Transferring property: gifts, usufruct and right of residence

Article L-0075 · 28.09.2026 · 7 min. reading time · Joé Christian Ewrard

What does it mean to transfer a property?

When a property is transferred, ownership of a plot of land, house or apartment changes hands during the owners' lifetime. The previous owners relinquish their legal position in full or in part. Once entered in the land register, the recipient becomes the owner and therefore also assumes responsibility.

A property can be transferred in full, in part or in return for certain forms of consideration. Options include a gift without consideration, a mixed gift, the assumption of existing liabilities or a transfer in return for maintenance payments. Usufruct, rights of residence and rights of recovery can also be agreed.

The contract must be notarised. Ownership does not transfer merely through a private agreement or the handover of keys, but through the required declarations and entry in the land register. This follows in particular from [Section 311b of the German Civil Code (BGB)](https://www.gesetze-im-internet.de/bgb/__311b.html).

Before making a decision, one simple question should be asked: What must the previous owners retain so that they can continue to live securely even in the event of illness, the need for care, family disputes or financial changes? Only then should taxes and contractual details be considered.

What does a gift mean for both parties?

With a gift, the recipient receives the property without providing consideration of equivalent value. That sounds straightforward, but it significantly changes the balance of power. In principle, the new owner can dispose of the property unless restricted by the contract and registered rights.

For the person making the gift, this means that the house no longer belongs to them after the transfer. They cannot sell or mortgage it alone, or later give it to another child. A verbal promise such as “You can always live here” does not provide sufficient security.

The recipient also assumes risks. They become the point of contact for matters relating to the land register, financing, insurance and major decisions. In the case of rented properties, they generally assume the role of owner. Existing loans do not automatically disappear as a result of the gift. Whether personal liability for a debt is assumed is not determined solely by the transfer of ownership and must be coordinated with the bank and notary.

In practice, conflicts often arise not from ill intent, but from unclear expectations. The parents assume that the child will pay for the roof later. The child believes that major repairs remain the parents' responsibility. Such matters should be discussed openly before notarisation and clearly regulated.

Usufruct: Transferring ownership while retaining the benefits

A usufruct gives the beneficiary the right to use the property and receive income from it. They can therefore live in it themselves or rent out the property and generally receive the rent. Although the recipient is registered as the owner in the land register, they do not automatically receive the economic benefits while the usufruct is in place. The legal basis is set out in [Section 1030 of the German Civil Code (BGB)](https://www.gesetze-im-internet.de/bgb/__1030.html).

This can be useful if parents transfer ownership at an early stage but wish to retain the income from a rented apartment. Particularly in a building with several units, a usufruct is often more flexible than a simple right of residence.

The allocation of costs is crucial. Who pays for ongoing maintenance, insurance, public charges or a new heating system? The law sets out basic rules, but they do not answer every practical question. The transfer agreement should therefore specify who is responsible for ordinary repairs and who bears the cost of major renovations.

A sale also becomes more complicated. As a rule, a registered usufruct remains attached to the property unless the beneficiary waives it or another solution is agreed. This affects use, financing and market value. Anyone reserving a usufruct should also not assume across the board that inheritance-law time limits will begin to run immediately and in full. This depends on the specific arrangement and must be reviewed by a specialist lawyer or notary.

Right of residence: Security for your own home

A right of residence in rem allows the beneficiary to occupy a building or specific rooms. Unlike a usufruct, it does not generally include the right to rent out the property for the beneficiary’s own account. If renting out the property is to remain possible, it must be assessed whether a usufruct would be more suitable.

The agreement should identify the rooms precisely. In the case of a single-family home, a “lifelong right of residence” may initially sound unambiguous. However, questions concerning the garden, garage, basement, driveway or shared areas can quickly remain unclear. The statutory right of residence may also include accommodating family members and required carers, as shown by [Section 1093 of the German Civil Code (BGB)](https://www.gesetze-im-internet.de/bgb/__1093.html).

The agreement should also cover ancillary costs, cosmetic repairs, maintenance and alterations. Another important question is what happens if the beneficiary moves permanently into a care facility. Should the right of residence continue, be suspended or be terminated in return for another benefit? Without clear provisions, disputes may arise later, while the encumbered property may also be difficult to use or sell.

A right of residence protects the right to live in the property, but not automatically the beneficiary’s entire financial plans. Anyone who may depend on rental income or cannot rule out moving at a later date should compare the alternatives with a notary and tax adviser.

Which tax and financial implications need to be considered?

A gift may trigger gift tax. Whether tax is actually payable depends, among other things, on the family relationship, the property’s value for tax purposes, previous gifts and any agreed encumbrances. Multiple acquisitions by the same person are aggregated within the statutory ten-year period.

A reserved usufruct or right of residence may affect the value of the gift for tax purposes. However, the calculation follows tax valuation rules and is not based simply on the perceived market value or a freely chosen contractual amount. The tax implications should therefore be reviewed before notarisation.

In addition to any taxes, notary and land registry costs will generally be incurred. There may also be expenses for valuation, advice on the agreement or adjustments to financing. For encumbered properties, it should be clarified at an early stage which land charges exist, who remains the borrower and whether the bank must approve the desired change.

A gift may also be reclaimed if the donor is subsequently no longer able to cover their reasonable living expenses. This statutory claim is subject to certain requirements and time limits; [Sections 528 and 529 of the German Civil Code (BGB)](https://www.gesetze-im-internet.de/bgb/__528.html) set out the basic principles. Whether a claim exists or is transferred to a social welfare provider is a legal question and should be handled by a lawyer.

Taking inheritance, siblings and compulsory shares into account

Transferring a property to a child often affects the entire family. Siblings may wonder whether they will receive compensation at a later date. The parents want to act fairly, but their idea of fairness may differ from that of their children. Equal treatment, compensation based on need and recognition of care provided do not automatically lead to the same outcome.

The agreement should clarify whether and how the gift is to be taken into account later in relation to inheritance or compulsory share claims. Such an effect does not reliably arise simply because the family has discussed it. Any will must also be consistent with the transfer. If the transfer agreement and estate planning conflict, a later dispute is likely.

A statutory ten-year period also plays a role in supplementary compulsory share claims. Within this period, a gift is generally taken into account on a sliding scale. However, special rules apply to gifts between spouses and where extensive rights of use are retained. A blanket statement such as “After ten years, everything is settled” may therefore be incorrect.

It is advisable to hold a family discussion before the draft agreement is finalised. There is no need to discuss every personal asset. However, those involved should understand why the property is being transferred, which rights the parents will retain and whether other relatives are to receive compensation.

What happens in the event of separation, debt or death?

If the property is gifted to a married child, it does not automatically belong to their spouse. A subsequent separation may nevertheless have financial consequences, for example due to changes in value, joint investments, loan repayments or its use as the family home. The specific effect depends on the matrimonial property regime and the financing arrangements. A specialist lawyer and tax adviser should be involved at an early stage.

The possibility of the recipient becoming insolvent or facing enforcement proceedings must not be overlooked either. Once transferred, the property generally forms part of the recipient’s assets. A right to reclaim the property agreed in the contract and secured in the land register can provide protection, but it must be drafted appropriately from a legal perspective.

Other typical grounds for reclaiming the property include a sale without consent, an unwanted encumbrance, the recipient’s death before the donor or a serious breach of contract. The law does provide for recovery due to the donor’s impoverishment and revocation due to gross ingratitude under strict conditions. However, no one should rely on these provisions alone. Gross ingratitude requires serious misconduct and is not a general right of withdrawal in the event of disappointment within the family.

Anyone entitled to reclaim the property also needs a practical way of being reinstated in the land register. Notarised retransfer clauses and a priority notice may play a role in this. The safeguards that are necessary and appropriate must be determined on a case-by-case basis.

How to prepare the transfer properly

The process begins with an assessment of the current situation. The documents required include an up-to-date extract from the land register, any existing loan and land charge documents, tenancy agreements and building documents, as well as information on gifts already made. A realistic valuation of the property is also required. Without a comprehensible valuation, it is difficult to assess the tax implications, compensation payments and the significance of retained rights.

Both sides should then set out their interests separately. The transferors should clarify whether they need to be able to occupy or let the property, have a say in decisions or sell it in an emergency. The recipients should assess which costs, obligations and restrictions they can realistically assume. Only then can a meaningful brief be prepared for the notary and tax adviser.

In the Eifelkreis Bitburg-Prüm, in Trier and Trier-Saarburg, in the Vulkaneifel, and along the border with Luxemburg, there are often additional regional considerations. These include larger plots, several buildings recorded on one land register folio, rented units, or cross-border living and working arrangements. If one of the people involved lives in Luxemburg or has other assets there, the tax and inheritance implications should be reviewed on both sides of the border.

An estate agent does not replace a notary, lawyer, or tax adviser in this process. However, they can assess the condition, usability, and market value of the property. This helps before the family decides on financial compensation, a right of residence, usufruct, or a subsequent sale.

If you wish to transfer a property, first gather the land register extract, loan documents, tenancy agreements, and any existing inheritance arrangements. Then have the property value and your personal security needs assessed. On this basis, a notary, tax adviser, and, where appropriate, a lawyer can develop an arrangement that takes ownership, use, family, and potential crises into account together.

Frequently Asked Questions

Can I transfer my house and still continue living in it?

Yes. A right of residence in rem or a usufruct can be entered in the land register for this purpose. Which right is appropriate depends primarily on whether you only wish to live in the property yourself or may later also wish to rent it out and retain the income.

Is usufruct better than a right of residence?

Not necessarily. Usufruct usually provides more extensive rights of use, but also requires more detailed arrangements regarding costs, management, and letting. A right of residence may be sufficient if the sole aim is to safeguard your own right to live in the property.

Can I reclaim a property that I have transferred?

Only if there is a statutory or contractually agreed basis for doing so. Appropriate circumstances for reclaiming the property can be specified in the notarised agreement and secured by an entry in the land register. A lawyer or notary should determine whether a right to reclaim actually applies.

Do I have to compensate my other children when making the gift?

There is not always an automatic obligation to provide immediate compensation. Nevertheless, issues relating to inheritance, compulsory shares, and equalisation may become relevant later. The transfer agreement and will should therefore be coordinated.

What happens to the right of residence if I move into a care home?

That depends on the contractual arrangements. A registered right of residence does not necessarily end when you move out and cannot automatically be rented out. The agreement should therefore expressly specify what is to apply in the event of a permanent move or a need for care.

Topics: property transfer, gift, usufruct, right of residence, anticipated succession, compulsory share, Eifel property, transfer agreement

Responsible for this post: Joé Christian Ewrard — Owner & Broker IHK, PRIOCASA Immobilien & Financial services. Last updated: 28.09.2026. This draft was created with the support of artificial intelligence and was reviewed and approved before publication (AI Transparency). This post does not replace legal or tax advice; for individual questions, please contact a notary, lawyer, or tax advisor.

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