A recent legal opinion from Professor Dr. Hans Christoph Grigoleit at Ludwig-Maximilians-Universität München has affirmed the legality of partial property sales, a model increasingly utilized for financial liquidity. The assessment, commissioned by the German Federal Association for Real Estate Pre-financing (Bundesverband für Immobilienverrentung e.V. – BVIV), concludes that such transactions do not constitute loans and are therefore outside the scope of consumer credit law.
The opinion characterizes partial property sales as a hybrid contract, combining elements of a purchase agreement, usufruct, and agency. Crucially, the arrangement involves the transfer of co-ownership of a property in exchange for lifetime usage rights for the seller, coupled with a phased realization of value. This differs fundamentally from traditional lending, according to the assessment.
A key finding of Grigoleit’s analysis is the absence of a personal obligation to repay. Unlike a conventional loan, where the borrower is legally bound to repayment, a partial property sale does not create such an obligation, nor does the seller’s remaining assets become liable. The financial return for the provider of capital is derived solely from the eventual sale of the property, not from the seller’s income or other holdings.
No Room for Consumer Credit Law
Based on this assessment, Grigoleit rejects the application of consumer credit law by analogy. He argues there is neither a gap in existing legislation requiring such an extension, nor a comparable justification based on the interests at stake. Applying loan regulations to this type of transaction would lead to overregulation and distort the reality of the agreement.
The BVIV explicitly supports this conclusion. “A partial property sale is legally and economically not a loan. Regulating it under loan law would misunderstand the nature of the transaction and distort contractual reality,” stated Thomas Weiss, a member of the BVIV’s board.
The opinion also critiques the demand for mandatory creditworthiness checks. Such checks are designed to protect against personal over-indebtedness resulting from a repayment obligation – a risk that does not exist in a partial property sale. Implementing such a requirement would unnecessarily complicate access to a legitimate liquidity option, particularly for older property owners.
Conflicts of Objectives in Consumer Protection
The BVIV points to a fundamental conflict in objectives. While traditional loans are often inaccessible to seniors due to stringent requirements, a partial property sale offers an alternative that could be blocked by additional scrutiny. The association argues that the focus should be on easing access to conventional property loans, rather than extending their standards to different models. The association notes that there are political efforts underway to address these access issues.
Another focus of the legal opinion is the disclosure of costs. Grigoleit challenges the call for an effective annual interest rate to be disclosed in partial property sales. He argues that such a metric is inappropriate given the lack of a fixed term, defined repayment amount, or predictable total costs. A calculated interest rate would create a false sense of precision.
However, the BVIV emphasizes that transparency is a central concern for the industry. The association already provides comprehensive information on all relevant costs, fees, and scenarios through its BVIV Basic Information on Partial Property Sales and supplementary guides.
Transparency Instead of Unsuitable Indicators
The association believes that standardized information and cost documents, tailored to the specific structure of a partial property sale, should be mandatory instead of loan-like indicators. The goal is to enhance comparability and understanding without distorting the inherent logic of the model.
The opinion ultimately confirms that partial property sales should be considered a distinct financial instrument. It is not a loan, but a specific form of real estate pre-financing with notarial security, clear risk allocation, and a tangible asset-based logic. “What we need is a tailored, sensible framework that strengthens transparency without blocking functioning models,” said Christoph Sedlmeier, also a member of the BVIV’s board.
As of , the legal status of these transactions remains a developing area, with ongoing debate about appropriate consumer protections and regulatory oversight. The BVIV’s position, supported by Grigoleit’s assessment, emphasizes the importance of distinguishing partial property sales from traditional lending models and focusing on transparency rather than applying loan-specific regulations.
A similar discussion regarding home sale proceeds and judgements was highlighted in a case involving a home sale where one party had a partial judgement attached to them, demonstrating the complexities that can arise when selling property with existing financial obligations.
