GERMANY LAW AND PRACTICE Contributed by: Wolfram H Krüger, Barbara Rybka, Markus Wollenhaupt and Alexander Zitzl, Linklaters
4.5 Right of Appeal Against an Authority’s Decision
or court or administrative order. Limited liabil - ity companies (GmbH) and limited partnerships (KG) are most commonly used to acquire and hold real estate. German law also recognises real estate invest - ment trusts (REITs), which are listed real estate stock companies. However, there are only five REITs listed in Germany. 5.2 Main Features and Tax Implications of the Constitution of Each Type of Entity Limited Liability Company A GmbH as limited liability company is a corpo - ration acting fully independently of its sharehold - ers, subject to rights and obligations. Only the company assets of a GmbH serve to discharge the company’s obligations vis-à-vis creditors, and any personal liability of the shareholders is excluded if the capital contributions have been fully paid. The applicable legal framework is quite flexible, and the company’s articles can be adjusted to specific needs. Its foundation requires a notarial act. The management is vest - ed with one or more managing directors, who are generally bound by the instructions of the shareholders. The company may have a super - visory board ( Aufsichtsrat ). In order to establish a limited liability company, at least half of the man - datory EUR25,000 capital contributions have to be paid. Notarial, company register fees and fees for business registration amount to approxi - mately EUR1,000. Limited Partnership The KG is a limited partnership under German law and must have at least two partners. The partnership agreement does not require notari - sation, unless it contains obligations requiring the observation of specific form requirements (eg, contribution of real estate). It is character - ised by having at least one general partner, per -
Legal action can be taken against the relevant authority’s decision to refuse planning permis - sion. Third parties, such as neighbours, can commence proceedings against the issuance of a building permit if they can prove that the decision may unlawfully affect their rights. 4.6 Agreements With Local or Governmental Authorities Arrangements known as urban development agreements can be entered into between build - ing owners or developers and the relevant municipality. In these contracts, the municipality undertakes to support the building owner/devel - oper, or the building owner/developer under - takes to support the municipality in its planning goals. 4.7 Enforcement of Restrictions on Development and Designated Use If a building is not built or used in line with the issued building permit the competent authority has the right to prohibit the use or – in a worst- case scenario – request the deconstruction of the building. The authority is obliged to exercise reasonable discretion (ie, it must adhere to the principle of proportionality). This means, if there is any way to grant a building permit to cover the actual building or use, it must be granted (after the usual application process) instead of a deconstruction order. 5. Investment Vehicles 5.1 Types of Entities Available to Investors to Hold Real Estate Assets Generally speaking, any entity, including for - eign entities, that has legal capacity can hold real estate in Germany, unless prohibited by law
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