Flo's Notes

Property Law

4 min read

References without law book default to BGB.

Resources

Property Law

Property law (Sachenrecht) regulates the legal relationships of people to things (movable objects and real estate). Unlike contract law, which creates relative rights between specific parties, property law deals with absolute rights that apply against everyone (erga omnes).

Ownership vs. Possession

A key distinction in German law:

  • Possession (Besitz) (§ 854 BGB): The actual, physical control over a thing. A lessee, a thief, or a borrower is a possessor.
  • Ownership (Eigentum) (§ 903 BGB): The legal right to a thing. The owner can deal with the thing as they please and exclude others from any interference.

Restitution Claim: § 985 BGB

The owner of a thing can demand that the possessor hand over the thing (§ 985 BGB), unless the possessor has a right to possess the thing (§ 986 BGB), such as a valid lease or rental agreement.

Transfer of Movable Things

Under German law, transferring ownership of movable goods requires an agreement and handover (§ 929 S. 1 BGB).

Abstraction and Separation Principles

  • Separation Principle: The contract to buy a good (obligational transaction, e.g. § 433 BGB) and the actual transfer of ownership (disposal transaction, e.g. § 929 BGB) are two separate legal transactions.
  • Abstraction Principle: The validity of the disposal transaction is independent of the validity of the underlying obligational contract. If the contract is void (e.g. due to mistake or minority), the transfer of ownership remains valid, and the seller must reclaim the good via unjust enrichment (§ 812 BGB).

Alternative Transfer Mechanisms

If physical handover is not practical, the law provides alternatives:

  • § 929 S. 2 BGB (Short-hand delivery / traditio brevi manu): The buyer is already in possession of the thing (e.g. a lessee buying the rented car). Only the agreement is needed.
  • § 930 BGB (Possession Medium / Besitzkonstitut): The owner transfers ownership but retains physical possession based on a legal relationship (e.g., leaseback or security transfer / Sicherungsübereignung).
  • § 931 BGB (Claim Assignment / Abtretung): The owner transfers ownership by assigning their claim for return of the thing from a third party (e.g., a warehouse carrier) to the buyer.

Good Faith Acquisition

If the seller is not the owner (and has no authorization to dispose of the item), the buyer can still acquire ownership if they act in good faith (§ 932 BGB).

Good Faith: § 932 II BGB

The acquirer is not in good faith if they know, or due to gross negligence do not know, that the thing does not belong to the alienator.

Exception: Stolen or Lost Items (§ 935 BGB)

Good faith acquisition is excluded if the item has been stolen, lost, or otherwise went missing (abhandengekommen) from the owner (§ 935 I BGB).

  • Exception to the exception: Money and bearer instruments, or items sold at public auction, can be acquired in good faith even if stolen/lost (§ 935 II BGB).

Real Estate & Mortgages

Real estate (Immobilienrecht) and mortgages (Grundpfandrechte) follow stricter rules than movables.

  • Real Estate Transfer: Requires notarial recording of the agreement (§ 128 BGB), mutual agreement on the transfer (Auflassung, § 925 BGB), and registration in the land register (Grundbuch, § 873 BGB).
  • Mortgages: A mortgage (Hypothek, § 1113 BGB) or land charge (Grundschuld, § 1191 BGB) is registered in the land register to secure a loan.
  • Limitation of Prokura: A commercial agent with power of attorney (Prokurist) cannot sell or encumber real estate without specific authorization (§ 49 II HGB).

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