When a Community of Heirs Inherits Real Property

Owning Real Estate as a Community of Heirs: What Does That Mean?

If several people jointly inherit a property, they automatically form a community of heirs. The property then becomes the joint property of all the people who receive the inheritance in accordance with the provisions of inheritance law or a will.

The property therefore belongs jointly to all the heirs. Individual members of the community of heirs cannot, therefore, dispose of the property or their share of it on their own. Important decisions must be made jointly and unanimously by all members of the community of heirs.

Tip: A current and independent real estate appraisal helps provide a realistic estimate of the property’s market value. This creates a solid basis for decision-making for the community of heirs.

What obligations does a community of heirs assume?

According to Art. 602 of the Swiss Civil Code (ZGB), all obligations associated with the property are also transferred to the heirs along with the inheritance. They must therefore jointly cover the ongoing expenses, such as:

• Mortgage Interest Rates

• Maintenance

• Insurance

• Administration

• necessary repairs

• major renovations

• Utility Costs

The costs are generally divided according to the shares of the estate, unless otherwise agreed. In addition, pursuant to Art. 603 of the Swiss Civil Code (ZGB), joint and several liability applies: All members of the community of heirs are jointly and severally liable, without limitation, with their personal assets for the mortgage debts. If an heir fails to pay their own share, creditors may therefore demand outstanding amounts from the other members of the community of heirs.

What happens if the community of heirs cannot reach an agreement?

Since important decisions must generally be made unanimously, even a single dissenting vote from one heir can block a sale or other plans.

This makes it all the more important to avoid such conflicts. In many cases, disagreements stem from differing visions for the property’s future. This is especially true when the inherited property is the family home. In such cases, personal memories and emotional ties play an important role alongside financial interests.

It is therefore worthwhile for all parties involved to discuss their wishes and expectations early on. A will or inheritance agreement, the early involvement of an executor, professional advice, and complete documentation of the property can also help avoid ambiguities.

Resolving Conflicts Within a Community of Heirs

If disagreements arise within the community of heirs, there are various ways to reach an agreement:

1. Disclose interests: All parties involved should sit down together and openly discuss their wishes and needs. Does anyone want to live in the family home themselves, and can that person buy out the other heirs? Does anyone depend on the cash proceeds from the sale? Or is there a strong emotional attachment to the property? This often makes it possible to find a mutual solution.

2. Determine the objective value of the property: Differences in asking prices are a common source of dispute. Unrealistic price expectations can quickly arise, especially when there is a strong emotional attachment to the property. At the same time, factors such as the property’s development potential are often underestimated—particularly in the case of older single-family homes, where the property’s potential can be a decisive factor.

An independent real estate appraisal provides a transparent and objective basis for decision-making.

3. Seek neutral mediation: If positions have hardened, mediation or neutral expert advice can help clarify differing interests and work out a mutually agreeable solution. Another option is to initiate an official conciliation proceeding with the appropriate conciliation authority.

4. Enforcing the Legal Division of the Estate: If mediation has also failed to reach an agreement, an heir may request a judicial division of the estate. However, such a legal dispute can be lengthy and costly. Furthermore, there is no guarantee that the wishes of the individual heirs will be upheld—for example, if the court orders a public forced sale of the property.

Sale, rental, or assumption of ownership of the property: these are the options available to communities of heirs

In general, communities of heirs have three options for dealing with the property—provided they can reach an agreement.

• You can sell the property and divide the proceeds from the sale—minus the costs of the sale—according to each heir's share of the estate.

• You can keep the property as joint owners and rent it out.

• One heir takes ownership of the property and pays out the other heirs.

Every solution has its own advantages and challenges. Which one makes sense in a particular case depends heavily on the individual situation.

5 Tips for Communities of Heirs Who Inherit Real Estate

• Talk to each other early on: Determine as early as possible what the individual heirs’ interests are. Also discuss what options are available for the property’s future and what conditions must be met for those options to be viable.

• Consider emotional factors: Emotions often come into play, especially when it comes to the family home. It can be helpful to discuss emotional desires and financial interests separately.

• Seek legal advice early on: In complex inheritance situations or when you have questions about the distribution of an estate, you should seek legal advice. This will ensure transparency for everyone involved.

• Gather all documents: Keep important documents related to the property in one central location where all heirs can access them. Documents that are essential for a thorough appraisal and the subsequent sale process are often missing. These include, among other things, current land registry extracts, floor plans, living area specifications, building specifications, and documents regarding previous renovations and investments.

• Seek neutral support: If you find yourselves in a deadlock, bring in an independent professional—such as a real estate agent or mediator—early on to help you reach a mutually agreeable solution.

Conclusion: A joint solution requires a solid foundation

An inherited property belongs jointly to the community of heirs—individual heirs generally cannot dispose of the property on their own. The greater the transparency regarding personal interests and wishes, as well as regarding financing, costs, and the property’s value, the easier it is, as a rule, to find a solution that is acceptable to all parties involved.