GbR register for real estate transactions from January 2024

From January 1, 2024, important changes related to the civil law partnership (GbR) and the acquisition of real estate will take effect. These changes concern the GbR register, the required actions for real estate transactions involving GbRs, and the tax implications. The background to this change is the fact that individuals acquiring real estate can choose between two forms of ownership: fractional ownership and the civil law partnership.

Over time, case law has recognized the legal capacity of GbRs; however, this recognition has not been sufficiently anchored in law. To close this gap, the Law on the Modernization of Partnership Law (MoPeG) will come into force on January 1, 2024. This law not only incorporates the legal capacity of GbRs recognized by case law into legislation but also introduces a partnership register comparable to the commercial register. This register enables the secure verification of a GbR’s existence as well as its representation and liability relationships. As a result, registered GbRs must operate in legal transactions as a "registered civil law partnership" or "eGbR." This registration provides a form of good faith protection, meaning that third parties can rely on the information recorded in the partnership register.

The concept of the GbR provides that a GbR (also referred to as an "external GbR") is a partnership with its own legal personality and can therefore act as the owner of real estate. The partners of a GbR are not direct property owners; instead, they hold partnership shares. GbR law is regulated in the Civil Code and has been adapted and updated by MoPeG. The formation of a GbR occurs through a partnership agreement, which in some cases must be notarized. Changes in the composition of the partners of a registered GbR must be reported for entry in the partnership register via a notarized registration.

From January 1, 2024, GbRs can be registered in the newly introduced partnership register. This register functions similarly to the commercial register and contains information about the GbR and its partners. Unlike previous practice, only the GbR itself will be recorded as the owner of the property in the land register, while the names of the individual partners will no longer be visible.

MoPeG also affects the real estate transfer tax treatment of GbRs. Due to the changes, certain tax exemptions for GbRs may no longer apply. For tax-related questions, consulting a tax advisor is recommended.

The eGbR is considered a registered partnership under the Money Laundering Act and is therefore required to register its beneficial owners in the transparency register.

Action is required, especially for real estate transactions involving a GbR from January 1, 2024. In such cases, the GbR must first be registered in the partnership register in order to make the necessary entries in the land register. Registration in the partnership register is also required for GbRs holding real estate that wish to encumber their property or otherwise exercise rights related to the property.

We recommend that all clients with property-holding GbRs review their situation in light of MoPeG to determine if action is needed. Even without concrete plans to sell or encumber property, proactive registration in the partnership register and correction of the land register can be advisable to be prepared and to avoid delays in property transactions. Anyone who anticipates selling or encumbering property through their GbR should take action without delay. It is important to note that brokers and financing intermediaries should clarify ownership early through land register inspection, particularly in northern Germany, where property ownership via GbRs is widespread and not always apparent to all parties involved. In many cases, registration in the partnership register will therefore be required first.