When several people inherit a house together, a community of heirs (Erbengemeinschaft) arises automatically – and with it a forced community for a limited time. No one owns the house alone, everyone owns it together, and hardly any decision can be made single-handedly. This often leads to uncertainty: Who is allowed to do what? How is the inherited house divided when some want to sell and others want to keep it? And how can you prevent a partition auction (Teilungsversteigerung) from destroying its value in the end? This guide explains, in clear terms, how a community of heirs works, which routes to division exist and how to avoid conflict – with a focus on the Düsseldorf and North Rhine-Westphalia market.
What a community of heirs is – and why no one decides alone
If a deceased person leaves several heirs, the estate automatically becomes the joint property of all heirs under Section 2032 of the German Civil Code (BGB). What forms is known as a community of heirs (Erbengemeinschaft). No single co-heir owns any specific item – the house, the car or a bank account, for example. Instead, all co-heirs jointly own the entire estate; this is referred to as a joint ownership in undivided shares (Gesamthandsgemeinschaft). Each co-heir holds only a notional share in the whole, corresponding to their inheritance quota – not "their room" or "their third of the property".
The consequence: the inherited house can only be disposed of jointly under Section 2040 BGB. A single heir can neither sell it alone nor encumber it alone with a land charge. This is precisely what makes a community of heirs cumbersome – and at the same time it is its protective mechanism, because no one can create facts over the heads of the others. From the outset, a community of heirs is legally designed to be dissolved: sooner or later it is meant to be settled, that is, partitioned (Erbauseinandersetzung) among the heirs.
Administering the house together: majority, unanimity and emergencies
As long as the community of heirs exists, the co-heirs must administer the inherited house jointly (Section 2038 BGB). Which majority is required depends on the type of decision:
- Proper administration – a majority suffices: For ongoing, customary measures, a majority resolution is enough, determined not by headcount but by inheritance quotas (Section 2038 paragraph 2 in conjunction with Section 745 BGB). This includes, for instance, customary repairs, taking out building insurance or ordinary letting.
- Material changes – unanimity required: Measures that fundamentally alter the character of the estate require the consent of all co-heirs. The sale of the house falls into this category.
- Emergency measures – anyone may act: If urgent damage is imminent, any co-heir may, acting alone, arrange what is necessary for preservation – for example after a burst water pipe (Section 2038 paragraph 1 sentence 2 BGB).
In practice, it is often the ongoing costs – property tax, insurance, maintenance – that cause tension. These burdens are borne by the co-heirs in proportion to their quota. A co-heir who uses the inherited house themselves without compensating the others may be obliged to pay a use compensation to the remaining co-heirs.
Selling the house: only jointly – the biggest hurdle
The most common wish within a community of heirs is to sell the house and divide the proceeds. This is usually the economically best route – but it comes with one clear condition. Because the sale is a disposal of an individual estate item, all co-heirs must consent to it under Section 2040 BGB. A unanimous resolution is mandatory here; a mere majority is not enough.
If everyone agrees, the process is straightforward: the community of heirs acts jointly as the seller, the purchase agreement is notarised, and the sale proceeds are distributed according to the inheritance quotas after deduction of any debts. This open-market sale generally achieves the best price – considerably better than any auction. The prerequisite is that the heirs are registered as owners in the land register, or that the correction of the land register has been initiated; for this you usually need a certificate of inheritance (Erbschein) or a notarial will with an opening record.
The greatest challenge is therefore rarely the sale itself, but rather reaching agreement on it: on whether to sell, on the timing and, above all, on the price. This is precisely where a neutral, market-based value of the property is often the key to breaking out of deadlocked discussions.
Paying out a co-heir or taking over the house
Not everyone always wants to sell. Frequently one co-heir wishes to keep the inherited house – to move in themselves, for example – while the others want to turn their share into cash. There are established routes for this:
- Taking over an inheritance share: Each co-heir may sell or transfer their entire share in the estate under Section 2033 BGB. This is done by notarial deed. In this way, one heir can gradually buy up the shares of the others and ultimately become the sole owner.
- Partition agreement: The heirs agree that one of them receives the house and the others receive a cash settlement. Here too, because real property is involved, notarial form is required.
- Withdrawal (Abschichtung): A co-heir leaves the community in return for a settlement; the shares of those remaining increase accordingly.
The size of the payout depends on the market value of the house – less existing encumbrances – and on the inheritance quota of the departing heir. So that no one feels short-changed, an objective, comprehensible valuation is essential. An overestimated value makes the takeover unaffordable; an underestimated one disadvantages those leaving.
Selling an inheritance share to third parties – and the co-heirs' right of first refusal
If a co-heir does not want to wait until everyone agrees, they may in principle also sell their inheritance share to an outsider (Section 2033 BGB). Specialised buyers of inheritance shares advertise this. Economically, however, it is rarely attractive: such shares are usually acquired only at a substantial discount, because the buyer takes on a difficult position within a stranger's community of heirs.
In addition, the law protects the remaining co-heirs: if an heir sells their share to a third party, the others have a statutory right of first refusal under Section 2034 BGB. They can therefore step in themselves on the same terms and thus prevent a stranger from entering the community. The period for exercising this right is two months from notification of the contract's content. In practice, the sale to third parties is therefore more of a lever for pressure than a genuinely worthwhile route – an amicable sale of the entire house almost always yields more for everyone involved.
Estate partition and the partition auction as a last resort
Under Section 2042 BGB, any co-heir may demand partition at any time – that is, the final division and dissolution of the community of heirs. No one has to remain in the community permanently. Before distribution, the liabilities of the estate must first be settled (Section 2046 BGB); the remainder is divided according to the inheritance quotas.
A house, however, cannot be physically divided without destroying its value (Section 752 BGB). If no agreement can be reached, the law therefore provides for a sale (Section 753 BGB) – in the case of real property, in the form of the partition auction (Teilungsversteigerung) under Sections 180 et seq. of the Compulsory Auction Act (ZVG). For this, the application of a single co-heir suffices; the consent of the others is not required. The inherited house is then auctioned by the court and the proceeds are distributed.
The partition auction should truly be the last resort. At auctions the number of bidders is often small, and the award may be made at a price well below the market value. Added to this are procedural costs and a considerable amount of time. In the end, all co-heirs frequently lose out – the proceeds achieved are regularly lower than in an open-market sale. Anyone who considers how much is at stake here has a strong reason to pursue a joint sale after all.
Taxes, avoiding disputes – and how we support communities of heirs
When selling an inherited house, the speculation tax plays an important role (Section 23 EStG). The decisive factor is the ten-year period between acquisition and sale. In the case of an inheritance, the step-into-the-shoes principle (Fußstapfentheorie) applies: what matters is not the inheritance event, but the point at which the deceased person purchased the property. If that purchase was more than ten years ago, the sale gain is generally tax-free. The sale is also tax-free if the property was used for the owner's own residential purposes in the year of sale and the two preceding years. This must be distinguished from inheritance tax with its allowances (spouses 500,000 euros, children 400,000 euros, grandchildren usually 200,000 euros) and the exemption for the owner-occupied family home. The binding assessment of your case belongs in the hands of your own tax adviser.
Disputes within communities of heirs rarely arise from ill will, but almost always from differing notions of value and of how to proceed. Anyone who relies early on a factual basis prevents many conflicts: a joint plan set down in writing, transparent allocation of costs – and, above all, a neutral, market-appropriate valuation of the property that everyone can trust.
This is precisely where we come in. As an arm of Wolfgang Richter GmbH, we have been supporting owners and heirs in the Düsseldorf and North Rhine-Westphalia market for more than six decades. Over the years, a grown network of more than 20,000 contacts has developed, which helps us to assess the value of a house realistically and – where a sale is desired – to bring owners and suitable buyers together discreetly. For a community of heirs, we are the neutral, professional partner who provides a sound property valuation and handles an open-market sale in a way that remains fair and comprehensible for all co-heirs. Legal questions you clarify with your lawyer or notary – the property and its value we take care of.
