Decision of the Federal Court of Justice on the admissibility of neighbouring heritable building rights

At the end of 2025, the Federal Court of Justice ruled on a legal issue that had been controversial for decades concerning the admissibility of so-called neighbouring heritable building rights.

A neighbouring heritable building right is understood to be a heritable building right that is established for an existing or yet-to-be-built building that extends over one or more neighbouring properties and cannot be divided at the property boundaries. The essential feature of a neighbouring heritable building right is therefore that only part of the building is located on the heritable building property itself, while other parts of the building are or are to be erected on one or more neighbouring properties.

Facts

In the underlying case, the legal predecessor of a trading group, as the holder of a heritable building right, agreed with a community of heirs, as the owner of the property, on a heritable building right on a piece of land for the construction of a large department store. The contract expressly allowed neighbouring properties to be included in the development. At the same time, an obligation to subsequently separate the parts of the building was provided for so that an independent building could remain on the heritable building property.

The shopping center, whose building complex comprised five properties and could not be separated without destruction at the boundaries, was built in the 1980s. When the holder of the heritable building right stopped paying the rent, the community of heirs enforced foreclosure. The holder of the heritable building right defended himself on the grounds, among other things, that the heritable building right agreement was void due to the inadmissibility of a neighbouring heritable building right.

Decision

In its ruling of 19 December 2025 (BGH, ruling of 19.12.2025 – V ZR 15/24), the Federal Court of Justice confirmed the admissibility of neighbouring heritable building rights and expressly abandoned its previous contrary case law.

According to the Federal Court of Justice, a heritable building right can be established for a uniform building that extends beyond property boundaries. Section 1 para. 3 of the Heritable Building Rights Act (Erbbaurechtsgesetz - ErbbauRG) does not preclude this. The provision regulates the spatial restriction of the heritable building right. However, such a restriction can only be said to exist if the spatial scope of the heritable building right is limited to part of the heritable building property. This is precisely not the case with a neighbouring heritable building right, which rather envisages the extension of the scope of exercise beyond the heritable building property.

The conflicts that the historical legislator had in mind when creating Section 1 para.3 ErbbauRG resulted from the division of a building between different beneficiaries. However, the creation of a neighbouring heritable building right does not in itself lead to the coexistence of different beneficiaries. Conflicts between different beneficiaries in the case of a neighbouring heritable building right generally only arise upon its termination or reversion. The restriction of the heritable building right to part of a building is only to be regarded as inadmissible if it takes place within the boundaries of the encumbered property, whereby the Federal Court of Justice leaves open whether only a horizontal or also a vertical restriction is inadmissible in this respect.
Insofar as the inadmissibility of neighbouring heritable building rights has been derived in part from past Senate rulings in literature and case law, the Federal Court of Justice expressly no longer adheres to this view.

Conclusion

The decision provides welcome legal certainty, particularly for complex real estate projects. Neighbouring heritable building rights are permissible. Section 1 para. 3 ErbauRG does not prohibit the creation of a heritable building right for a uniform building extending beyond property boundaries. In practice, this means greater planning and investment security for large-scale, cross-border projects, but also high requirements for the drafting of contracts to deal with the property law issues arising from the termination of the neighbouring heritable building right.

In addition to the neighboring heritable building right, the tried-and-tested structure of a comprehensive heritable building right continues to exist as a further form of cross-border development based on a heritable building right.