If a leaseholder regularly pays a fee to the landowner, he or she is taking advantage of the so-called heritable building right. That means this may build or maintain a structure on or under the property. The hereditary building right is also colloquially called hereditary leasehold. In Austria, Switzerland and Liechtenstein, it is called "building lease."
The building, which is erected on this leased place, is itself treated like a piece of land. In plain language, this means that the builder is also the owner of this structure and not the landowner himself. The whole project is documented in two land registers. One entry is made in the land register and one in the hereditary building land register. In the latter, the hereditary building right is directly determined in the second division. In the event of a compulsory auction, the heritable building right holder cannot be compulsorily enforced. He gets to keep his leasehold.
Since the hereditary building right is treated like a real property, you may also inherit, encumber and sell it. One could certainly take out a mortgage on the heritable building right. The hereditary building code mentioned earlier serves this purpose. Which is created specifically for such measures. This plan also includes the earthworks contract, which was agreed and concluded between all parties involved.
What are the reasons for an inheritance right?
The ground lease was created to promote housing development. Socially weaker sections of the population should thus be given the opportunity to build houses and other projects. It also serves to combat land speculation. Today, this hereditary building right is mainly used by owners who want to exploit large areas economically. This is how they can hold their basic assets in a favorable way. Mainly churches, foundations and municipalities receive this so-called hereditary building right. But other landowners are also entitled to order it. The landowner also has the right to impose certain obligations on the leasehold owner. For example, that a sports club house, may only be used as a club house and not privately. If the leaseholder acts contrary to the contract, the hereditary building right can be withdrawn from him. Otherwise, deadlines apply, as stated in the land register.
The ground lease owner, who rents or leases his ground, receives a so-called ground rent. This is a payment that is regularly made by the leaseholder. As soon as the registration in the hereditary building land register has taken place, this hereditary building interest also comes into force. As a rule, this amounts to 1% of the current land value. It is fixed at the beginning of the respective term. An increase is only possible if this is recorded in the land register and achieved by means of a value protection agreement under debt law. The adjustment clause of the in rem ground rent expired on 1. October 1994 came into force and is valid until further notice.