Inherited property – how does one dissolve a community of heirs?

‘Communities of heirs’ as defined under German law are formed when several beneficiaries come into their inheritance following the death of a friend or relative. However, this community is not intended to last forever. The aim is therefore to dissolve the community of heirs. What are the options for dissolution if the inheritance in question is a property? And what should communities of heirs be aware of in this regard?

There is more than one way to dissolve the community of heirs. The entire process can either be transacted amicably among the co-inheritors or contested in a legal dispute over the inheritance. It is always worth investigating the options for dealing with an inherited property.

What options do I have when it comes to the inherited property?

Firstly, all the co-inheritors should amicably decide on an estate agent to perform a valuation of the property. If the property is tenanted, it can be useful to have an investment broker assess whether there is any potential for achieving high returns.

Based on the valuation and assessment, the co-inheritors can then decide whether the property should be sold with the aim of achieving a high sale price, or whether it should instead be let. However, the property can also be retained for personal use. A professional estate agent will be able to assess which option is the most suitable in each instance.

Before the partition – have all the co-inheritors been located?

No partition can take place if the community of heirs is incomplete. This is because every co-inheritor can only dispose of their own portion of the inheritance. All the heirs must decide together what to do with the property as a whole.

To this end, all the co-inheritors must be located. This isn’t always easy, as distant relatives outside the immediate family may also be entitled to inherit. Anyone who isn’t certain that all the co-inheritors have been found can use the services of a probate researcher to search for additional co-inheritors.

When an executor has been appointed

If the testator appointed an executor in their will with the power of conducting the partition within the community of heirs, the community cannot be dissolved without the executor’s approval. The executor is also obligated to respect the wishes of the testator.

Dissolution of the community of heirs

It is always advisable to achieve the dissolution amicably. The inheritance can be partitioned on the basis of a contract. The co-inheritors record how the inheritance is to be partitioned in a so-called deed of partition. However, this contract can only be concluded when the full scope of the inheritance as well as any liabilities have been established. It is also essential that the deceased didn’t issue a prohibition against partition.

The community of heirs also has the option of agreeing on the communal sale of the inherited property. Here, a professional estate agent is the ideal person to consult.

If no amicable partition can be achieved, a co-inheritor can bring the dissolution of the community of heirs one step closer via a partition auction. This is because a complete partition cannot be achieved this way, as each heir can only dispose of their share of the inheritance. Yet this share can be sold to someone else. However, if the dissolution of the community of heirs cannot be achieved by this method either, the only remaining option is a partition suit.

Regardless of the arrangement reached within the community: when it comes to an inherited property, it is always advisable to retain the services of a property expert.

For more information:

https://www.ratgeber-erbengemeinschaft.de/erbrecht/testamentsvollstrecker/

https://de.wikipedia.org/wiki/Erbengemeinschaft

Note

In this text, the generic masculine is used for better readability. Feminine and other gender identities are explicitly included to the extent necessary for the statement.

Legal note: This article does not constitute tax or legal advice in individual cases. Please have the facts of your specific individual case clarified by a lawyer and/or tax advisor.