ᐅ Extension to Parent House: Questions About Inheritance and Property Division
Created on: 10 Aug 2016 15:30
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Michael187M
Michael18710 Aug 2016 15:30Hello dear homebuilding community,
I would like to add an extension to my parents' house. I still have some questions and hope you can help me a bit.
Current situation:
Given these conditions, my brother, my parents, and I have sat down together to try to work out a fair and realistic “deal” for everyone involved. The following proposals emerged:
1. My parents transfer half the land to me. Since land subdivision is not possible, I probably need to be added to the land register (title deed)? Or does a condominium ownership structure (similar to an apartment or multi-family dwelling) need to be established? I will pay my brother a quarter now. The other half including the house will be divided 50/50 later.
2. The entire plot remains owned by my parents, and I carry out the extension. Upon their passing, the property will be divided between my brother and me. We are considering that he might get the house since he has been waiting longer for his inheritance.
If financially feasible, I would like to pay out my brother later and take full ownership of the land including the houses.
These are our current thoughts and ideas about the situation. Please give me feedback if there are any mistakes in our thinking or how we could organize this better. I appreciate any comments.
I would like to add an extension to my parents' house. I still have some questions and hope you can help me a bit.
Current situation:
- My parents own a debt-free 1100m2 (12,000 sq ft) plot of land, with an approximate value of 200,000 euros.
- My parents' house is very old (built in 1936), well maintained but not up to modern technical standards. The estimated value of the house is 50,000 euros.
- I have a brother; his inheritance must be taken into account in any agreement.
- I have checked with the local building authority that the land cannot be subdivided.
- My parents want to keep ownership of half the land, including their house, until they pass away.
- My construction project will cost about 350,000 euros.
- If possible, I would like to have my parents’ land registered as collateral (mortgage / deed of trust) to secure a better loan.
Given these conditions, my brother, my parents, and I have sat down together to try to work out a fair and realistic “deal” for everyone involved. The following proposals emerged:
1. My parents transfer half the land to me. Since land subdivision is not possible, I probably need to be added to the land register (title deed)? Or does a condominium ownership structure (similar to an apartment or multi-family dwelling) need to be established? I will pay my brother a quarter now. The other half including the house will be divided 50/50 later.
2. The entire plot remains owned by my parents, and I carry out the extension. Upon their passing, the property will be divided between my brother and me. We are considering that he might get the house since he has been waiting longer for his inheritance.
If financially feasible, I would like to pay out my brother later and take full ownership of the land including the houses.
These are our current thoughts and ideas about the situation. Please give me feedback if there are any mistakes in our thinking or how we could organize this better. I appreciate any comments.
It would be best if your parents transfer the property and house to you now and register a lifelong usufruct (right of use) for themselves.
This has several advantages:
If your parents ever need care and the transfer was done more than 10 years ago (I’m not sure if you can still manage that), the care provider cannot claim the land and property. Otherwise, it will be calculated strictly: remaining life expectancy, potential sale value, how much that would yield per month. If it adds up, the house can be taken away very quickly—faster than you realize (we experienced this with my grandmother’s apartment, so these are not just tales).
Your parents can also arrange inheritance after you. In our case, my parents specified that any spouses are not entitled to inherit. If my brother or I pass away, half goes to the surviving sibling as long as there are no children (of the deceased). The next generation—the grandchildren—then inherit. I have no children, my brother has three (and likely will keep it that way); so the inheritance passes entirely to my brother’s children (which is perfectly fine with me).
Then the property would be half yours, and you could definitely register a mortgage on it.
I get along very well with my brother, so that wouldn’t be a problem.
If you build, you need to define very clearly how the ownership of the house will be handled. A skilled notary is best for that.
Will your brother want to build on the property later? Is the old house supposed to be possibly demolished after your parents’ death?
Do you want to extend the old house (an addition) or build a separate house on the property?
I’m currently dealing with the same issue, and it’s not so simple. I’m assuming there is no valid development plan (building plan / zoning plan), right?
Then you have to pay close attention to setback requirements. Be clear about what building envelope you get.
Check with the municipality whether they support your building plans. Besides setbacks, what else do you have to consider? Are there rules about floor area ratio, site coverage, etc.? Section 34 (local building code, compatibility requirement) will probably apply. If there are mostly large plots with small houses around you, the municipality must agree if you want to exceed site coverage or floor area ratio compared to neighboring properties. If you’re lucky, the community is already aiming to increase density (in Bavaria that’s currently a key term, “densification instead of new development areas”), so you have good chances.
So I would basically clarify whether you are allowed to build and, independently of building, encourage your parents to transfer ownership. It makes sense!
This has several advantages:
If your parents ever need care and the transfer was done more than 10 years ago (I’m not sure if you can still manage that), the care provider cannot claim the land and property. Otherwise, it will be calculated strictly: remaining life expectancy, potential sale value, how much that would yield per month. If it adds up, the house can be taken away very quickly—faster than you realize (we experienced this with my grandmother’s apartment, so these are not just tales).
Your parents can also arrange inheritance after you. In our case, my parents specified that any spouses are not entitled to inherit. If my brother or I pass away, half goes to the surviving sibling as long as there are no children (of the deceased). The next generation—the grandchildren—then inherit. I have no children, my brother has three (and likely will keep it that way); so the inheritance passes entirely to my brother’s children (which is perfectly fine with me).
Then the property would be half yours, and you could definitely register a mortgage on it.
I get along very well with my brother, so that wouldn’t be a problem.
If you build, you need to define very clearly how the ownership of the house will be handled. A skilled notary is best for that.
Will your brother want to build on the property later? Is the old house supposed to be possibly demolished after your parents’ death?
Do you want to extend the old house (an addition) or build a separate house on the property?
I’m currently dealing with the same issue, and it’s not so simple. I’m assuming there is no valid development plan (building plan / zoning plan), right?
Then you have to pay close attention to setback requirements. Be clear about what building envelope you get.
Check with the municipality whether they support your building plans. Besides setbacks, what else do you have to consider? Are there rules about floor area ratio, site coverage, etc.? Section 34 (local building code, compatibility requirement) will probably apply. If there are mostly large plots with small houses around you, the municipality must agree if you want to exceed site coverage or floor area ratio compared to neighboring properties. If you’re lucky, the community is already aiming to increase density (in Bavaria that’s currently a key term, “densification instead of new development areas”), so you have good chances.
So I would basically clarify whether you are allowed to build and, independently of building, encourage your parents to transfer ownership. It makes sense!
Climbee is right, first clarify what is legally possible in terms of building regulations or planning permission.
Then consult a lawyer or notary to find the best legal solution.
Your parents could at any time, after a dispute with you, their death, remarriage of the surviving spouse, or other circumstances, leave the property only to your brother or only to a new partner. It may sound unrealistic today, but if they (hopefully) live another 25 years, a lot can happen...
Then consult a lawyer or notary to find the best legal solution.
Your parents could at any time, after a dispute with you, their death, remarriage of the surviving spouse, or other circumstances, leave the property only to your brother or only to a new partner. It may sound unrealistic today, but if they (hopefully) live another 25 years, a lot can happen...
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Bieber081510 Aug 2016 20:29Michael187 schrieb:
These are our thoughts and ideas about the situation so far. Please give me feedback on any logical errors we might have or how we could improve the plan. I appreciate any comments. You want to build on your parents’ land?
Actually, it would be important to know:
- Are there other assets? What income do your parents have? How old are they? Are they married?
- Do you have other assets (to compensate your brother)?
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Michael18711 Aug 2016 07:51@Climbee Thank you for the detailed and thorough response.
My family has already discussed dividing the plot / house. However, I got the impression that my parents were not very enthusiastic about it. They are still relatively young (early 60s) and you never know what the future holds. Maybe one day they want to sell the house and spend their retirement somewhere sunny?! Very unlikely, but you never know. However, they are willing to give up half of the plot so that I can build. I will bring it up again; it surely cannot be in their interest to lose everything because of potential care needs.
My brother has no interest in building on the plot or using the family home himself later. He will probably want to sell or rent out his share.
There is no valid development plan (building permit / planning permission), so Section 34 applies. Another detached house may not be built on the plot. Only an extension is possible. However, most of the other residents in the neighborhood have already built extensions. Therefore, I do not expect any problems.
The house design is already complete and has been discussed with the building authority. I have also received a provisional OK from the building authority.
My family has already discussed dividing the plot / house. However, I got the impression that my parents were not very enthusiastic about it. They are still relatively young (early 60s) and you never know what the future holds. Maybe one day they want to sell the house and spend their retirement somewhere sunny?! Very unlikely, but you never know. However, they are willing to give up half of the plot so that I can build. I will bring it up again; it surely cannot be in their interest to lose everything because of potential care needs.
My brother has no interest in building on the plot or using the family home himself later. He will probably want to sell or rent out his share.
There is no valid development plan (building permit / planning permission), so Section 34 applies. Another detached house may not be built on the plot. Only an extension is possible. However, most of the other residents in the neighborhood have already built extensions. Therefore, I do not expect any problems.
The house design is already complete and has been discussed with the building authority. I have also received a provisional OK from the building authority.
M
Michael18711 Aug 2016 07:54Maria16 schrieb:
Climbee is right, first clarify what is legally possible regarding building regulations.
Then consult a lawyer or notary to find the best legal solution.
Your parents could, at any time after a dispute with you, death, remarriage of the surviving partner, or other circumstances, leave the property only to your brother or only to a new partner. This might sound unrealistic today, but if they hopefully live another 25 years, many things can happen...Of course, we will make an appointment with a lawyer or notary. However, I want to inform myself as much as possible beforehand in order to be able to ask targeted questions.