A community of heirs is often connected with disagreements or even disputes among the co-heirs. To get around this, many heirs want to sell their inheritance and thus leave the community of heirs. Whether that is at all possible, which conditions are to be considered thereby and much further information to the topic receive you in this contribution.
- Is it allowed to sell an inheritance?
- When is a sale of inheritance sensible?
- To whom can I sell my inheritance?
- Requirements to sell the inheritance in case of community of heirs
- Rights& Duties
- Form& Contents of an inheritance sale contract
- Procedure of an inheritance sale
- Special cases
- taxes – are they sold with the inheritance?
- Alternatives to the sale of inheritance shares
- Summary: Advantages and disadvantages of an inheritance sale
- Tip: free initial assessment in inheritance law
1. Is it allowed to sell an inheritance?
If a testator appoints several heirs in a will or inheritance contract, they form a community of heirs. If one of the co-heirs does not want to be part of this community of heirs and wants to leave it, he can sell his inheritance share. With a notarized contract of sale, the heir can transfer his legal or testamentary share of the inheritance, as well as related rights and obligations, to a buyer.
A sale is thereby at any time and without the consent of the co-heirs possible. However, the heir should be aware that if the inheritance is sold, he loses all claims to the inheritance and cannot assert them afterwards.
The sale of inheritance shares should not be confused with the sale of individual items from the estate. Since the entire estate belongs to the co-heirs jointly and no co-heir may dispose of individual items alone, no individual items from the estate can be sold.
An advocado partner attorney will explain to you in a free initial assessment how to proceed.
2. When is a sale of inheritance shares sensible?
Sole inheritance
If sole heirs do not wish to accept their inheritance, they can either sell their inheritance or disclaim it. In contrast to a disclaimer, a sale has the advantage that the heir no longer has anything to do with the estate and the associated obligations, but can still make a profit from the inheritance. Since the sole heir has no co-heirs and thus has sole control over the entire estate, he or she can also decide independently whether to sell or disclaim his or her inheritance – he or she can either sell the entire inheritance or only parts of it.
You can find out what a sole heir is and what rights and obligations he or she has in our article "Sole heir".
Community of heirs
In a community of heirs, disagreements about the distribution of the inheritance often arise between the co-heirs. In this case, too, it can make sense for a co-heir to sell his or her share of the inheritance – in this way, he or she can leave the community of heirs and still benefit from his or her share of the inheritance. The consent of the co-heirs is not necessary, so that the heir can decide independently about the sale of his inheritance. There are exceptions for land and real estate owned by a community of heirs – we go into more detail below.
You can find more detailed information on this topic in our article Inheritance community.
Selling compulsory portion claims
If a close relative was disinherited by a testator, he or she is still entitled to a compulsory portion of the inheritance. These can also be sold in accordance with § 2317 para. 2 BGB can be freely transferred to third parties. As with the sale of inheritance shares, all rights and obligations are then transferred to the purchaser of the compulsory share.
If you would like more important information on the compulsory portion, read our article Compulsory portion.
3. To whom can I sell my inheritance?
In principle, an heir can sell his or her inheritance to any person – this can be either the co-heirs, third parties or banks, for example. Sometimes the co-heirs buy out the inheritance share and thus prevent a third party and possibly a stranger from entering the community of heirs and having a say in the distribution of the estate.
4. Conditions for selling the inheritance share in the case of joint heirs
In order for an heir to be able to sell his or her inheritance share in the case of a community of heirs, some requirements must be met:
- There is a community of heirs,
- the heirs have been determined,
- a certificate of inheritance has been issued and
- all assets, liabilities and debts arising from the inheritance are known.
If the aforementioned conditions are met, co-heirs can therefore start looking for a suitable buyer and sell their inheritance share – together with all inheritance law obligations.
5. Rights& Duties
If a co-heir wishes to sell his or her inheritance share, his or her rights arising from the inheritance will also be& Transfer duties. The following sections explain the rights of the seller, the buyer and the co-heirs.
Rights& Duties of co-heirs
In order for a co-heir to be able to sell his or her share of the inheritance, the consent of the co-heirs is generally not necessary. Nevertheless, the co-heirs have certain rights if a member of the community of heirs wishes to sell his or her inheritance share.
Informing the co-heirs
Since a third party could enter the community of heirs in the case of a sale of an inheritance share and the community of heirs is therefore directly affected by the sale, according to § 469 para. 1 BGB a duty of notification to the co-heirs. This means that the heir who wants to sell his part of the inheritance must inform his co-heirs about it.
Sometimes the notary takes over this duty of information after the conclusion of the purchase contract – otherwise the co-heir himself is obliged to contact the other co-heirs.
Pre-emptive right of the co-heirs
As soon as the co-heirs have been informed that a share of the inheritance is to be sold, they can exercise a right of first refusal. This means that the co-heirs can buy the inheritance jointly before all third persons – i.e. they have a right of first refusal over persons who are not members of the community of heirs. The purchased inheritance then becomes a part of the estate again, which is entitled to the community of heirs.
Since the purchase contract with an interested third person often already exists when the co-heirs are informed, they can only buy the inheritance if they agree to the existing purchase contract. In this case, they must comply with all the regulations and obligations already stipulated in the contract.
Normally, a community of heirs buys an inherited share with the agreement of all co-heirs – however, if all but one of the co-heirs waive their right of first refusal, this co-heir can also buy the inherited share on his own.
Deadlines
If a co-heir wants to sell his inheritance and the community of heirs is interested in a purchase, the community of heirs should not wait too long before making a purchase. The right of first refusal can be exercised in accordance with § 469 Para. 2 BGB can be claimed in the case of real estate up to two months after knowledge of the sale – in the case of other objects only up to one week thereafter. If the seller specifies other deadlines for a right of first refusal in the purchase contract, however, these deadlines apply instead of the legally specified deadlines.
Preventing the right of first refusal
If you want to prevent the right of first refusal of a co-heir, you can also give away your inheritance share instead of selling it. Although the right of pre-emption by co-heirs is forfeited in the event of a gift, you cannot – in contrast to the sale of inherited property – derive any financial benefit from your inherited property.
Rights& Duties of the seller
If heirs want to sell their inheritance, they must act themselves. First, they can find a suitable buyer and negotiate a purchase agreement with him/her. The purchase agreement must then be notarized by a notary public – only then can all rights and obligations under inheritance law be transferred to the buyer. Since the co-heirs have a right of first refusal, however, the selling heir must first wait for the deadlines for the right of first refusal before the purchase agreement with a third person becomes legally valid.
rights& Duties from the acquirer
A purchaser of inheritance shares takes over all rights and obligations from the selling co-heir. This means that the buyer joins the community of heirs and must pay for estate liabilities or legal fees, for example, and receives the seller’s inheritance rights in return. In addition, the acquirer must comply with the contract of sale to which he has consented.
6. Form& Contents of an inheritance share sale contract
If a part of the inheritance is sold, a contract of sale must be drawn up – as is usual for contracts, this must comply with various formal and content requirements. It is important that both parties to the contract agree to the content of the provisions, sign the contract and obtain a notarial certificate.
Important contents
In order to avoid misunderstandings between the contracting parties and to ensure that the contract is complete, the most detailed provisions possible can be determined regarding the sale. The following questions can be clarified in the contract in any case:
- Who are the contracting parties?
- Who is the testator?
- Who is seller, who is buyer?
- What is the object of sale/what is to be sold?
- Who bears any costs incurred?
- Who is liable for inherited burdens arising from the inheritance?
- What does the buyer have to pay to the seller in return for the inheritance share?
- What period should apply to a right of first refusal?
Since contracts always have to be individually adapted to each case, it can make sense to hire a lawyer to draw up the contract. The co-heir is responsible for ensuring that the contract is drawn up correctly and worded appropriately, and that it contains all the important provisions.
An advocado partner lawyer will explain the further procedure to you in a free initial assessment.
Notarization is mandatory?
A sales contract is only legally valid if it has been notarized by a notary public – a verbal or written agreement between the co-heir and the buyer is therefore not sufficient on its own. A notarization also verifies that the contract complies with all the necessary content and form requirements and is therefore legally valid.
7. Procedure of an inheritance sale
As described above, heirs who wish to sell their inheritance must find a buyer themselves. If you have found an interested party for the inheritance, a notarized contract of sale must be concluded. For this purpose, all regulations can first be negotiated with the buyer and a notarization can be obtained from a notary for the already completed contract.
After the conclusion of the sales contract, the community of heirs must be notified that a co-heir wishes to sell his or her share of the estate. They can then assert their right of first refusal. If you do this, you agree to the sale contract and the third party has no claim whatsoever. Only if the co-heirs are not interested in a preemption and let the set deadline pass, the inheritance share will be transferred to the third person.
Several months often pass between the start of negotiations and the receipt of payments – this means that an heir who wishes to sell his or her inheritance share can be faced with ca. You must allow four months for the contract to be concluded.
8. Special cases
Real estate& Selling real estate
The sale of land and real estate is difficult in most cases. Because only if a property is entirely in the possession of a single co-heir, he may freely decide on the sale. However, since communities of heirs dispose of the inheritance jointly, no single item from the estate belongs to any co-heir – real estate and land can therefore only be sold with the consent of all co-heirs.
Because the goal of an heir who wants to sell his or her inheritance is usually to leave the community of heirs – in order to z. B. To avoid division disputes, the sale of real estate is not an option, as it is only possible once the inheritance has been divided.
The situation is different if the estate has already been divided on the basis of a partition plan. If a co-heir receives an entire property or a plot of land, he or she can dispose of it freely and sell it independently.
So if you are part of a community of heirs and want to sell your share in a property, but the co-heirs do not agree, you can file a partition action – also called an action for the settlement of the inheritance. This will force the community of heirs to disagree and you can then sell your share of the property.
You can find out exactly how an action for partition works and what you need to bear in mind in our detailed article on the action for partition.
Selling an inheritance to a bank
Another way heirs can sell their share of the inheritance is to sell it to a bank. Just as in the case of a sale to co-heirs or third parties, the bank assumes all the rights and obligations of the co-heir under inheritance law in the case of a sale.
Especially if the seller’s inheritance might include rare or valuable real estate, banks are often interested in buying inherited shares.
9. Taxes – are they sold with the inheritance share?
As with all rights and obligations, tax obligations are also transferred to the buyer when a co-heir wishes to sell his or her share of the inheritance. This means that the selling co-heir is exempt from all inheritance tax obligations and these are transferred to the buyer.
You can read more about the tax burdens in the case of a community of heirs in our article "Erbauseinandersetzung".
10. Alternatives to the sale of inheritance shares
If a co-heir no longer wishes to deal with the community of heirs, he or she has other options besides selling his or her inheritance shares as to how to leave the community of heirs.
Distribution of inheritance
With an inheritance settlement, the estate is divided among the heirs of a community of heirs. As soon as a co-heir arranges for the inheritance to be divided, the members of the community of heirs must agree on who should receive what part of the estate and transfer the individual estate items to the new owners. In this way, the co-heirs receive their legally entitled share of the inheritance, but must also come to terms with the other co-heirs and reach an agreement.
You can find out exactly how an inheritance settlement takes place, what rights heirs have in the event of a settlement, and other important information on the subject in our article on inheritance settlements.
Partition auction
If, for example, real estate or land is part of the estate, a partition auction can be advantageous. In this case, one item from the inheritance is auctioned off and the proceeds go to the community of heirs – thus all heirs benefit from the auction and the community of heirs is dissolved. For a co-heir to withdraw from a community of heirs prematurely, however, a partition auction is not suitable.
When a partition auction takes place, how to apply for a partition auction and further information can be found in our article Partition auction.
Give away the inheritance instead of selling it
As already mentioned, an heir can also give away his or her inheritance share as an alternative to the sale of the inheritance share. However, he should consider this carefully, because in the case of a gift, the heir does not receive any financial compensation and likewise loses all claims under inheritance law.
It is advantageous to give away the inheritance if the heir wants to prevent the right of first refusal of his co-heirs – because according to § 2034 BGB this only exists in the case of a sale and not in the case of a gift. Thus, in the case of a gift, co-heirs cannot protect themselves against a third party entering the community of heirs and receiving the inheritance share of the person making the gift.
11. Summary: Advantages and disadvantages of selling inheritance shares
If an heir wants to sell his part of the inheritance, this can have advantages and disadvantages for him, the buyer and the co-heirs of the community of heirs. Here is a summary of all the advantages and disadvantages:
Advantages
✓ The seller leaves the community of heirs and therefore does not have to deal with the division of the inheritance,
✓ the seller can profit from the inheritance despite leaving the community of heirs,
✓ the consent of the co-heirs is not required,
✓ financial benefits occur more quickly than in the case of inheritance settlement,
✓ Disputes can be bypassed,
✓ Partition auctions can be circumvented and
✓ the co-heirs have a right of first refusal and can prevent a third person from becoming a member of the community of heirs.
Disadvantages
X The heir who sells does not comply with the will of the testator,
X the period for the right of first refusal is very short,
X strangers can become members of the community of heirs and
X in order to prevent a third person from becoming involved, many heirs buy out the inheritance and get into debt in the process.
12. Tip: free initial assessment in inheritance law
Do you want to withdraw from a community of heirs but still benefit from your inheritance?? Or a co-heir wants to sell his inheritance and you do not know how to act? An estate lawyer will help you sort out any questions you have about selling your inheritance and show you your possible courses of action.
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An advocado partner lawyer will explain the possible course of action in a free initial assessment.