The land register and its encumbrances

Anyone who owns a property must be registered in the land register. Especially when selling inherited properties, for example, a lack of awareness of existing entries can lead to price reductions or, in the worst case, prevent the sale altogether. But property buyers also need to know whether they will receive the full rights of an owner after the purchase. If other parties' rights are registered, the seller cannot freely decide what happens to their property.

The land register records the ownership of properties. The purpose of this public register is to document the rights and encumbrances on a property. These rights include, for example, the right of first refusal and the right of usufruct.

The right of first refusal

Simply put, a right of first refusal allows a third party to jump the queue when buying a property. This right can be exercised by municipalities, co-heirs, or tenants, among others. If such a right of first refusal is registered in the land register, the buyer may, under certain circumstances, end up without their long-desired dream property, even after signing a purchase agreement.

usufruct right

Many owners wish to continue living in their property after selling it and therefore establish a lifelong right of residence or a usufruct. Since the usufruct includes not only lifelong occupancy but also the right to benefit from the property for life, it gives them the option of renting out the house in case they require care and thus financing the costs of a nursing home. Unlike a lifelong right of residence, with a usufruct the seller is also responsible for the upkeep of the property. Both the usufruct and the lifelong right of residence are recorded not in the purchase agreement but in the land register.

The right of recovery

In addition to the right of residence, there is also the option of registering a right of reversion. Since the new buyer usually finances the property with a loan, the bank's lien takes precedence over the right of residence. This means that the right of residence would become invalid if the new owner were to become insolvent and a foreclosure auction were to take place. By registering the right of reversion, the property can be transferred back to its previous owner.

Are you considering selling your property but would like to continue living there? Contact us! We would be happy to advise you on your options.

Legal notice: This article does not constitute tax or legal advice for any specific case. Please consult a lawyer and/or tax advisor to clarify the facts of your individual situation.

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