Temporarily lease land

For me, settlements via hereditary leasehold or similar are only conceivable if no disadvantage arises for me and the matter is legally absolutely airtight.

Even with hereditary leasehold, the bank pays attention to a sufficiently long remaining term. In other words, the bank will not accept a 4-year hereditary leasehold contract.

The fact is that banks cause a bit of an uproar when it comes to hereditary leasehold and they are supposed to finance the house. They are more reassured when it comes to official associations like the Klosterkammer or churches as lessors, because with them everything is well scrutinized and lawful regarding contracts and conditions, and has been played out over hundreds of years. Private hereditary leasehold contracts... well, then it has to be a well-prepared contract draft. Hereditary leasehold for only a few years? I bet my bottom dollar that in your situation no loan can be obtained.

I assume that there will be tax disadvantages for the owners if they sell now. Agree on a purchase price, then everyone can be satisfied.

We only finance leasehold rights if the loan is fully repaid 10 years before the end of the leasehold period - this is a legal requirement according to the [Erbbaurechtsgesetz]!!!
There are also issues such as "foreclosure-proof" or "standstill agreement," etc.
It's a complex topic, but with the short term, this option is excluded anyway :eek:

Which seller, without having sold the property, provides a complete stranger with his property as security.
The builder throws himself in front of the train, the property owner is stuck with the debt (although there is also a house, but he doesn’t want that)!?

Well, if a purchase contract has been concluded that regulates the transfer of the property, but the process - as I described - takes much longer for technical and bureaucratic reasons than your banker is willing to guarantee the interest rate, then such things just happen. It was/is unproblematic in both cases because all companies involved in these matters each have capital tied up in land worth several million euros. That the transfer of ownership happens 1-2 years later is of no interest - excuse me - to anyone, not even the bank financing it.

You are talking here about two commercial owners, I only see one owner, namely the property owner (who cannot/will not sell his property yet). Besides, this is not about a division …

The division was only mentioned as an example of why there might be reasons to build on someone else’s land. And I believe this happens more often than you can imagine. Ultimately, it is nothing other than the valuation/financing in case of partial ownership.

(a priority notice of conveyance can, for example, also be registered on a property area to be divided later, so it can take several years - this is quite normal).
Building on the property of parents or children is a completely different story, where a declaration of purpose for the land charge will also be unproblematic.

In the constellation mentioned by the OP, I guarantee you that no bank will finance a house on someone else’s land, since the seller (who isn’t even the seller yet) will never see any reason to be liable for the house builder.

Of course he does see a reason, otherwise one wouldn’t even consider the idea. Because the seller ultimately wants the buyer not to back out and look for another property because he doesn’t want to wait 4 years – ergo, the buyer says he is willing to build on someone else’s land and thus help the seller benefit from a tax advantage, on the condition that the seller provides the land as security.

If the seller does not or will not do this, the buyer simply backs out or the transfer of ownership takes place immediately to the seller’s tax disadvantage. Whether this risk pays off is of no concern to us at this point – it can be arranged that way. And there are of course banks that finance this accordingly.

I would – and this is now my very personal opinion – not readily accommodate the seller on the purchase price either. Why should I? He can or will only make the building plot available to me for the transfer of ownership in 4 years. This may also represent a disadvantage or risk for me that could ultimately entice me to look for another property. So I would probably only agree to such a constellation if the property had advantages I couldn’t find elsewhere.

Best regards
Dirk Grafe

Maybe it's simply the more feasible way to have the tax disadvantage of the spouses calculated and add the whole thing to the purchase price.

exactly, that is the easiest and most likely also the cheapest way! at least ask how many euros it's actually about. if in the end it's about €5000 and you spend several thousand euros on lease, 2x notary fees and/or such nonsense, better buy the property right away. maybe it's only about speculation tax or something similar. if they really want to get rid of their property, they'll sell it to you right away :)

Hmm ... 1x notary!? Purchase contract with transfer of rights and obligations as of 31.12.2020, buyer receives the right to build on the property until then, "lease" for the 4 years is credited against the purchase price, ergo no financial disadvantage for the buyer today?

Best regards
Dirk Grafe

Well, if a purchase contract has been concluded that regulates the transfer of the property, but the process simply - as I described - takes much longer for technical and bureaucratic reasons than your banker is willing to grant interest rate guarantees, then such things happen. This was/ is unproblematic in both cases because all companies involved in these matters each have equity in land worth several million euros. That the transfer of ownership then takes place 1-2 years later simply doesn’t matter – excuse me – to anyone, not even to the bank that finances it.

Problem: The sale cannot take place now – says the OP. This makes your argument invalid. With a concluded purchase agreement and registered land charge, no bank has problems if the transfer of ownership only takes place much later – you are absolutely right about that, and this is common practice.

The subdivision was only mentioned as an example of why there may be reasons to build on someone else’s land. And I believe this happens more often than you can imagine

No, that does not happen often. I estimate that in my life I have seen thousands of financings with a financing volume of up to EUR 250 million (at various banks). Building on someone else’s property (without a purchase agreement for it) I have seen only once.

Of course he sees a reason, otherwise one would not even have to consider the idea.

No, he does not, since there is no purchase agreement – see above. Thus, there is no financing.