Concept and significance of transfer in law
Transfer is a central legal concept that is applied in numerous areas of civil law, public law, and labor law. In principle, transfer refers to the process by which a right, duty, claim, or item passes from one natural or legal person to another. Legally, this is a matter of a proprietary or obligatory process that creates prerequisites and different legal consequences. The transfer may occur by legal act, by law, or by court decision.
Transfer in civil law
Transfer of rights
The transfer of rights, especially claims and ownership rights, is one of the most important areas of application.
Assignment (cessio)
According to Sections 398 et seq. BGB, assignment (cessio) describes the contractual transfer of a claim from the previous creditor (assignor) to a new creditor (assignee). Assignment requires a valid assignment agreement; as a rule, no particular form is required unless otherwise specified by law. The debtor’s consent is not required (Section 398 sentence 2 BGB), although a prohibition of assignment can be agreed upon (Section 399 BGB).
Transfer of ownership
The transfer of ownership of movable property generally requires, according to Section 929 BGB, an agreement (contract of transfer) and the delivery of the item. For real estate, the transfer occurs through agreement and registration in the land register (Section 873 BGB). Thus, the transfer of ownership refers to the change in ownership while observing the legal provisions.
Transfer of company shares
For shares in a company (e.g., shares in a GmbH), their transfer depends on special formal requirements, usually in writing or, as with GmbH shares, notarized (Section 15 GmbHG). The legal effect of the transfer is governed by the respective corporate law provisions.
Transfer of obligations
The transfer of obligations is more strictly limited by law and occurs particularly through assumption of debt (Sections 414 et seq. BGB) or contract takeover. In the case of assumption of debt, the debtor is changed, while a contract takeover involves the total transfer of the legal relationship, which regularly requires the consent of all parties involved.
Universal succession
A special case is universal succession, where assets are transferred as a whole, for example in the case of inheritance (Section 1922 BGB: succession), but also in the merger of companies (see Umwandlungsgesetz).
Transfer in public law
The transfer also plays a central role in public law, especially in the context of the transfer of powers and responsibilities.
Transfer of sovereign powers
Sovereign powers can be transferred by law to other state bodies or corporations, for example to municipalities (Art. 28 para. 2 GG) or within the framework of municipal self-government.
Transfer of tasks and powers
Official tasks can be transferred by law, ordinance, or administrative act to other public or private bodies. The formal requirements and the scope are determined by the relevant special laws.
Transfer in labor law
In an employment relationship, transfer particularly means the assignment of other duties, tasks, or areas of work. The boundaries of transfer are established by the employment contract, collective bargaining agreements, and the employer’s right to issue instructions (Section 106 GewO).
Corporate co-determination rights
If a transfer of tasks or duties affects collective interests, co-determination by the works council is often required according to the Works Constitution Act (e.g., in the case of transfer, Section 99 BetrVG).
Transfer of business
A special case is the transfer of business in accordance with Section 613a BGB, where employment relationships pass to the acquirer of a business by operation of law. There are special protection mechanisms in place for employees.
Transfer in corporate and tax law
Share transfer and participation quotas
In corporate law, the transfer of shares, rights, and obligations in companies, as well as their tax treatment, are frequently the subject of detailed statutory regulation. The transfer of company shares and silent partnerships requires special consideration with respect to insolvency and creditor protection.
Tax consequences in the event of transfer
The transfer of assets or rights (for example, gifts, inheritance, or business handover) is associated with tax consequences (inheritance tax, gift tax, real estate transfer tax, etc.). The taxation is generally based on the value of the transferred asset and the relationship between the parties involved.
Transfer and legal consequences
The legal effects of a transfer are varied. They range from the change of legal ownership to the comprehensive assumption of responsibility and rights. The particulars depend on the type and legal basis of the respective transfer.
References
- Civil Code (BGB)
- Commercial Code (HGB)
- Transformation Act (UmwG)
- Works Constitution Act (BetrVG)
Summary
Transfer is a multifaceted legal concept that serves as a central link between different areas of law. In civil law, public law, as well as labor and tax law, it governs the statutory or contractual passing of rights, obligations, assets, or responsibilities, each with specific requirements and legal effects. The precise legal design always requires a differentiated view of the respective legal regulation and the legal objects concerned.
Frequently Asked Questions
What legal requirements must be met for a valid transfer?
For a valid transfer – for example of rights, claims, or ownership – German law generally requires a so-called ‘transaction of disposition’ aimed at the legal passing of the respective asset. Depending on the nature of the right, a formal act may be necessary, such as in the case of real estate transfers, which require, in addition to the underlying obligatory transaction (e.g., purchase agreement), a notarized contract and entry in the land register (Sections 873 et seq. BGB). The transfer of claims, for example by assignment (cession under Sections 398 et seq. BGB), requires that the claim is assignable, there are no contractual or statutory prohibitions on assignment, and that the assignment meets the statutory form requirements. In addition, the parties must agree on the transfer (“agreement”), and the transferor must generally be authorized to dispose, i.e., be the holder of the right. For movable property, the law often requires delivery unless there is a constitutum possessorium or intermediary possession arrangement (Sections 929 et seq. BGB).
In which cases is a transfer legally excluded?
A transfer is legally excluded if prohibited by law, by contract, or by the nature of the matter itself. Statutory prohibitions can be found, for instance, with strictly personal rights, such as usufruct (Section 1059 BGB), maintenance claims (Section 400 BGB), or membership rights in associations (Section 38 BGB). A contractual prohibition of assignment of claims may also be agreed upon (Section 399 BGB). Moreover, the law prohibits the transfer of legal positions that are inseparably linked to the person entitled to them – for example, guardianships or public offices. The transfer of certain objects, such as cultural assets, may also be subject to public-law approval requirements (Cultural Property Protection Act).
What special formal requirements apply to the transfer of certain rights or objects?
Depending on the type of right or object to be transferred, different formal requirements apply. For the transfer of real estate, notarization of the contract is essential (Section 311b para. 1 BGB), followed by entry in the land register (Section 873 BGB), which constitutes the transfer. For claims, agreement without special form is generally sufficient unless a special statutory written or text form is prescribed (for example, for certain licenses or interests in companies). For registered shares, transfer is carried out by endorsement and delivery of the certificate (Sections 68 et seq. AktG). The transfer of movable property, on the other hand, follows the principle of delivery and agreement (Section 929 sentence 1 BGB); however, for vehicles, presentation of the registration certificate and vehicle title is customary to prove acquisition in good faith. For some copyrights, written assignment is mandatory.
What role does the consent of third parties play in a transfer?
In many cases, a transfer is only possible or effective with the consent of a third party. This applies, for example, to co-ownership, where transfer may only take place with the consent of all co-owners (Section 747 BGB). Company shares are also often transferable only with the consent of the other shareholders or the company itself, such as under Section 15 para. 5 GmbHG for shares in a GmbH, where the articles of association may contain corresponding provision. In tenancy law, the transfer of tenancy rights or subletting may be subject to the landlord’s consent (Section 540 BGB). The same applies to pledges or security interests where third-party rights exist. For rights with a prohibition of assignment, the debtor’s or beneficiary’s consent is also regularly required.
Can existing liability relationships be changed through a transfer?
The transfer of a right generally alters the liability relationships associated with that right in accordance with the legal model. In the transfer of ownership, the new owner is liable from the registration or delivery for the rights and duties connected with the item (e.g., costs and burdens of a property under Section 446 BGB). In the transfer of claims (assignment), the assignor is generally not liable for the debtor’s solvency, but only for the existence of the claim (Sections 398 et seq. BGB, especially Section 437 BGB). In contrast, in the case of contract takeovers (e.g., in the event of a change of debtor or creditor according to Sections 414 et seq. BGB), the associated obligations and ancillary obligations are transferred to the new contracting party as agreed and permitted by law. In the event of a liberating assumption of debt, the creditor’s consent is regularly required under Section 415 BGB.
What are the consequences of a defective transfer?
A defective transfer, for example due to lack of authority to dispose, unmet formal requirements, or a prohibition on assignment, is generally invalid and has no effect on changing rights. The consequence is that the right remains with the previous holder, and the acquirer cannot derive any legal claims from it. In some cases, however, there is protection for bona fide acquirers, for example with movable property (Sections 932 et seq. BGB) or with certain securities. In the case of claims, German law protects the debtor if he satisfies the previous creditor in good faith (Section 407 BGB). If there is a defect in form, the transaction may be remedied subsequently in exceptional cases (e.g., by registration in the land register for real estate transactions, Section 311b para. 1 sentence 2 BGB). If damage occurs due to the defective transfer, compensation claims against the transferor may arise due to breach of contract or liability for fault.
