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What exactly is a ‘life lease’?

Last updated: 15. June 2020 | Reading time: 1 minute

The ‘hereditary lease’ is now prohibited by law in Germany. In everyday language, however, the ‘right of hereditary leasehold’ is often referred to as a ‘hereditary lease’. A “hereditary building right” is a right equivalent to a property right, which is recorded in a separate “hereditary building rights register”.

A plot of land may be leased as a ‘hereditary building right’ for a fixed period (usually 99 years) in return for a monthly ground rent. Ownership of the plot remains with the grantor of the leasehold right during this period. During the term of the contract, the leaseholder generally has the right to develop the plot. The leasehold right may be sold by the leaseholder during the term of the contract.

At the end of the leasehold agreement, the land reverts to the grantor. In the case of residential building plots, at least two-thirds of the real value of the buildings (often referred to as the market value) is paid to the leaseholder as compensation.

Maximilian Riedel

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