Right of residence

What is a right of residence?

A right of residence is a legal concept that allows a person to live in a specific property without being the owner. It is often agreed in the context of inheritances or tenancies to ensure that a specific group of people can continue to live in a house or flat. A right of residence may be for a fixed term or indefinite and is often set out in a contract drawn up by a notary.

Types of right of residence

There are various types of right of residence, which can be structured differently depending on the situation and requirements:

• Lifetime right of residence: This right allows the person concerned to live in the property until the end of their life.
• Perpetual right of residence: This is a right of residence granted for an indefinite period, without a predetermined duration.
• Fixed-term right of residence: In this variant, the right of residence is granted for a specific period, e.g. for a number of years.

Legal basis of the right of residence

The right of residence is governed by the German Civil Code (BGB) and is subject to certain legal provisions. It must be clearly defined who has the rights of use, which rooms may be used and whether costs for maintenance or running the property are to be borne. A right of residence may also take the form of a tenancy agreement, in which case additional provisions under tenancy law must be observed.

Advantages of a right of residence

The right of residence offers a number of advantages to both the owner and the beneficiary:

• Security: The beneficiary has a secure living situation, particularly in the event of inheritance.
• Tax benefits: Under certain circumstances, the property may be eligible for tax relief.
• Flexible arrangements: Individual agreements can be made to suit the holder’s personal circumstances.

What should you bear in mind?

When agreeing a right of residence, a number of points should be borne in mind:

• A clear definition of the rights of use.
• Ensuring that the right of residence is entered in the land register to legally secure the rights.
• Taking into account the running costs and obligations that may arise under the right of residence.

A clear example of the topic: right of residence

Imagine that Mr Müller inherits his parents’ house. However, his elderly uncle, Mr Schmidt, has been living in a flat on the ground floor of the house for many years. As Mr Schmidt does not wish to move out overnight and has no other accommodation, Mr Müller decides to grant him a life-long right of residence. A contract, which is notarised, stipulates that Mr Schmidt may continue to live in the flat without having to pay rent, but remains responsible for the service charges.

This arrangement gives Mr Schmidt the security of being able to continue living in his familiar surroundings, whilst Mr Müller, as the new owner, retains control over the property. This illustrates how significant a right of residence can be for both the owner and the beneficiary.

Conclusion

The right of residence is an important element of property law that provides personal and financial security for those involved. It is crucial to understand the individual circumstances and the legal framework in order to successfully structure the right of residence. A well-drafted contract provides planning certainty for all parties involved and protects against future disputes.