Predecessor

Preliminary heir - A preliminary heir is a person who, pursuant to a testamentary provision (preliminary and reversionary succession, §§ 2100 et seq. BGB), initially becomes an heir but must transfer the inheritance to a reversionary heir designated by the testator upon the occurrence of a specific event (usually the preliminary heir’s own death). In the case of real estate, the role of preliminary heir entails significant restrictions: The preliminary heir may not freely sell or encumber the property and must preserve its value for the reversionary heir.

Rights and Obligations of the Preliminary Heir

Although the preliminary heir becomes the owner of the estate property and is entered in the land register, they are subject to strict restrictions: They may not gift the property (Section 2113(2) BGB) and may not encumber it with a land charge or mortgage without the consent of the reversionary heir. Sales are generally possible, but the reversionary heir may challenge the disposition if it was made for free. The preliminary heir has a duty of proper administration (Section 2130 BGB): ongoing maintenance, insurance, and tax payments. The proceeds from use (rental income) are due to him. A note regarding the reversionary heir is entered in the land register to alert potential buyers and banks to this restriction.

The administrative duties also require that the preliminary heir must keep extraordinary proceeds-such as the proceeds from the sale of estate assets-in a separate account so that they can be transferred to the reversionary heir. Significant changes to the property that go beyond routine maintenance (e.g., an addition or demolition) generally require the consent of the reversionary heir or the probate court. If the preliminary heir fails to carry out necessary repairs and the property suffers a loss in value as a result, he may be liable for damages to the reversionary heir.

Impact on Real Estate Transactions

The right of reversion has significant practical implications: Sale - the reversionary heir may sell the property, but the proceeds take the place of the property (subrogation) and, upon the reversionary heir’s entitlement, accrue to the reversionary heir. However, a buyer may acquire the property in good faith under the protection of the public faith in the land register if they were unaware of the reversionary heir notation-in practice, however, the notation is always visible. Financing - Banks are reluctant to grant loans on properties held by a preliminary heir because the land charge may expire upon the reversionary heir’s succession. Leasing - the preliminary heir may lease the property, but lease agreements do not automatically terminate upon the occurrence of the reversionary inheritance.

Particularly relevant in practice: If the preliminary heir’s property is encumbered with a land charge without the reversionary heir’s consent, this land charge expires with respect to the reversionary heir upon the occurrence of the reversionary inheritance - the bank loses its security. Banks therefore typically either require the successor heir’s notarized consent or rule out financing entirely. Sometimes a subordination agreement helps: The successor heir declares that they will subordinate their rights to the bank’s land charge. Such an agreement must be notarized.

Exemption from Restrictions

The testator may expressly exempt the preliminary heir from the statutory restrictions in the will (Section 2136 BGB). The so-called exempt preliminary heir may administer the inheritance largely at his or her discretion: He or she may sell the property and use the proceeds, encumber it with real estate liens, and make structural alterations. The only restriction: Gifts from the estate are also prohibited for the exempted preliminary heir (Section 2113(2) BGB). The note regarding the reversionary heir remains entered in the land register even for the exempted preliminary heir-however, a buyer can prove that the restrictions do not apply by means of a notarial declaration from the preliminary heir and presentation of the will.

Practical Tip for Property Owners in Nuremberg

We recommend that heirs and reversionary heirs in the Nuremberg metropolitan area who receive real estate as part of a preliminary/reversionary succession clarify the practical consequences early on with a specialist attorney for inheritance law. In Nuremberg, properties held by preliminary heirs are particularly difficult to sell because the reversionary heir notation in the land register deters potential buyers. The testator may order an exemption from the restrictions (Section 2136 of the German Civil Code (BGB) - “exempt preliminary heir”) in the will-in which case the preliminary heir may freely sell and encumber the property. Check whether your will contains such an exemption.

If no exemption exists, we recommend working out a mutually agreeable solution together with the reversionary heir: Either the reversionary heir agrees to the sale and receives a portion of the proceeds, or the parties enter into a notarized agreement that removes the reversionary heir notation (in exchange for a settlement payment). The Nuremberg Land Registry Office will only accept the removal of the reversionary heir’s note if the reversionary heir provides notarized consent to the removal. For investors wishing to purchase a property held by a preliminary heir as an investment, we recommend a thorough review of the reversionary heir’s rights before a purchase agreement is notarized.

Frequently Asked Questions

What is the difference between an exempt and a non-exempt preliminary heir?

The non-exempt preliminary heir (the standard case) is subject to all legal restrictions: no sale of the property without surrogation, no encumbrance, no gift. The exempt preliminary heir (Section 2136 of the German Civil Code) may freely administer the estate and dispose of estate assets-the only restriction being that they may not dispose of them gratuitously (no gifts from the estate). The exemption must be expressly ordered by the testator in the will.

As a preliminary heir, can I encumber the property with a land charge?

As a non-exempt preliminary heir, only with the consent of the subsequent heir or with the approval of the probate court. Land charges registered without consent are ineffective against the subsequent heir-they expire upon the subsequent heir’s succession. Banks therefore generally require the consent of the reversionary heir for the creation of a land charge on properties held by a preliminary heir. As an exempt preliminary heir, you may encumber the property without consent.

What happens to the reversionary heir notation upon sale?

The reversionary heir notation generally remains in the land register even upon sale, unless the reversionary heir consents to its deletion. A buyer then acquires the property with the note-upon the reversionary inheritance taking effect, the reversionary heir may demand its return. In practice, a sale therefore only makes sense if: the reversionary heir consents and the note is deleted, or the proceeds are invested as a substitute for the reversionary heir. Without the deletion of the note, it is difficult to find a buyer.

Is the preliminary heir responsible for maintaining the property?

Yes. The preliminary heir is obligated to ensure proper administration (Section 2130 of the German Civil Code). They bear ongoing maintenance costs out of their own pocket-they must preserve the property’s condition for the reversionary heir. Under certain circumstances, they may cover extraordinary expenses (e.g., an unforeseen roof renovation) from the estate’s assets. If they fail to fulfill their maintenance obligation, they are liable to the reversionary heir for damages.

Back to the Real Estate Glossary.