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When partially selling (residential) real estate: be sure to weigh up the pros and cons

26. September 2023

Many providers would like to attract owners with the new real estate partial sale and promise thereby profit and in particular for pensioners a safe age precaution. But even with this model, there may be disadvantages and actual as well as legal problems. This article looks at the potential gains, but also the associated risks, from a partial sale.

What is a partial sale?

A partial sale of real estate is the sale of an intangible portion of a property while the owner retains a portion. The buyer – often a company – becomes a co-owner through a partial sale, but the running costs of the property continue to be borne only by the previous owner, explains attorney Sascha C. Fürstenow. As an owner one can sell an ideal portion of its home to a buyer and/or partial sales offerer and receive for it a purchase price. In return the owner pays an amount to the buyer (use fee for the sold part). In addition, owners must continue to fulfill their obligations and are responsible for repairs, etc. Many see the partial sale of a property as an opportunity to generate money without having to give up full ownership.

The right of use or right of residence is notarized in the case of such a partial sale, so that it is also legally secured. In addition, the right of use or right of residence is also agreed in the form of usufruct, i.e. the owner may continue to live in the property when it is sold.

Another prerequisite for a partial sale is that the property is not encumbered by debts or only with a small residual debt, which may then be offset against the payment of the purchase price.


Not only for private owners, but also for investors a partial sale can come into question. This can result in the following advantages for both owners and buyers:

1.) For real estate owners, a partial sale is more often profitable, as they release part of the property as capital without having to sell it completely. The resulting profit is then used again, for example, to invest in other properties or to finance business projects.

2) In addition, this allows investors to diversify their assets and spread them across other asset classes, thus minimizing risk.

3) A further potential profit can be made through cash flow if the partial sale of a rented property takes place and the owner continues to generate rental income from the remaining part.

4) Due to the notarized usufructuary right, the former owner is granted a lifelong right to live in his property.


Risks and disadvantages

However, some risks and disadvantages are not always considered:


Usage fee

In order to be allowed to continue to use the property, owners must pay the buyer a kind of “rent”, a so-called usage fee, until the entire property is sold. If this is no longer possible for the seller due to unforeseeable reasons, a forced sale of the property may be threatened if the fee cannot be paid for a certain period of time. The amount of the user fee is contractually regulated, but can be increased by the partial purchase companies.


Value retention clause

This clause in the contract states that the partial buyer is entitled to a certain percentage of the partial purchase amount when the property is sold in its entirety (partial purchase price plus X). In this case, the buyer receives his purchase price at the time plus X percent; known value retention clauses are around 17 percent.


Maintenance and resale

The former owner must continue to pay the costs for the maintenance of the property as well as the costs for the resale or total sale of the property, and often the partial sale company has a claim to minimum proceeds in both cases. In addition, the amount for the buyback is usually higher than the partial purchase price paid by the buyer.


Insolvency of the partial buyer

In the event that the partial purchaser becomes insolvent, it is also necessary that the previous owner is secured, as there is no jurisdiction for the solvency of the partial purchaser at a state agency.


When should you forego a partial sale?

As a consumer, you should refrain from a partial sale in some cases, for example if you expect a long-term increase in value. If you are convinced that the value of a property will increase in the long term, it may make more sense in some cases to keep the property and benefit from the increase in value.

In addition, it can be discouraged if the capital is not urgently needed to meet other financial obligations, as the partial sale can affect the financial situation in the long term, especially if the property has a good return or offers other benefits. Another point to consider is that there may be costs associated with the partial sale, such as valuation fees and brokerage commissions. It should not be forgotten that a partial sale may also have tax implications. As co-owner of the property, property tax is still payable. A participation in the property tax on the part of the sellers is not specified.

Partial sales require detailed and contractual agreements to protect the rights of all parties.

It is advisable to have each partial sale carefully and individually reviewed and evaluated. In addition, potential legal risks should be uncovered and minimized beforehand so that the protection of your interests as the seller can be guaranteed, advises attorney Fürstenow. Apart from the sales contract, there are many other points to consider, such as the user fee and other costs.

Attorney Sascha C Fürstenow will be happy to advise you on this and work with you to ensure that the contract contains all the necessary provisions and that your interests are represented.