The more freedom a buyer has over a property, the more valuable it is. Any rights that restrict this self-determination after purchase also affect the purchase price. A typical example, besides the right of residence and usufruct, is the right of way.
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Many paths lead to a property, including one across the neighboring property. However, the owner who needs to cross the neighboring property must pay the neighbor for the right of way. This reduces the property value of both properties. This is legally regulated in several sections of the German Civil Code (BGB) and can be registered in the land register under Section II as an easement.
When and how does the right of way apply?
A right of way usually applies to divided properties. It can be exercised on foot (pedestrian right of way) or by car and other motor vehicles (vehicular right of way). If the only access to one’s own property is across the neighboring property because there is no connection to a public road, the right of way applies. The owner of the neighboring property is entitled to annual compensation for this use. The amount of compensation depends on the extent to which the right of way inconveniences the neighbor.
Therefore, determining compensation always involves individual case-by-case assessments. The reduction in value due to the right of way is a significant factor. Only a local, qualified real estate expert can determine the exact amount of value lost.
Example calculation: How does the loss in value affect the sale?
Plot A has access to the road and is 500 square meters in size. The other half of plot B, which lies behind it, also has an area of 500 square meters. The path to be crossed is 70 square meters. Plot A is now to be sold.
A local real estate agent determines the value of the property: €270,000. The real estate professional calculates the reduction in value at €40,500 (due to the registered right of way). However, the compensation already received from the owner of property B to the owner of property A is also taken into account. Therefore, the property value is reduced by only €22,500 (€40,500 – €18,000). The property value, including the right of way, is now €247,500.
To determine the exact amount of the depreciation and the compensation for use, owners should consult a real estate professional. This professional can also assist the affected owners through the notarization process or provide more detailed information about the right of way.
Are you unsure whether there are any restrictions or encumbrances on your property and whether these affect its value? Then ask us! We’d be happy to advise you.
Notes
For the sake of readability, this text uses the generic masculine form. Female and other gender identities are explicitly included where relevant to the statement.
This article does not constitute tax or legal advice for any specific case. Please consult a lawyer and/or tax advisor to clarify the facts of your individual situation.
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