Extension to the parental home: questions about inheritance and land division

Hello dear house construction community,

I would like to build an extension onto my parents' house. I still have some questions to clarify. I hope you can help me a bit here.

Following situation:

[*]My parents own a debt-free 1100m2 plot of land which has an approximate value of 200,000 euros.

[*]My parents' house is very old (1936), well maintained but not up to the latest technical standards. The house has an estimated value of 50,000 euros.

[*]I have a brother; his inheritance must be taken into account in the agreement.

[*]I have checked with the building authority; the plot is not divisible.

[*]My parents want to remain owners of half of the plot including their house until their death.

[*]My construction project will cost about 350,000 euros.

[*]If possible, I would like to have my parents’ land registered as a mortgage to get a more attractive loan.

Given these conditions, my brother, my parents, and I sat down and tried to work out a fair and realistic “deal” for all involved. The following approaches have emerged.

1. My parents transfer half of the plot to me. Since a plot division is not possible, I will probably have to be registered in the land register? Or must a residential property ownership (WEG) be established (similar to multi-family houses, keyword condominiums)? I am now paying my brother one quarter. The other half including the house will later be split 50/50.

2. The entire plot remains in my parents' possession; I build the extension now. After my parents' death, it will be divided between me and my brother. We are considering that he gets the house, as he had to wait longer for his inheritance.

If financially possible, I would like to pay out my brother later and take over the entire plot including the houses.

These are our thoughts and ideas about the situation so far. Please give me feedback on what mistakes we might have or how we could arrange it better. I am grateful for every comment.

The best thing would be if your parents already transfer the land and house to you now and register a lifelong usufruct for themselves.

This has several advantages:
If your parents ever need care and the transfer was made more than 10 years ago (I don’t know if you’ll manage that), then the care providers can no longer access the land or property. Otherwise, the calculation is brutally strict: remaining lifetime, what the sale would bring, how much that equals per month. If it pays off, the little house is gone just that quickly, you won’t even notice (we’ve been through this with my grandma’s apartment, so these are not tall tales).

Your parents can also arrange the inheritance after you. In our case, my parents stipulated that any spouses are not entitled to inherit. If my brother or I die, half goes to the survivor provided there are no children (of the deceased). In the next generation, the grandchildren inherit. I have no children, my brother has three (and that will probably stay that way); so all the children of my brother will inherit (which is completely fine with me).

Then the land would belong to you half and you could definitely register a land charge on it.

I get along very well with my brother, so that wouldn’t be a problem either.

If you build, however, you have to define very precisely how the ownership situation regarding the house is. The best help for that is an experienced notary.

Does your brother also want to build on the land later? Should the old house possibly be torn down after your parents' death?
Do you want to extend (i.e., directly attached to the old house) or build another house on the property?

I’m currently dealing with the same issue and it’s not that simple. I assume there is no valid development plan, right?

Then you have to pay attention to the setback areas. Be clear on what kind of building envelope results for you.
Ask the municipality if they are open to your building plans. What else, besides setback areas, do you have to pay attention to? Are there regulations for floor area ratio, built-up area, etc.? §34 (integration requirement) will probably apply. If there are lots of large plots with small houses around you, then the municipality has to cooperate if you want to significantly exceed the built-up area/floor area ratio of the neighboring plots. If you’re lucky, they want to increase density where you are anyway (in Bavaria currently the key term is density instead of new development areas), then you have good chances.

So I would basically clarify whether you are allowed to build and possibly get your parents to transfer (completely independent of the building). It makes sense!

Climbee is right, first clarify what is possible under building law. And then have a lawyer or notary advise you on the best legal solution. Your parents could, after a dispute with you, death, and remarriage of the surviving spouse, or or or... leave the property only to your brother or only to a new partner at any time. It may sound unrealistic today, but if they (hopefully) live another 25 years, a lot can happen...

As far as our thoughts and ideas about the situation go. Please give me feedback on any errors in reasoning we have or how we can do it better. I am grateful for any remarks.

You want to build on your parents' property?

Actually, one would need to know:
- Is there additional wealth? What income do the parents have? How old are they actually? Married?
- Do you have additional wealth (to buy out your brother)?

Thank you for the long and detailed response.

My family has already talked about dividing the property/house. However, I got the impression that my parents were not very enthusiastic about it. They are still quite young (early 60s) and you never know what the future holds. Maybe one day they will want to sell the house and spend their retirement somewhere in the sun?! Very unlikely, but you never know. However, they are willing to give up half of the property so that I can build. But I will bring it up again; it surely can’t be in their interest that everything is lost due to possible care needs.

My brother has no interest in building on the property or later using the parental home himself. He will probably want to sell or rent his share.

There is no valid development plan, §34 applies. Another detached house may not be built on the property. Only an extension is possible. However, a large part of the other residents in the settlement have already extended. Therefore, I do not expect any problems.

The design of the house is already finished and has been discussed with the building authority. I have also already received a preliminary OK from the building authority.

Climbee is right, first clarify what is legally possible in terms of building regulations. And then have a lawyer or notary advise you on the best legal solution.

Your parents could, at any time after a dispute with you, death, the remarriage of the longer-lived spouse, or whatever... leave the property only to your brother or only to a new partner. That may sound unrealistic today, but if they (hopefully) live for another 25 years, a lot can happen...

Of course, we will make an appointment with a lawyer / notary. However, I want to inform myself as much as possible beforehand in order to be able to ask targeted questions.