House construction on property/relatives, requirements / obligations?

Hello,

I wanted to ask what it looks like if you want to build your house on someone else’s property?
That means, the land does not belong to you personally, but to relatives.

What needs to be considered?
Are there any sources to read up on?

Then the newly built house also belongs to the relatives.

Who pays for the house and from what means? Loan? Savings book?

And who provides the security for a loan and in what form?

Spontaneously, I can only think of paying rent to the relatives, who then build, or a hereditary leasehold right (Erbpachtrecht).

Hello elaxel84,

this is a hot topic you are considering...

In short: Since the house is firmly attached to the land, the owner of the land is also automatically the owner of the house.

Financing through bank funds requires that the landowner agrees to the registration of a mortgage, which means, in case of doubt, that the land can be auctioned off if the loan is not repaid as agreed. If you can provide other securities for the bank, this point is, of course, not relevant.

If the landowner dies, the matter becomes even more complicated, then you may have to deal with a community of heirs.

What degree of kinship would you have to the owner of the land?

Personally, I would never build on land that does not belong to me...

Regards,

Dirk

You can make a leasehold out of that, can't you?

Yes, leasehold is the only way to legally separate house and land somewhat cleanly, although within the family this rarely makes sense: a house has an average useful life of 60-80 years, so leasehold is usually set for 99 years. For parents, a period of 99 years is rather uninteresting despite all medical advances, and even for siblings it does not change the fact that one will not experience the end of the lease agreement. Church and state may think differently, but under private law this is only interesting, if at all, from a tax law perspective and it should be designed so that in the event of inheritance the land falls to the owners of the house.

All other arrangements cannot, in my opinion, be recorded in the land register and are therefore associated with risks, meaning: I would never dream of building my house on a family member’s land if I only hold a private law contract and no land register security in the form of ownership or an ownership-equivalent right, i.e., leasehold.

Best regards
Dirk Grafe

There is also the possibility outside of the heritable building right. Keyword "Scheinbestandteil". I have financed it before, but would never do it again and would not recommend it to anyone. Registration of a land charge is not possible, assignment of the house is required. I currently do not know of any bank that would go along with this game.