As the city of Berlin becomes more and more popular and therefore dense, and penthouses are more and more attractive attic conversions are getting popular. Private buyers are more and more willing to buy such a project instead of a finished flat.
On top a lot of small developers use this type of development as a starter to gain market knowledge and understand the process of buying, refurbishing and selling flats in Germany.
Challenges to face
As a developer with experience in such conversions I have to say that its probably the most tricky real estate development one can do.
- commercial and
- legal challenges to face.
In this post we only cover the legal aspects.
Special situation in condominiums
The legal challenges especially if there is (or will be) a condominium (WEG) involved are big.
My advise is to use a notary that is very experienced in such attic conversions.
Legal definitions of space in condos
If you design the condominium you have to make sure that future attic space has a certain legal status.
The partition deed (“Teilungserklärung”) typically differs between so called three types of spaces in the condominium (in Germany always a common-hold).
Wohnungseigentum = Sondereigentum (an einer Wohnung) + Miteigentumsanteil (an dem gemeinschaftlichen Eigentum), z.B. Grundstück und Treppenhaus + Sondernutzungsrecht besteht.
- “Teileigentum” is a space like a flat or an a office with defined borders (walls or balcony railings clearly visible)*.
- “Miteigentum” is co-owned space and used by all parties of the condominium and their guests (the staircase, the lift etc.) and
- “Sondernutzungsrecht” is a special usage right space that is part of the co-owned space and typically accessible by third party (like co-owners) but there is an agreement that one party uses this space exclusively (e.g. a garden, a terrace, a cellar, or a space within the property like a storage in the attic of a house)
Traps to avoid
The biggest and very common trap is to put the attic in a legal status of special usage right(s) so called “Sondernutzungsrecht (SNR)”. The reason why to avoid this is the power of the condominium (Beschlusskompetenz) to make decisions effecting the common spaces of the condo. As the special usage right is above all a space belonging to the common area and only after this space dedicated to the usage of one particular owner, the condo has a lot of decision power over a space. This can cause a lot of trouble, stress and delay, while the purchaser of such a right thinks he fully owns the space like a flat.
- always use an experienced lawyer or notary to design your partition deed “Teilungserklärung”.
- always put attics to be converted in a flat in the legal status of part-ownership “Teileigentum”.
Acknowledgement and recommendation
The importance and the solution of the aspect of developing properties in Germany was stressed to me by
lawyer Dominik Schüller of Sawal Rechtsanwälte Berlin, specialized in condominium law.
* to be correct. The law differs between space which is used for residential and space which is used for non-residential usage (“Wohneigentum” vs. “Sondereigentum”)