ᐅ Division of the land registry entry before having the building plans
Created on: 19 Apr 2019 22:07
R
rubiwanHello dear forum members,
My brother and I are planning to build and live in a house together.
The basement will contain a separate apartment for my brother to live in.
On the ground floor and first floor there will be a second residential unit where I plan to live with my wife and our children.
The problem is that we do not yet have a secured building plot, as there is currently an allocation process by the local municipality (greater Mannheim area). Since there are several plots available, we do not yet know if we will receive one or which one we will get. For this reason, we cannot start the final house design, as the house must fit the plot.
In summary: For the purchase, we have to specify ownership details in the land registry and possibly include a division agreement. However, without a building plan, this cannot be determined. And without a building plot, we cannot create a building plan…
Any ideas on how to proceed?
My brother and I are planning to build and live in a house together.
The basement will contain a separate apartment for my brother to live in.
On the ground floor and first floor there will be a second residential unit where I plan to live with my wife and our children.
The problem is that we do not yet have a secured building plot, as there is currently an allocation process by the local municipality (greater Mannheim area). Since there are several plots available, we do not yet know if we will receive one or which one we will get. For this reason, we cannot start the final house design, as the house must fit the plot.
In summary: For the purchase, we have to specify ownership details in the land registry and possibly include a division agreement. However, without a building plan, this cannot be determined. And without a building plot, we cannot create a building plan…
Any ideas on how to proceed?
Are you planning to divide a plot of land? This is generally only possible according to condominium law (WEG), unless the plots are twice as large...? I assume that’s not the case. It’s not some insignificant rural land, right? Under WEG, the division is done proportionally, so I don’t see any problem there.
The issue is more that basements (or lower ground floors) usually do not count as fully livable space and are therefore difficult to value proportionally.
I see the main problem related to the basement: unless it’s a generously sized plot, you might have issues with setback requirements for the habitable rooms in the basement. Do you already have more detailed information about the development plan and plot sizes?
The issue is more that basements (or lower ground floors) usually do not count as fully livable space and are therefore difficult to value proportionally.
I see the main problem related to the basement: unless it’s a generously sized plot, you might have issues with setback requirements for the habitable rooms in the basement. Do you already have more detailed information about the development plan and plot sizes?
rubiwan schrieb:
In summary: For the purchase, we already have to specify the ownership details in the land register and possibly attach a declaration of division. But without a building plan, we cannot determine this. And without land, we cannot create a building plan… There seems to be a misunderstanding here. A “declaration of division” (e.g., condominium declaration or partition agreement) is not a statement about who contributed which parts of the purchase price and therefore wants rights of residence or shares in the building. Ownership rights to the land cannot yet be divided and registered as long as the land is one single land register entity. So, one whole property cannot have owners of individual parts. At the time of purchase, it will therefore initially be one plot of land and one land register entry. However, this can have multiple owners—for example, the married couple Rubiwan owning 7/10 and the brother owning 3/10. Or the land could be owned entirely by you, and the brother registers a mortgage in the land register corresponding to his share of the purchase price. A right of residence most likely cannot yet be registered, as the building does not exist yet.
If you really want to make the brother’s residential unit a separate ownership share during the development, then the declaration of division takes place. After this declaration of division, the subunits arise as separate land register entities, for example: 1. Your apartment (entirely owned by you), 2. the brother’s apartment (entirely owned by him), and 3. the surrounding land, paths, and parking spaces (for example, owned 7/10 by you and 3/10 by the brother). Upon handing over his unit, the brother would then have his mortgage entry (or his share of co-ownership, depending on the chosen method) removed from the land register sheet of the current undivided property.
Before planning, you therefore do not need to explain to anyone (nor can or want to) how the eventual ownership is to be divided legally and in rem. Instead, you and your spouse and your brother are collectively one purchasing party vis-à-vis the seller of the currently undivided entire property, which legally has no parts yet. Who pays what portion of the purchase price does not matter—there is one purchase price. What the brother contributes can be secured in one of two ways (theoretically also combined): a) you become joint owners with shares registered as described above, or b) you and your spouse alone go into the land register, and the brother registers a mortgage in his favor on the current entire property for the amount he contributed.
I would probably—because the values of the units are not yet clearly determined—register the brother’s share so that the value of his residential unit probably exceeds his share of the current entire property. Hence, the suggestion to possibly combine the two methods—but a business consultant is not a lawyer, so a lawyer should also be consulted.
Your assumed “catch-22” problem is therefore a misunderstanding; the declaration of division is only required at a later stage—and only if you actually want to split according to the condominium law (WEG). For the purchase itself, you do not yet have to specify (or be able to specify) who will own how much of the “final product house with multiple residential units,” and apart from anti-money laundering laws, you do not owe any accounting as to who paid what. The question initially is only between you and your brother: does he want/should he be a co-owner or a mortgage creditor in the current undivided property land register? Obviously, the individual residential land register sheets cannot exist yet.
Assuming you actually want to divide according to WEG later, and the brother’s apartment share of the total property is, for example, 28%, then the question for the expert would be: should the brother be registered with 1/4 = 25% now in the land register (and then pay you the additional 3% upon buying the apartment after his mortgage is removed), or should he be registered with 3/10 = 30% and later receive 2% from you? In your position, I would ask an expert who is both a lawyer and a tax advisor—then you have one expert with both opinions.
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