Real Estate

Changes affecting civil law partnerships following the reform of partnership law

Previously, a civil law partnership (Gesellschaft bürgerlichen Rechts, "GbR") could not be entered as a legal entity in the commercial register (Handelsregister). This has changed with the introduction of the Act to Modernise the Law on Civil Law Partnerships (Personengesellschaftsrechtsmodernisierungsgesetz, "MoPeG"), which came into force on 1 January 2024. GbRs can now be registered in a newly established partnership register kept at the local courts (Amtsgerichte). Registration is neither mandatory nor necessary to act with legal capacity. This means that a GbR can still have legal capacity without being registered in the partnership register.

Even though registration is not mandatory, it is advisable to register a GbR if there are plans to carry out transactions which require registration in a German public register. This is particularly important for real estate transactions. A GbR must be registered if real property or hereditary building rights are to be purchased, sold or encumbered.

Changes to the law on civil law partnerships

As of 1 January 2024, the MoPeG applies to existing and newly founded GbRs, with few transitional provisions. It introduces necessary adjustments for a more comprehensible legal framework. By turning existing case law into statutory law and including new transparency provisions, the reform aims to increase legal certainty and transparency in business transactions involving GbRs.

Once registered in the partnership register, a GbR is irrefutably presumed to have legal capacity – something that is explicitly recognised by statute for the first time. This will not have any impact on the current view of what constitutes an "external" (außen) or "internal" (innen) GbR or the consequences of this status for the legal capacity of a GbR. An external GbR will still be deemed to have legal capacity as long as it participates in legal transactions. A GbR which is neither registered nor participates in legal transactions (internal GbR) still lacks legal capacity under the new legislation.

This means that there are now three different types of GbRs: (i) registered GbRs with legal capacity, (ii) unregistered (external) GbRs with legal capacity and (iii) (internal) GbRs without legal capacity.

New register for partnerships

The MoPeG introduces the possibility of registering GbRs in a new partnership register. Information published in the partnership register is available to the public, creating an increased level of transparency. Current problems regarding uncertainties about the actual existence of a GbR can be resolved by registering the partnership in the partnership register. This enables a GbR not only to publish the power of representation of its partners but also to enter any location in Germany as its registered office. The registered office need not be the administrative headquarters where the business is conducted, making it easier to relocate business activities.

Once a GbR is registered, it acquires an additional "e" – short for "eingetragen" (registered) – in its name, making it an "eGbR" (eingetragene Gesellschaft bürgerlichen Rechts).

Situations where registration is required

According to the new legislation, transactions that must be registered in a German public register and involve a GbR can only be carried out after the GbR has been validly registered in the partnership register. This is an important change. German public registers that require such prior registration include the commercial or company register, the land register, the DPMAregister, the list of shareholders of a limited liability company (Gesellschaft mit beschränkter Haftung – GmbH) and the share register of a stock corporation (Aktiengesellschaft – AG).

The Land Register Code (Grundbuchordnung, "GBO") now stipulates that a right will only be registered for a GbR if it has been registered in the partnership register. Only such registered GbRs can be entered in the land register as the owner of real property or hereditary building rights. However, a GbR can still be entered in the land register after 1 January 2024 according to the provisions of the previous law, if the corresponding agreement or consent was declared and the application for registration was filed with the land register before 1 January 2024. The same applies if a priority notice was entered or consented to and applied for before 1 January 2024: the legal change secured by this priority notice can still be entered in the land register after 1 January 2024 without prior registration of the GbR.

The Limited Liability Companies Act (Gesetz betreffend die Gesellschaften mit beschränkter Haftung, "GmbHG") provides for a similar provision that applies to any GbR acquiring shares in a limited liability company (Gesellschaft mit beschränkter Haftung, "GmbH").

Situations in which registration is advantageous

As from 1 January 2024, a registered GbR can undergo conversion in accordance with the Transformation Act (Umwandlungsgesetz, "UmwG"). The provisions set out in the UmwG entitle any registered GbR to participate in a merger (Verschmelzung), spin-off (Abspaltung) or change of legal form (Formwechsel). This makes it easier for GbRs to participate in legal transactions.

Application of the Money Laundering Act

Once a GbR is registered in the new partnership register, it falls under the scope of application of the Money Laundering Act (Geldwäschegesetz, "GwG"). This triggers the obligation to submit a list of its beneficial owners to the Transparency Register.

Registration procedure

The application for registration in the new partnership register must be submitted by all partners of the GbR. The application must be certified (beglaubigt) in front of a German notary public, a process that can also be completed via video conference.

The application must contain the following information:

  • name of the GbR,
  • registered office of the GbR,
  • address in a Member State of the European Union,
  • purpose of the GbR, unless this is clear from its name,
  • surname, first name, date of birth and place of residence of all partners,
  • if the partners are legal entities or partnerships with legal capacity: the name, legal form and registered office of the legal entity or partnership and, if required by law, the relevant register and register number,
  • information on the partners’ power of representation, and
  • confirmation that the GbR is not already registered in the commercial or partnership register.

Applications for registration in the partnership register can be submitted from 1 January 2024 onwards.

Summary and conclusion

The changes following the introduction of the MoPeG will not only provide more certainty regarding GbRs, but will also facilitate the involvement of GbRs in legal transactions in general.

As of 1 January 2024, any changes that must be filed with German public registers will not be enforceable until the GbR has been registered in the new partnership register.

Even though registration is neither mandatory nor necessary for legal capacity, we recommend early registration and expect that most partners of GbRs will register their GbRs with the partnership register.