The housing cooperative - Optimal asset protection for real estate assets
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In today's world, the housing cooperative is becoming increasingly important, especially when it comes to the efficient management and reliable asset protection of real estate assets. This form of cooperative offers a wealth of advantages and is proving to be an ideal instrument for the sustainable preservation of assets. In this article, we explain why this legal form is suitable for protecting and building up real estate assets and managing them across generations.
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The housing cooperative - an overview
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The purpose of a housing cooperative is to create and maintain living space for its members. This not only enables the efficient use of real estate assets, but also offers considerable advantages in terms of asset protection.
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Advantages of the housing cooperative
Effective asset protection:
Limited compensation claims: When a member leaves the cooperative, the claim to the settlement balance is limited to the amount of the existing share capital. In accordance with § 73 para. 2 sentence 3 GenG, the departing member is not entitled to a share in the reserves or other assets of the cooperative. This provision ensures that the remaining members can continue to be supported and that the assets of the cooperative remain protected. It also ensures that the assets of the cooperative are not allocated proportionately to the private assets of the members.
Execution of the severance payment claim: The limited severance payment claims of a departing member are subject to execution from the time they arise or as soon as their content can be sufficiently determined. The claim to the settlement balance is limited to the amount of the share capital. This clear limitation ensures financial stability within the cooperative and protects the assets.
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Long-term asset commitment:
Ensuring continuity: Long notice periods and limited settlement options ensure that the real estate assets remain tied up in the cooperative in the long term. These measures help to maintain the financial stability and cohesion of the cooperative. In this way, the real estate assets remain secure and can be used effectively to promote all members.
Long-term preservation: In principle, the cooperative can only be dissolved by resolution of the General Meeting of its members. In accordance with Section 78 (1) GenG, this requires a majority of at least three quarters of the votes cast. In addition, the articles of association of the cooperative may stipulate further requirements and conditions. These high hurdles for dissolution guarantee stability and continuity by ensuring that such a decision is only taken with broad approval and thorough consideration.
Non-transferable membership: Memberships in a cooperative are not transferable. This prevents uncontrolled transfer to third parties. In addition, joining the cooperative may be subject to further requirements, such as the need for the Board of Directors to approve the accession of a potential member. These regulations help to maintain the integrity and continuity of the cooperative and protect the interests of all members.
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Permissible funding purpose and legal certainty:
Promotion of housing: The purpose of a housing cooperative is to create and maintain housing for its members. As a result, it meets the legal requirements for a cooperative and receives legal recognition. This enables it to benefit from tax advantages.
Regular audits: According to § 54 S. 1 GenG, a cooperative must belong to an independent auditing association that audits the financial circumstances and the proper conduct of business. These audits ensure that the cooperative fulfills its purpose and is legally secure.
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Inheritance and gift tax opportunities:
Low valuation approach: Cooperative shares can be valued at the lower nominal value; this results in a lower inheritance and gift tax burden. In a ruling from 2014, the Cologne Fiscal Court decided that cooperative shares should be valued at their nominal value, as a member can only dispose of their share under difficult conditions. This view is also held in the literature, but must be assessed taking into account the individual circumstances.
Conclusion:
The housing cooperative offers considerable advantages for asset protection and the management of real estate assets. The tax opportunities and long-term asset commitment make it an effective instrument for intergenerational asset succession. The clear earmarking and regular reviews ensure the continued existence of the cooperative. Anyone wishing to protect and manage real estate assets in the long term will find a sustainable solution in the housing cooperative.