Dividing an inherited property - the most common difficulties

Interview with lawyer and real estate expert Sven Johns

If a property is inherited, there is usually not just one sole heir, but a community of heirs among whom the inherited assets must be divided. In this interview, lawyer Johns explains the first steps that heirs should take in this situation.

Mr. Johns, what advice do you have for heirs who have to divide an inherited property between several parties? What is the best way for them to come to an agreement quickly?

"At the very beginning, of course, there is the big question of what the property is worth. In other words, the first step in this context is to go to a real estate agent or an expert to determine the value of the property - and not just roughly. You can also say that we'll look it up on the internet first or perhaps look at a few comparable properties in the area, but that's no use, because a difference of 40,000 or 50,000 euros in a dispute between several heirs means that if one of the heirs wants to keep the property, they would have to pay out so much more to the other."

So first of all, an appraisal should be carried out, but what happens once the value of the property is known?

"From a lawyer's point of view: the most common difficulty is to find a value together that all the heirs can live with so well that they say, okay, if this value comes out, then we can agree on a settlement plan. Either one of the heirs takes over the property or the property is sold, and the respective share of the remaining sales proceeds is paid to the members of the community of heirs from the proceeds of the sale after the registered encumbrances have been paid off."

How can heirs even find out which encumbrances still have to be paid off, where are they registered or listed?

"You can't tell directly from the land register extract how high the actual encumbrance is. If the property is encumbered with a land charge, i.e. a loan has not yet been paid off, you can find this out from the loan agreement. There is a monthly list at the back with the installment you pay each month, so that you can see exactly how much is still owed on this land charge for a particular month. It is also possible, for example, that a home loan and savings contract is still entered in the land register in second place in section 3 because the deceased may have used a home loan and savings contract to renovate the bathroom and kitchen or bought a new heating system at some point. You then have to look at what still needs to be repaid. The next consideration can begin with all these lists that you determine and what comes out of them."

So you take the balance of the calculated property value and the charges that you have found out - and then you know what there is to distribute?

"Yes, and only then does the question arise: Will it be sold? Does one of the heirs want to keep the property? Can the person who "keeps" the property pay out the full amount to the others, and how can this payout value be determined? Before initiating an actual property settlement, I can only strongly recommend that you make these considerations and that all parties involved first clarify this: What is the actual settlement value?"

Do you need an appraisal or professional advice and support with the sale of an inherited property? Please contact us! We will be happy to advise you.

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Legal notice: This article does not constitute tax or legal advice in individual cases. Please consult a lawyer and/or tax advisor to clarify the facts of your specific individual case.

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