Managing inherited property: rental management for a community of heirs (Erbengemeinschaft)

The basic problem: joint owners, separate opinions

A community of heirs (Erbengemeinschaft) is designed to be wound up, not to last. Until the estate is divided, the property belongs to all heirs jointly — no one owns a particular room or a particular flat alone. Until then:

• The tenancy continues. The landlord's death does not end it; the heirs step into the landlord's position (§ 1922 BGB).
• Rental income goes into the estate, not into the co-heirs' private accounts.
• The estate bears charges and costs. Towards creditors, the co-heirs are in principle jointly and severally liable for the estate's debts (§ 2058 BGB) — each for the full amount, with the option of limiting liability to the estate.

In practice, disputes almost always arise at the same three points: Who collects the money? Who decides on repairs? When is money paid out?

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Who may decide what?

Type of measure	Examples	Required
Necessary maintenance	Burst pipe, heating failure in winter, storm damage to the roof	any co-heir alone (§ 2038(1) sentence 2 BGB)
Proper management	Collecting rent, service charge statement, re-letting, appointing a property manager, rent increase	majority by inheritance shares
Extraordinary management and dispositions	Sale, conversion works, conversion into condominium ownership, encumbering with a land charge	all co-heirs (§ 2040 BGB)

"Majority by inheritance shares" means by the value of the shares, not by heads (§ 745(1) BGB). Three co-heirs with one sixth each cannot outvote one co-heir holding half.

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The first six months after the death

This section summarises what needs to be done in a community of heirs immediately after the death. The full overview of deadlines — disclaiming the inheritance, the special right to terminate a lease, notifying the tax office — and a checklist for securing the property are under Inherited property: what to do in the first weeks.

1. Obtain proof of inheritance. A certificate of inheritance (Erbschein) or a notarised will with the record of its opening. Without this proof, no bank grants account access and no land registry updates the register.

2. Update the land register (Grundbuch). If the application reaches the land registry within two years of the death, the update is free of charge. After that, fees apply. This deadline is often overlooked and costs money unnecessarily.

3. Inform the tenants. Tenants need to know where to pay and whom to contact. A joint letter from all co-heirs or from the appointed manager prevents rent from going to a frozen account.

4. Set up an estate account. All rental income and costs go through one account. No co-heir collects rent into a private account — that is the quickest route into a years-long dispute.

5. Check insurance. Buildings insurance, liability insurance and, where there is an oil tank, water pollution liability. Keep paying the premiums; a cancelled buildings policy is hard to replace for older buildings.

6. Clarify tax obligations. Inheritance tax, ongoing rental income, and a separate joint tax assessment where there are several parties. That belongs with the tax adviser, not the property manager — but the manager supplies the figures.

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What rental management actually does in this situation

It takes the treasurer's role off the co-heirs. In rental management, rent goes into a management account, is accounted for and accumulated until the estate is divided — or, if the co-heirs have agreed, distributed on an ongoing basis by inheritance shares. Every co-heir receives the same statement. That takes the most common accusation — "you're not accounting properly" — off the table.

It is a single point of contact for the tenant. Otherwise tenants do not know whom to contact, and co-heirs give different answers. That leads to rent reductions and terminations.

It documents decisions. Which repair was approved by whom, with what majority, at what price. When the estate is later divided, this record is worth its weight in gold.

It preserves the property's value. A building that nobody has looked after for three years loses far more on sale than three years of management fees.

It prepares a sale if dividing the estate leads to one: complete documents, a current rent schedule, documented maintenance status.

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Manage or sell? An honest assessment

In favour of managing	In favour of selling
Ongoing income, appreciation in a growing market	The co-heirs need liquidity
All co-heirs basically agree	No majority for anything
The property is in good condition	Considerable maintenance backlog and no willingness to fund it
The ten-year speculation period (§ 23 EStG) is still running; a sale would be taxable — the deceased's holding period counts	One co-heir wants out and threatens a partition auction

The point many communities of heirs understand too late: any single co-heir can force a partition auction (Teilungsversteigerung) (§ 2042 BGB, § 180 ZVG). It often yields proceeds below market value. If you want to avoid that route, you have to actively involve the remaining co-heirs — orderly management with transparent accounts is the most effective tool for that.

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The regional picture

In the Nuremberg, Fürth and Erlangen area, a large share of apartment buildings is privately owned and due to pass to the next generation in the coming years. For communities of heirs, one thing matters most: the measures that raise the value of such buildings — modernisation, aligning rents with the rent index, changing layouts, conversion into condominium ownership — all require a majority, and some require the consent of all co-heirs.

That leads to a pattern we see regularly: the community does not manage the building, it manages a standstill. Every year without a decision costs rental income compared with the rent index and pushes maintenance further back, where it gets more expensive.

Whoever brings order here — aligning rents with the rent index, billing service charges correctly, planning maintenance — improves the position of all co-heirs, whether the property is ultimately sold or kept.

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Ravenica provides rental management for communities of heirs in Nuremberg, Fürth and Erlangen — with a statement that every co-heir receives in identical form.