Concept and Legal Nature of Ausgedinge
Das Ausgedinge (also known as: settlement, ‘Altenteil’, or life annuity) is a concept anchored in German civil law that refers to a specific form of provision. Traditionally originating from rural areas, Ausgedinge describes the lifelong provision for the transferring generation upon the transfer of agricultural plots, farms, or inheritances to the next generation. Ausgedinge is mainly given legal form in connection with real estate and farm transfer agreements.
Historical Development
As early as the Middle Ages, Ausgedinge developed as a component of peasant property transfers. Originally, it secured the economic livelihood of ‘Altenteilers’ (usually parents), especially after leaving active working life. Over time, Ausgedinge was codified in various regional laws and achieved legal binding force through the German Civil Code (BGB), the Property Law Equalisation Act (Sachenrechtsbereinigungsgesetz), and special state regulations.
Legal Classification and Principles
Ausgedinge is not a separate type of contract, but is usually structured as a component of a transfer agreement. The legal foundations are primarily found in §§ 1093, 1090 ff., and 1105 to 1112 BGB, which contain provisions on real rights of residence, servitudes, and usufruct. Ausgedinge can be structured as a real charge (‘Reallast’) or as a personal servitude; contractual agreements under the law of obligations are also common.
Obligatory and Real Ausgedinge
- Obligatory Ausgedinge: This is a contractual agreement in which claims to services exist exclusively between the contracting parties and are thus only enforceable under civil law obligations.
- Real Ausgedinge: If Ausgedinge is registered as a real charge, usufruct or servitude in the land register, the claims exist directly against the respective property owner and are secured with reference to the property.
Typical Services of Ausgedinge
Ausgedinge typically covers:
- Rights of residence (e.g., certain living spaces in the transferred farm)
- In-kind benefits (e.g., food, clothing, heating)
- Care services and/or medical care
- Cash payments or pension payments
- Use of further parts of the property (e.g., garden, outbuildings)
The exact scope of obligations is usually individually specified in the transfer agreement.
Contract Design and Entry
Agreement in the Transfer Contract
In practice, Ausgedinge is usually contractually stipulated during farm transfers or property transfers. The contracting parties determine the type, scope, and duration of the services to be provided. Typically, the transfer is made in exchange for the granting of the Ausgedinge – a simultaneous consideration in which the right to provision is regarded as an essential part of the agreement.
Formal Requirements
The establishment of a real effect Ausgedinge (as a real charge, servitude or usufruct, for example) generally requires notarization and entry in the land register. In this way, the security and enforcement functions vis-à-vis third parties (especially in the event of a change of ownership or encumbrance) are ensured.
Legal Effects and Security
Effect against the Property Owner
By registration as a real charge or right of residence in the land register, an immediate claim to the agreed services arises – and this also applies to any legal successors of the property owner. Ausgedinge is thus tied to the property and secures provision independently of changes in ownership.
Liability and Enforcement
If the real charge is not fulfilled, the beneficiary can claim in-kind or monetary benefits as determined by law or custom. These necessary claims can, if necessary, be enforced through legal proceedings. To assert their rights, the beneficiary of Ausgedinge may use the claims provided under property law (§§ 1108 BGB – claim for tolerance and prohibition, among others).
Protection in Special Cases
In the event of the obligor’s insolvency or compulsory auction, the Ausgedinge remains as a registered encumbrance and is given special consideration in the compulsory auction proceedings (§ 10 ZVG). Even in the event of a transfer of ownership, the Ausgedinge remains as a real right.
Termination and Redemption of Ausgedinge
Ausgedinge is generally designed to last for the lifetime of the beneficiary. It ends with the death of the beneficiary, but may be expressly limited to certain periods in exceptional cases. Early terminations, such as by mutual agreement or settlement, are possible. In the event of relinquishment of the right of residence or waiver, the respective settlement modalities are governed by the contract or, subsidiarily, by law.
Tax Treatment
Ausgedinge benefits are subject to special tax regulations. The granting of Ausgedinge is usually part of a gratuitous acquisition process and regularly leads to income tax or gift tax consequences. For income tax purposes, the consideration may have to be taken into account as a permanent burden or an extraordinary burden. Details are governed especially by § 10 (1a) EStG and ErbStG.
Ausgedinge in Agricultural Special Law
Particularly in agricultural special law, for example the agricultural farm law (including the Agricultural Holdings Order), Ausgedinge plays a significant role. It serves the sustainable protection of the departing generation and the preservation of the operational structure of the farm across generations. Special regulations can be found, for example, in § 12 HöfeO and in several state laws.
Distinctions
For clarity, it should be noted that Ausgedinge must not be confused with typical pension rights, ‘Altenteil’ under general tenancy and rental law, or the basic pension. Its special feature lies in the connection with the transfer of agricultural or, analogously, craft businesses and the security linked to the property.
Literature References
- German Civil Code (BGB), §§ 1090 ff., 1105 ff.
- Code of Civil Procedure (ZPO)
- Act on Compulsory Auction and Receivership (ZVG)
- Agricultural Holdings Order (HöfeO)
Weblinks
- <a href="https://www.gesetze-im-internet.de/bgb/_1090.html”>German Civil Code (BGB): §§ 1090-1112
- <a href="https://www.gesetze-im-internet.de/hfeo/”>Overview of the Agricultural Holdings Order
Summary: Ausgedinge is a legal instrument of traditional rural provision rules and is applied under German law as an in rem and contractual right to provision upon the transfer of property or farms. Legal security is usually ensured through entry in the land register; the legal effects comprise extensive protection and enforcement mechanisms for the beneficiaries. Tax law and special agricultural regulations complement its structure.
Frequently Asked Questions
Who is typically entitled to claim the contractually agreed benefits under Ausgedinge?
With Ausgedinge, the transferring person – often a farmer transferring an agricultural holding to a successor – is usually entitled to claim the agreed provision benefits. This mostly refers to the ‘Altenteiler’ (retired farmer) or their spouse, in other words, the previous farm owners or their spouses. The exact entitlement arises from the notarized Ausgedinge contract or transfer agreement, which expressly specifies who has a claim to right of residence, in-kind, or monetary benefits. It is relevant that the beneficiaries are named and the services are precisely described, since ambiguities can later lead to disputes. Heirs of the original beneficiaries of Ausgedinge may also become legal successors under certain circumstances, especially if the claim has not yet been completely fulfilled and this is stipulated in the contract.
What legal obligations does the transferee of a property encumbered with an Ausgedinge have?
The transferee is obliged, by virtue of the servitude registered in the land register (e.g., right of ‘Altenteil’) and the private agreements, to provide the services stipulated in the Ausgedinge contract. These typically include care services, maintenance, right of residence as well as in-kind or monetary benefits. As a rule, these obligations also pass to a later acquirer of the business, provided that the Ausgedinge is secured as a real charge or a limited personal servitude. The transferee must fulfil the claims of the beneficiaries of the Ausgedinge regardless of their scope; otherwise, civil claims for performance, damages, or enforcement measures may apply. The transferee can only be released from obligations if the beneficiary expressly waives them or if a judicial amendment takes place (adaptation due to significant changes in circumstances).
What legal remedies exist if the transferee fails to provide the Ausgedinge benefits?
If the transferee does not fulfil theAusgedinge contractually agreed benefits, the beneficiary has various legal options. They may first take legal action to demand performance of the benefits. If the entitlements consist of a right of residence or provision, many contracts also provide for a claim to forbearance or positive action, which can be enforced by interim injunction. If the claims are secured in the land register (e.g., as a real charge), the beneficiary may also, if necessary, initiate enforcement measures against the farm successor. In extreme cases, there is also the possibility to sue for reversal of the farm transfer if there are serious breaches of duty and this is expressly agreed in the contract (“reversion clause”). An application to the arbitration board under § 13 HöfeO is only relevant in the context of agricultural farms.
Can an Ausgedinge be subsequently modified or terminated?
The amendment or termination of an existing Ausgedinge is in principle only possible by mutual agreement and should always be notarized, especially where rights are entered in the land register. Unilateral amendment by one contractual party is excluded. Only in the event of a significant change in circumstances – such as the death or serious need for care of the beneficiary – can an adjustment be made if this is agreed by contract or arises from interpretation of the agreement. In some federal states, the Old Ownership Act (§ 16 AEG NRW) or the Agricultural Holdings Order (§ 14 HöfeO) provides for judicial adjustment for gross unfairness. If an adjustment is enforced through the courts, this may affect the type, scope, or duration of the benefits.
How is Ausgedinge legally secured in the land register?
Ausgedinge can generally be secured in the land register by registering a real charge (§§ 1105 ff. BGB), a limited personal servitude (§§ 1090 ff. BGB), or a usufruct (§§ 1030 ff. BGB). The type of security depends on the scope of the services to be granted. While real charges generally concern recurring services (e.g., in-kind benefits, pensions), rights of residence and other rights of use are often entered as servitudes. Registration in the land register is made on application to the land registry office, usually subordinated to secured mortgages (e.g., mortgages). The rights can only be enforced against subsequent purchasers of the property with the corresponding registration. Deletion, in turn, is only possible with the consent of the beneficiary.
What tax aspects must be observed in connection with Ausgedinge?
Legally it must be noted that the transfer of an agricultural holding against Ausgedinge is treated for tax purposes as a so-called mixed gift or partly paid transaction. The provision benefits specified in Ausgedinge may be recognised as recurring benefits or a permanent burden within the meaning of § 10 para. 1 no. 1a EStG, which has tax implications for both parties. Depending on the structure and value of the agreed benefits, income, gift, or inheritance tax liabilities may arise. Social security law (health and long-term care insurance) may also be relevant in individual cases, especially if care services are agreed. Details should always be clarified with a tax advisor specializing in agricultural law.
