Joint tenancy

Joint tenancy is a special form of joint ownership in which several persons jointly own a property without each person being able to assign a specific share or dispose of it independently. Shares in jointly held property are generally not transferable individually; each co-owner may dispose of the property only jointly with the others. Typical joint ownership communities in the real estate sector include the civil law partnership (GbR), the community of heirs, and-historically-the marital community of property.

Distinction from fractional ownership

In fractional ownership (co-ownership by shares, §§ 741 ff. BGB), each co-owner may freely dispose of their share, sell it, or encumber it. In joint tenancy, however, the property belongs to the community as such; no participant may dispose of individual assets without the consent of the others. In the land register, joint ownership is therefore entered as “GbR” or “community of heirs,” not with individual shares.

This distinction has practical consequences: A co-owner holding a fractional share may sell or encumber their half-share at any time-the other co-owner has only a statutory right of first refusal. With joint tenancy, this is generally excluded: Anyone wishing to withdraw from a GbR or community of heirs can do so only by dissolving the community or by transferring their share in the partnership or inheritance-not by directly accessing the property itself.

Joint Tenancy in the Community of Heirs

Upon the death of an owner, the real estate assets automatically become joint property of the community of heirs. All co-heirs must jointly dispose of the property-sale, encumbrance, or leasing require unanimity or a majority decision (Section 2038 BGB). In practice, this deadlock often leads to conflicts. A solution is provided by the partition of the community of heirs through the transfer of the property to individual heirs or its joint sale.

The situation becomes particularly problematic when heirs from abroad are involved or when individual co-heirs are difficult to reach. In such cases, the community may become de facto incapable of acting. A frequently used solution is the partition auction (Sections 180 et seq. ZVG): Any co-heir may apply for the auction, which often prompts the other co-heirs to agree to a sale in order to avoid a forced sale below market value.

GbR as a Joint Tenancy in Real Estate Purchases

If several persons purchase a property as a GbR, joint tenancy of the GbR arises. The GbR is entered in the land register as the owner. Since the MoPeG (Company Law Modernization Act) came into effect on January 1, 2024, registered GbRs can be entered in the commercial register, which simplifies their registration in the land register. In principle, all partners must consent to the sale or encumbrance of the property, unless the partnership agreement provides otherwise.

For investors, the GbR offers a flexible and cost-effective structure for joint real estate acquisition. However, GbR partners are personally and unlimitedly liable, which can pose a significant risk in the event of loans or liabilities arising from the property. As an alternative, a GmbH or GmbH & Co. KG is recommended as soon as the investment volume or the number of parties involved justifies a limited-liability structure.

Tax Aspects of Joint Ownership

Under tax law, the community of heirs as a joint ownership entity is generally transparent: income (e.g., rental income) is directly allocated to the individual co-heirs in proportion to their inheritance shares. Each co-heir pays taxes on their share according to their personal tax rates. This can be advantageous if co-heirs have different income levels. It is disadvantageous if one co-heir falls into a high tax bracket and the others do not.

The same principle applies to a GbR: The partnership itself is not a taxable entity for income tax purposes; profits are allocated to the partners on a pro-rata basis. A potential trade tax liability only becomes relevant if the GbR engages in commercial activities-pure rental activity is considered asset management and is generally not subject to trade tax.

Practical Tip for Property Owners in Nuremberg and Franconia

In the Nuremberg metropolitan region, real estate is often held by siblings or married couples as a community of heirs without a formal division of the estate. This leads to problems upon a later sale if individual heirs cannot be located or refuse to give their consent. We recommend dissolving a community of heirs as early as possible through a notarized agreement on the division of the estate-for a typical single-family home in Nuremberg that has been held for years, an unresolved community of heirs can reduce the sale price by 5-10% due to necessary price concessions, as potential buyers shy away from the risk of a stalled transaction.

Anyone wishing to invest with partners should, instead of an informal GbR, establish a clear partnership agreement that governs decision-making processes and withdrawal rights. Ideally, a notary should be consulted to authenticate the partnership agreement and arrange for its entry in the commercial register.

Frequently Asked Questions

Can I sell my share of the joint ownership?

No, an isolated sale of the share is not possible in joint ownership. In the case of a community of heirs, however, you may sell your share of the inheritance (Section 2033 BGB), but you cannot select specific items. In the case of a GbR, the transfer of a partnership interest is only possible with the consent of the co-partners, unless the partnership agreement provides otherwise.

What happens if a co-owner dies?

In a GbR, the deceased partner’s share passes to their heirs, provided the partnership agreement contains a continuation clause. Without such a provision, the GbR may be dissolved upon the partner’s death. In a community of heirs, the share of the deceased co-heir is added to the shares of the remaining co-heirs (accrual), provided the deceased has no heirs of their own.

How is joint ownership entered in the land register?

In the land register, the name of the community or the partner is entered with the addition “as a civil law partner” or “as a community of heirs.” Since 2024, registered GbRs can also be entered directly as legal entities, which significantly simplifies land registry transactions.

When is a partition auction advisable?

A partition auction is a last resort when a community of heirs or a community of joint owners cannot agree on a solution. Since auctions often yield less than market value and incur procedural costs, we recommend first trying all out-of-court avenues-including mediation or the purchase of shares by one of the co-heirs.

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