Sell apartments or keep them?

If he is indeed the usufructuary (I read it differently), then these are also assessable incomes for his bank. I agree with you there. But it reads differently.

The houses belong half to my brother and half to me.

Belong = ownership.

However, 1/3 of the houses belonged to my mother and 1/3 to my uncle.
Both shares were gifted equally to my brother and me
with lifelong usufruct.

1/3 + 1/3 = 2/3. Missing from 100% ... 1/3. Who might own the last third?

In fact, I am entitled to 1/6 of the current rental income.

Voilà - the last third or 2/6 have been found.

By the way. No bank is allowed to credit income if it goes to someone else. Nothing more and nothing less is to be considered here.

Please think again, Nordanney. A childless couple, both civil servants, with over €4,000 net income AND about €15,000 annual income from VuV from a mortgage-free property worth around €3 million, which, via the usufruct (mortality table! annually increasing capitalized share of the brothers!) will eventually belong 50% each to the brothers, comes to you and you say – sorry, but we unfortunately cannot consider this.

The client is out of your office before you finish the sentence, that should be clear to you. This results simply from the consideration that the family could realize €3 million in cash by selling, both brothers could pay €600K each per property out of petty cash and still have €1.8 million left to supplement the mother and uncle’s pension. Then your bank makes zero from the deal and both brothers have a house.

You realize yourself that something doesn’t add up, right?

Regards
Dirk Grafe

Hi,

I'm trying to clarify:

1/6 of the whole is mine without restriction

1/6 of the whole is my brother's property without restriction

1/3 belonged to my mother and was gifted half to me and half to my brother WITH lifelong usufruct for my mother. That means 1/3 of all income/expenses belong to my mother or have to be borne by her.

1/3 belonged to my uncle and was gifted half to me and half to my brother WITH lifelong usufruct for my uncle. That means 1/3 of all income/expenses belong to my uncle or have to be borne by him.

I hope it is clearer now.

Thanks for the offer regarding pn. I will gladly take you up on that.

Regards

You say Dir and Du - yes, sorry, but unfortunately we cannot take that into account.

No, it’s not me who says that. The bank MAY only credit the income (share) that remains with the customer. The usufruct belongs to someone else and MAY NOT be taken into account. MAY is the keyword; it’s not about WANTING to.

The customer is out of your office before you have even uttered the sentence, that should be clear to you. This already follows from the consideration that the family could realize 3 million in cash through a sale, both brothers could each pay €600k for a property out of petty cash and still have €1.8 million left to improve the pension of mother and uncle. Then your bank earns nothing on the deal and both brothers have a house.

Yes, guess how many customers we turn away because we cannot and will not finance – and yet we are among the market leaders in our segment. Nice example Düsseldorf Kö or Cologne Schildergasse. Property purchase €30 million, equity input €13 million + ancillary costs, financing €17 million too high – loan-to-value 115% ==> customers sent home!!! Back to the usufruct. If the usufruct does not concern the entire property, the free rent portion is taken into account. If the entire property is burdened with usufruct in favor of third parties, the value of the property tends toward zero (unless the entitled are already very old). Who would buy such a property without income? Normally nobody, just like with a right of residence. That’s how a bank sees it, and from a valuation perspective it cannot be otherwise, since usufruct has priority. Of course, the family can always somehow come to an agreement, but banks don’t care about that – and they are not allowed to care.

1/6 of the whole is mine without restriction

Good, with that you have your creditable income share for the bank. Do you still realize that you’re not a banker but a surveyor ;). Stick to the things you really know about.

No, I’m not the one saying that. The bank MAY only credit the yield (share) that remains with the customer. The usufruct belongs to someone else and MAY not be considered. MAY is the keyword, it’s not about WANTING to.

You are seriously unwilling to understand the situation. The OP is the usufructuary.

Yes, what do you think how many customers we turn away because we cannot and do not want to finance them – and yet we are among the market leaders in our segment. Nice example Düsseldorf Kö or Cologne Schildergasse. Property purchase €30 million, equity contribution €13 million + incidental costs, financing €17 million too high – loan-to-value ratio 115% ==> sending customers home!!!

Which has absolutely nothing to do with the present example.

Back to the usufruct. If the usufruct does not affect the entire property, the free rental portion is considered.
If the entire property is encumbered by a usufruct in favor of third parties

Which, as already mentioned, is unlawful in the present case...

... the value of the property tends toward zero (unless the beneficiaries are already very old). Who would buy such a property without income? Normally nobody, just like with a right of residence.

Wrong. Keyword mortality table. Already mentioned, it goes in one ear and out the other with you. Banks actually do exactly that when they take over a property from the owners in exchange for a pension – they buy such properties. But of course – nobody would do that!? It happens daily...

Only this is how a bank looks at it and valuation-wise it cannot be done otherwise, since the usufruct will have priority.
Sure, the family can always somehow agree, but that doesn’t interest banks – nor are they allowed to be interested. Do you still realize that you’re not a banker but a surveyor engineer ;). Stick to the things you really know about.

The problem is that surveyor engineers conduct valuations during their studies as well as in the two-year legal traineeship at the state, are tested on it, and this includes, among other things, the capitalization of usufruct rights.

So it is easy to turn the tables, because that is my area. The only question is how long it will take until that sinks in with you.

Best regards
Dirk Grafe

The OP is usufructuary.

Sorry Dirk, but I don’t see that here either.

1/6 of the entire is entirely mine without restrictions

The bank should be able to count on that.

1/3 belonged to my mother and was gifted half to me and half to my brother by gift. WITH lifelong usufruct for my mother. That means 1/3 of all income/ expenses belong to my mother or have to be borne by her.

1/3 belonged to my uncle and was gifted half to me and half to my brother by gift. WITH lifelong usufruct for my uncle. That means 1/3 of all income/ expenses belong to my uncle or have to be borne by him.

That might perhaps serve as collateral, since the value should be greater than the value of the usufruct, but the income belongs to the mother and the uncle. So this has no influence on the monthly income.

No, the income belongs to the TE for €15K, to the brother of the TE for €15K, and to the mother and uncle for €30K each.

However, understanding this will be difficult if one does not grasp or consistently ignores the construct of usufruct in connection with gift/anticipated inheritance. They have almost certainly transferred to the children in advance for tax reasons here (value of transfer > €400K!). It is legally required (I'm writing this for the third time!!!) that the remaining usufruct of the transferors must overall _not_ amount to 100%. Your argument is therefore ... as repeatedly described ... legally invalid.

In this construct, the children must receive at least a 10% usufruct share; otherwise, the tax office will not accept the deal.

Ergo, the children are both 50% owners and also usufructuaries, here with 1/6 corresponding to ~16.6%, which is over 10%.

But well, why bother arguing ... Of course, you are right and I have my peace. ;)

Best regards
Dirk Grafe