wouldn't be the first person to sell an apartment with a Niessbrauch in favour of a parent still in place.

You may take a bath on the price, but if this is your only source of cash and you don't want to (or can't) mortgage it to pay the debt resulting out of the court case, then selling is definitely an option.

I can't be much help with the legal issue, sorry, but feel free to PM me if you'd like some more information on the value/price side. I may be able to get a hold of some figures for you.

Good luck.

NFLDer

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Posted

He has niessbrauch recht but i am thinking of selling one of the flats to pay for this. i understand it is possible to do this but the new owner will have to accept the fact that they can get rid off him and he can enjoy the benefits of the flat till he dies. The flats are worth around 250 k euro any idea on what its worth with a 73 year old?

If the flats are desirable then you might find someone to take on the investment at a massive price hit (fraction of the value) but you are more likely to find the flats unsellable with a Niessbrauch. At 73 your dad could easily be around another 10-15 years and that's a lot of risk for an investor to take.

You say you don't see eye to eye with your Dad, but almost certainly the easiest and cheapest way to sort this would be to have him cancel the Niessbrauch, even if you have to buy it off him. Have you suggested that?

Also could anyone give me an idea how open i am to debt in another eu country. the other owners have decided to only aim the case against me instead of my brother and sister because i gues i am in the eu and they are in south africa. Can a baliff come to my uk residentail adress and take my belongings? Will it effect my credit rating in the uk?

I'm not an expert on international debt but AFAIK yes, German creditors can get bailiffs to come to your UK address. I have no idea of the mechanics but the UK certainly has an agreement with Germany that an international "Mahnbescheid" is possible. If all three of your are listed as owners then all three of you are fully accountable and so its logical that they go after the guy they can get their claws into.

Don't forget its not just bailiffs you should be worried about in certain circumstances the other owners could take you to court and force foreclosure on your flat to cover debts owed to the owners association. You could potentially end up with no flats and massive debts.

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Posted

There is such a thing as a reverse mortage where you get a loan which will only have to be paid back after the property owner (or I guess the person enjoying the usufruct) will have passed away. This might also be something to consider.

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Posted

Thanks for taking the time to reply.

I appreciate the advice and recomendations.

I think my next step is to look into a german property lawyer and deciding on a way forward.

Kind Regards

Roland

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Posted

Before you do that, a friendly word of warning: German lawyers charge by the value of the object at stake, and with a 250,000€ flat, that will be a bill for a few thousand €.

For examples, please see Berlin lawyers/notaries charging €800/hour and €2,500 lawyer flat fee for 6 hours?.

So please, first ask the lawyer for a price quote in writing, and only look at specialised lawyers, i.e. Fachanwalt für Miet- und Wohnungseigentumsrecht: http://anwaltauskunft.de/index.php?alias=anwaltsuche

You can specify Fremdsprache: Englisch

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Posted

Hi again,

I spoke to the management agent/ administrator for the EWG of the block of flats to discuss the problem. He informed me that the lawyer who is taking me to court on behalf of the other owners had told him, should the flat be seized by the court and auctioned off the niessbrauch recht held by my father would fall away/ no longer apply.

He said the property would be auctioned first with a reserve of 70% of the market value. If it did not sell it would be auctioned for a second time at 50%. If it still not sell after that the 3rd auction would start off with no reserve.

Can anyone tell me whether this sounds right?

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Posted

Yes and no.

A Niessbrauchsrecht doesn't automatically fall away in a court auction. Basically only if the debts to the other owners would already be mentioned in the "Grundbuch", the cataster book.

And then only if these debts have the same or a better "ranking". Which I doubt.

Plus, keep in mind that in case your father would loose his Niessbrauchsrecht it would be up to you as owner to pay him a lifelong monthy indemnisation.

Basically your father has the obligation to cover the running costs (which he apparenly didn't). He has theoretically debts against you. But the legal consequenses concerning the other owners and the court auction are only a matter for the legal owners, you.

IMO you just have to do one , rather simple and by far the cheapest thing : Get a loan from a german bank (secured by your apartment), pay off the other owners asap, pay the right now relatively low interest on that loan and then either wait until your father .... or get in contact with an agent and try to sell the place . Prices are up today,and even with a Niessbrauch there might be people interested in buying. Selling is way better than getting rid of it via an court auction. And no shark- I mean lawyer fees with this way.

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Posted

I spoke to the management agent/ administrator for the EWG of the block of flats to discuss the problem. He informed me that the lawyer who is taking me to court on behalf of the other owners had told him, should the flat be seized by the court and auctioned off the niessbrauch recht held by my father would fall away/ no longer apply.

Well, it wouldn't fall away, it would instead be converted into a pension in accordance with §92 Absatz 2 Zwangsversteigerungsgesetz, i.e. a lump sum of the remaining money has to be set aside so that your father gets the amount that that flat would bring in in rent on the open market.

This lump sum that has to be set aside is calculated based the remaining life expectancy of your father, but no matter how old the person who has the Nießbrauch is, no more than 25 years of that pension have to paid out of that lump sum.

Here and here is a lawyer detailing the process (in German).

He said the property would be auctioned first with a reserve of 70% of the market value. If it did not sell it would be auctioned for a second time at 50%. If it still not sell after that the 3rd auction would start off with no reserve.

That's correct.

***********************

I agree with sosarx, take on a mortgage and pay off your father's debts.

Though with the flat being in Frankfurt (as long as it's Frankfurt am Main and not Frankfurt an der Oder), the perils of it being sold very much under price are quite low, if it really should come to an auction (most people settle before) it would be sold at the first sitting.

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Posted

Pandamunch and Sosarx thanks again for the advice.

The mortgage may be a problem since I co-own with my sister and brother who are both living in south Africa. I also worry that if I mortgage and pay off the debt nothing guarantee's me that I will not end up in the same situation a few months down the line. In the Urkunde, it states that he is responsible for some of the payments but taking him to court may prove pointless.

I could cover the payments for one of the flats but not for both. So I am not to fussed about losing one. All I want to is get the best end result.

You both mentioned that after the court debts are paid with the property auctioned the remaining money would return to my father. Any idea how this would likely be played out?:

1]he would be paid out as a lump sum into his account

2]the money would be held in the bank as a pension and only paid out in monthly instalments

3]be held by me and I would be responsible for repaying to him the money he lost from renting out the 2nd flat.

The reason I ask is that this may be an argument for getting him to agree to a sale at the market price if I agree to giving him a large percentage of the money.

Thanks again for all your help.

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Posted

As far as I know it would be case 2.

See here for the a bit different case (see point 3.) of an auction between co-owners, where they follow the principle of investing the net present value of the annuity in order to ensure that the annuity is paid out out of the lump sum and the ensuing interest. Any money left in the pot at his death would then revert to you three.

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Posted

Basically only if the debts to the other owners would already be mentioned in the "Grundbuch", the cataster book.

And then only if these debts have the same or a better "ranking".

Nope, Hausgeld is automatically higher ranked than entries in either section 2 or 3 of the Grundbuch (§ 10 Abs. 1 Nr. 2 vs. § 10 Abs. 1 Nr. 4 ZVG)

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Posted

Thanks all

Panda Munch i follow point 3 but what are they saying was an option in point 2? i tried to google translate but its not making much sense.

I would want to make sure that should the property be auctioned by the bank he will not receive a load of money which he would be able to spend as he wanted. Getting the debt paid off with him receiving something like pension payments every month would be the best end result.

Would i be able to detach some of the remaining money if he continious to refuse to make payments as stipulated in the urkunde?

Also does anyone know if i did allow the property to be auctioned by the court would it effect my credit rating in the UK?

Thanks

r

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Posted

Panda Munch i follow point 3 but what are they saying was an option in point 2? i tried to google translate but its not making much sense.

Nope, I just wanted to say that your point 2] corresponded to point 3. in the German article that I linked to.

I would want to make sure that should the property be auctioned by the bank he will not receive a load of money which he would be able to spend as he wanted. Getting the debt paid off with him receiving something like pension payments every month would be the best end result.

He won't get that lump sum paid out for sure, just a quarterly pension.

Here's the web site of a notary, and he says quite clearly under point "3.1 Nießbrauch" that it is not possible to have the capital (= lump sum) paid out:


  • "Eine vorzeitige Auszahlung des Gesamtkapitals ist jedoch nicht möglich."

Would i be able to detach some of the remaining money if he continues to refuse to make payments as stipulated in the urkunde?

As long as he lives, nobody has access to the capital.

Only if he has the explicit obligation (according to the contract in which he got the Nießbrauch) to pay that Hausgeld and only if you take him to court could you win the right to attach something from that quarterly pension.

But do you really want to do that?

Also does anyone know if i did allow the property to be auctioned by the court would it affect my credit rating in the UK?

Sorry, no idea.

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Posted

Basically my father is in a vendetta with the other owners on the running of the block of apartments. The block has 4 apartments and he owns 2 so the voting is split 50/ 50 which has caused all sorts of problems. If I auction one apartment he is not going to be pleased and turn into a major problem to spite me. Taking him to court would be a last resort.

How would I go about getting the apartment auctioned do I have to inform the court when I receive the first court order that I am unable to pay and they will go ahead and they will seize it. Auction without the niessbrauch clear the debt owed to the EWG and stick the rest in a pension fund for my dad. Is this the way it works?

Also what about the other debts he may have racked up. Would I be able to ask the court to also pay money owed to Frankfurt Kassen and Steueramt because I am sure he is behind on those payments

There is a person in the flat which would be auctioned and he has been renting for the last 3 year or so...would the bank just give him notice and turf him out?

thanks

roland

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Posted

If with the Kassen- und Steueramt you mean Grundsteuer, then again, you as the owner are responsible for paying it.

That you also have a contract with your dad is of no interest to them.

If he should have been the one paying then you will have to take him to court to recuperate the outlay.

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Posted

How would I go about getting the apartment auctioned do I have to inform the court when I receive the first court order that I am unable to pay and they will go ahead and they will seize it. Auction without the niessbrauch clear the debt owed to the EWG and stick the rest in a pension fund for my dad. Is this the way it works?

Roughly, yes.

The court will write a note into the land registry (= Grundbuch), and if you don't do anything, it will come to the auction.

The steps are explained in this article.

Though I think you will be one of only a few people who voluntarily enter into this proceeding.

Normally, people try to avert an auction, since flats fetch a better price on the open market.

There is a person in the flat which would be auctioned and he has been renting for the last 3 year or so...would the bank just give him notice and turf him out?

No, the new owners can terminate that person's rental contract, but they have to do so immediately after the auction.

No matter what notice period is written into that person's rental contract, the new owners can give 3 months' notice (since that person has been living there for less than 5 years), with the reason given that they want to move in themselves.

Please see here for an article written by a lawyer on this topic.

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Posted

Thanks Pandamunich and others for all your advice. Its really helped me come up with some sort of game plan to deal with this mess. I have given my father a weeks to come up with the money or agree to a sell otherwise i will ask the court to auction a flat off. Lets see what happens!

roland

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Posted

Hi folks

The saga continues.

My father has agreed to sell 1 of the flats and found a potential buyer. He holds the niessbrauch and a vollmacht allowing him to represent us in all EWG matters.

When we spoke we came to a verbal agreement that the owners [his kids] would get a portion of the sale price, the EWG would be paid all outstanding debts and he would get paid out the majority of the rest of the money.

He has now asked us to sign a vollmacht [copy and pasted below].

['Wir die Unterzeichnenden und Eigentűmer von 2 Wohnungen, Erdgeschoβ , und 1. Stock , im Gebȁude _____ Frankfurt Main , _______str. 21 ermȁchtigen hiermit als seine Kinder unseren Vater ________ , der bereits das Nieβbrauchrecht besitzt , uns bezűglich aller Belange des Gebȁudes …Verwaltung , WEG , Stimmrecht, vor Gericht u.s.w. ….. zu vertreten und die Wohnung im 1. Stock zu verkaufen , die Auflassung zu erklȁren, den Kaufpreis zu vereinnahmen und alle Erklȁrungen abzugeben, gegen jederman die nach seinem Ermessen in diesem Zusammenhang erforderlich sind ']

This states all the money is to be paid to him. He does promise to pay us out afterwards but I don't trust him as we don't have a conventional loving family relationship.

My questions is what is the best way to go ahead with a sale of a property with a Niessbraucher you don't trust?

Do I need to give him a vollmacht for something as I prefer not to?

Is the best way to ask the buyers notary to draw up a sales contract/agreement that requires the owners and niessbraucher to sign out the property and within that document there would be a breakdown of how the money should be distributed? Is there one document that does all this?

Thanks in advance

Roland

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