Partial legal capacity of a GbR and purchase situation
In 2001, the BGH (II ZR 331/00)that a company under civil law (GbR) has legal capacity as long as it establishes its own rights and obligations through participation in legal transactions with the outside world. Furthermore, the GbR is equally active and passive party capable, which means that the GbR can both sue and be sued.
This soon resulted in GbRen appearing as buyers of land, houses and apartments. However, since company shares in a GbR could be transferred informally at any time, even verbally, it was not possible to prove with a articles of association in a form suitable for the land register who was still a shareholder at the time the purchase was notified to the land registry. Because there is (unlike a GmbH, AG or oHG) no GbR register. This in turn led to the practice that the company was also founded in the purchase contract document, for example "Mr. A and Ms. B hereby found AB GbR, and AB GbR hereby buys the property". In practice, it was enough to have the GbR entered as the owner in the land register and this was how it was handled from then on. The model was popular because GbR shares can be transferred informally at any time, regardless of who is listed as a shareholder in the land register.
Proof of shareholder in the sale situation
The next problems then arose when GbRen entered in the land register wanted to sell again. This turned out to be impracticable, since it was not possible to prove to the land registry who is currently a shareholder and who can effectively represent the GbR in legal transactions. All of this can be changed orally at any time. Even if all shareholders go to the notary, declare there that they are the (sole) shareholders and jointly represent the GbR, and even if the notary then sends this to the land registry immediately, a) the declaration may have been wrong, what notary and land registry cannot check due to a lack of register, and b) another assignment has already taken place between the declaration at the notary and the receipt at the land registry, which also cannot be prevented. No articles of incorporation or other document satisfied the strict requirements for proof required by the land registry.
This meant that real estate owned by a GbR became unsaleable because the land register could not be processed. Incidentally, there were other problems with the loan, etc. (see e.g here ). Difficulties increased in December 2008 when the BGH (V ZB 74/08) decided that a GbR can also be entered in the land register under its own name, without having to include the names of the GbR partners.
The legislator reacts: § 47 Abs. 2 GBO and § 899a BGB
In August 2009, the legislature reacted and stipulated that the names of the shareholders must also be entered in the land register (§ 47 paragraph 2 GBO). On the other hand (in § 899a Civil Code) a presumption written into the law that those persons are shareholders who are entered in the land register and that there are no other shareholders. "Guess" means that it may be right or wrong. The aim of the regulations was to make it possible to process the land register again, but not to interfere with the legal situation. This subtle difference has important consequences.
The Justification for the law (here page 23-25) I reproduce the changes in the GBO below for readers interested in the details. If you are only interested in the results, feel free to skip the indented italic text:
"According to the recent case law of the Federal Court of Justice, the GbR itself is the bearer of its corporate assets (BGH NJW 2001, 1056). This also applies to real estate (BGH NJW 2006, 3716). The earlier practice in the land register, on the other hand, regarded the shareholders as the owner of the company's assets in a joint ownership relationship and made the entries accordingly.
Now, instead, the GbR is to be entered as the beneficiary, whereby according to the case law of the Federal Court of Justice, either their partners or their name must be given for their designation (BGH NJW 2009, 594). Paragraph 2 sentence 1 stipulates that the shareholders must also be entered in the land register if a GbR is entered in the land register as the beneficiary. According to the prevailing opinion, the information on the shareholders is no longer regarded as content of the land register, but as a mere aid to identifying the authorized GbR. This means that there is currently no secure basis for the application of §§ 891 to 899 of the German Civil Code (Bürgerliches Gesetzbuch - BGB), i.e. those substantive legal norms that previously guaranteed the effective participation of GbRs in real estate transactions.
According to the new regulation envisaged here, the entry of the shareholders is clearly again part of the land register. This makes it possible to link a substantive presumption related to the position of the shareholder and the corresponding applicability of § 892 ff. BGB to the entry. Sentence 1 ensures that the land register correctly announces the material allocation of assets in the case of the GbR, as it is now based on the case law of the highest court. Only the GbR is to be entered as the authorized party. The registration of the shareholders also fulfills a double function. On the one hand, it guarantees the identification of the authorized GbR. On the other hand, the entry of the shareholders is part of the land register with substantive and procedural consequences.
A corresponding entry in the land register could read: "Civil law company consisting of A, B and C". This corresponds to the booking form that has already been expressly regarded as permissible by the Federal Court of Justice (BGH NJW 2009, 594). The consequence of sentence 1 is that the registration of a GbR solely under its name, i.e. without the registration of the shareholders, is inadmissible in the future. It is necessary to prevent such entries because they entail problems that can hardly be solved in practice. Because the existence, proper representation and identity of the GbR only registered under their name can often not be proven in the form of § 29 GBO.
Sentence 1 also means that a GbR can only participate in the land register procedure by stating its shareholders. However, there is no corresponding provision in civil procedure law. Difficulties can therefore arise in real estate enforcement if a GbR fights for a payment title in civil proceedings under its own name and wants to enforce this by entering a compulsory security mortgage in the land register. Sentence 1 requires the registration of the shareholders, but the rubrum of the title does not indicate this. However, this is not a specific problem of the procedural designation of the GbR. Other legal entities must also identify themselves in civil proceedings in a way that satisfies § 15 GBV if they later want to run a smooth real estate enforcement. If a designation suitable for the land register is omitted in the civil process, the GbR is not simply deprived of the property of the title debtor as an object of enforcement. Access to enforcement through foreclosure and receivership remains possible, since these forms of enforcement are not necessarily aimed at the entry of the title creditor in the land register. The disadvantage that the registration of a compulsory security mortgage is not readily possible is acceptable because it can easily be avoided by the GbR by appropriate designation in civil proceedings. In any case, it seems far less serious than the problems that would arise if GbRs were only allowed to be entered under their name (according to the designation in the title) in the land register.
In addition, the introduction of a GbR register, as is sometimes required as an independent register or as part of the commercial register, would not resolve the tension between civil procedural law and land register law if entry in such a register were made a prerequisite for entry in the land register .
By prescribing the entry of all shareholders in sentence 1, it also excludes entering only those shareholders in the land register who are entitled to represent the GbR according to the articles of association. Rather, all shareholders must always be entered.
The entry of the shareholders according to sentence 1 is on the one hand content of the land register, on the other hand it is also a means of identifying the authorized GbR. The entry of all shareholders is necessary for the specific designation of the beneficiary in terms of land register procedural law, but is also sufficient. It is conceivable that several GbRs with identical holdings exist as independent legal entities. The identity doubts resulting from this, if a GbR is named solely by stating its shareholders, are essentially no different from those that occur with other legal entities. If, for example, a natural person is entered in the land register in accordance with § 15 paragraph 1 letter a GBV, stating their name and date of birth, there may also be another natural person to whom these identification features apply. However, these "abstract" identity doubts are hidden in the land register procedure. The same applies to a GbR that is identified by the details of its shareholders. If a GbR submits a land register declaration – also fictitious in accordance with § 894 ZPO, or if there is a title against a GbR, and the GbR is designated in accordance with sentence 1, the land register can and must accept the application without further proof of identity complete.
The new sentence 2 stipulates that in the registration procedure, those provisions that relate to the registration of the beneficiary apply accordingly to the registration as a shareholder. The regulation means that the GbR can continue to be treated in terms of land register procedural law in the same way as before their legal capacity was recognized by case law. This ensures continuity in land register practice and prevents the land register offices from having to change over.
Sentence 2 guarantees in particular a regulatory regime for the treatment of changes in the number of shareholders in the land register. In this respect, the previous practice in the land register can essentially be retained unchanged. If a GbR is entered in the land register as the beneficiary and a registered shareholder assigns his share in the company to a third party, the registration of the assignee as a new shareholder can - as was also the case under the old legal situation - for example on the basis of the assignor's correction approval and declarations of consent from the assignee and all other registered shareholders, each granted in the form of Section 29 GBO (cf. on the earlier legal situation Schöner/Stöber, Grundbuchrecht, 14th edition 2008, para. 982 f.). However, not only changes in shareholders due to individual succession, but also those due to universal succession and the departure of shareholders are to be carried out in accordance with sentence 2 of the land register procedure, as was customary before the recognition of the legal capacity of the GbR. In this respect, too, the previous practice in the land register can be retained and existing literature and case law can also be used in the future.
According to sentence 2, the principle of pre-registration according to § 39 GBO is also applicable to disposals of the right of the GbR. If, for example, a GbR is entered in the land register as the owner of a property and a registered shareholder has assigned his share to a third party, according to § 39 paragraph 1 GBO in connection with the new sentence 2 the third party must be registered as a shareholder before a Disposition of the GbR over their property, such as a conveyance or encumbrance, can be entered in the land register. This corresponds to the legal situation before recognition of legal capacity, so that the previous practice in the land register can also be retained in this respect. However, the principle of pre-registration applies - as it did before - only to disposals of the law of the GbR, but not to disposals of the shareholders' share in the company. In the case of a chain of assignment, the intermediate links do not have to be entered as well.”
The Explanatory memorandum to Section 899a of the German Civil Code can also be found on pages 26 and 27. Those who are not interested in the details can also skip here.
"Section 899a BGB is the substantive supplement to the new regulation in land register procedural law in Section 47 paragraph 2 sentence 1 GBO, according to which the shareholders of a GbR must always be entered in the land register.
Sentence 1 establishes a presumption that corresponds functionally to Section 891 BGB with regard to registration as a shareholder. Sentence 2 builds on this and declares §§ 892 to 899 BGB to be applicable accordingly.
The aim of the regulation is not to give the land register the function of a general company register. IIn the wording, this is expressed by the fact that the registration of the shareholders only has material consequences "in view of the registered right". This wording, which is common in the BGB, means that the registration of the shareholders is only relevant for legal acts that are directly related to the subject of the registration. If, for example, a certain GbR is entered in the land register as the owner of the property, sentence 1 establishes a presumption if the registered partners own the property, but not if they purchase furnishings for the building on the property. Since sentence 2 is systematically linked to sentence 1, the restrictions on the substantive effects of registration, which follow from the constituent elements "in view of the registered right", also apply to sentence 2, which declares §§ 892 to 899 BGB to be applicable accordingly. A corresponding synchronization between sentences 1 and 2 of § 899a BGB is also teleologically necessary.
Sentence 1 justifies both a positive and a negative presumption. It is positively assumed that those persons are shareholders who are entered as such in the land register. On the negative side, it is assumed that the GbR has no other shareholders. In combination, these two aspects lead in particular to the assumption that the GbR is properly represented if those persons who are listed as its partners in the land register act on its behalf. This result is a necessary consequence of the principle of self-organization that characterizes partnerships.
According to sentence 1, however, it is not only assumed that certain persons are partners in a GbR, but also that the GbR actually (still) exists. The existence of the GbR is a necessary prerequisite for the existence of shareholders. If, for example, a GbR consisting of shareholders A and B is entered in the land register and B then assigns his share in the GbR to A outside the land register, the GbR expires without liquidation, A’s assets increase and the land register becomes incorrect. According to sentence 1, however, it is assumed in this case that the GbR (continued) exists and that B is still its shareholder.
The assumption of sentence 1, like that of § 891 BGB, applies to everyone and thus also to the land registry. If the shareholders are entered in the land register in accordance with Section 47 Paragraph 2 Sentence 1 GBO, this is also relevant for the land register procedure in accordance with Sentence 1. Further evidence of the existence, proper representation and identity of the registered GbR is therefore regularly superfluous.
Sentence 2 declares that §§ 892 to 899 of the German Civil Code (Bürgerliches Gesetzbuch, BGB) with regard to registration as a shareholder are correspondingly applicable with regard to the registered right. As long as in the GbR the partners themselves were regarded as joint owners of rights, §§ 892 to 899 BGB were directly applicable to a corresponding entry in the land register. Sentence 2 functionally reproduces this legal situation on the basis of recent legal developments.
In connection with § 892 BGB, sentence 2 means that to a bona fide purchaser (Only) those persons are regarded as shareholders who are announced as such in the land register. In terms of how it works, Section 892 BGB in conjunction with sentence 2 is similar to the provision in Section 15 Paragraph 3 of the Commercial Code – albeit limited to a group of specific legal acts directly related to the registered right. While § 892 BGB enables a bona fide acquisition from an unauthorized person in its immediate area of application, § 892 BGB in connection with sentence 2 guarantees a bona fide acquisition from a legal entity that is not properly represented or does not (any longer) exist. As is expressed in the constituent element "also" in sentence 1 BGB, Section 891 et seq. BGB are direct in the case of a GbR, specifically with regard to the registration of the entitled GbR, and moreover Section 892 et seq. BGB in conjunction with Section 899a BGB applicable accordingly with regard to the registration of the shareholders. A combined application of § 891 ff. BGB with § 892 ff. BGB in connection with § 899a BGB is possible. This could be considered, for example, if the transfer to a GbR registered as the owner of the property is initially ineffective and if later there were also changes of shareholders outside of the land register. In this case, a combination of § 892 BGB in direct application and in connection with sentence 2 enables a purchase in good faith.
On the other hand, the assignment of a share in a GbR, which is the owner of a property right, does not represent a legal act directly related to property law. § 899a BGB does not assign a general register function to the land register, but limits the group of legal acts affected by the elements of the facts “in respect of the registered right”. It follows that § 892 BGB in conjunction with sentence 2 BGB does not allow the purchase of a GbR share from the book partner in good faith.
According to § 893 BGB in conjunction with sentence 2, § 892 BGB applies accordingly, among other things, if a service is provided to a GbR for the attention of a shareholder entered in the land register. If, for example in the case of a share assignment, the registered partner is actually no longer a partner in the GbR and is therefore not authorized to receive the service, payment can nevertheless be made in good faith to the GbR.
Sections 894 to 899 of the German Civil Code contain, in connection with sentence 2, substantive provisions for correcting the land register if the number of shareholders in the land register is incorrect. In the case of the assignment of a share in a GbR entered in the land register, the assignee is entitled to a correction claim against the assignor in accordance with Section 894 BGB in conjunction with sentence 2. If the GbR is registered as the owner of a letter right, § 896 BGB can entitle the assignee against the owner of the letter to have the letter submitted to the land registry. § 897 f. BGB regulates in connection with sentence 2 the bearing of costs with regard to the land register correction and the statute of limitations of the material claims resulting from the incorrectness, if the land register incorrectly announces the partnership status of a GbR. Finally, Section 899 BGB, in conjunction with sentence 2, makes it possible to enter an objection in the land register if the number of shareholders of a GbR is incorrectly announced there.
result in 2009
As a result of the aforementioned legal amendments, a sale by a GbR became possible again. The land registry may assume that those persons who are entered in the land register as shareholders are the shareholders of the GbR. At the same time, a purchaser can acquire the property from them in good faith.
However, the explanatory memorandum also expressly makes it clear that this only applies at the so-called real level, not under the law of obligations. The land register is not a substitute for a GbR register, which means that its content can be incorrect. Although sees Civil Code § 899 that an objection to the correctness can then be entered. However, one should not rely on this happening, if only because it requires an applicant who may not have any interest in it at first.
For the notarial certification situation, this leads to certain difficulties. If everything goes well, the GbR will have received the purchase price and the buyer will have ownership of the property. The fact that everything goes well is not guaranteed by law, but rather the notary must ensure that the transaction also works safely - that, for example, assignments of GbR shares before and after the certification, the payment and until the transfer of ownership or even abusive participants can not change anything about the fact that the contract, once concluded, can be carried out safely.
I will explain how to do this in Part 2.