Teilungsgesellschaft

The term Teilungsgesellschaft translates literally as “division company” and refers to a legal entity established to carry out the subdivision of real estate, typically a property that is divided into several individual ownership units. In Germany this concept is closely linked to the Wohnungseigentumsgesetz (WEG), the law governing condominium ownership, though a Teilungsgesellschaft can also be used for non-residential fragmentation such as office spaces or industrial buildings.

A Teilungsgesellschaft is usually created by an existing landowner who wishes to sell portions of a property without fully relinquishing control of the remaining part. The company is incorporated as a Gesellschaft mit beschränkter Haftung (GmbH) or an Aktiengesellschaft (AG). Each future owner receives a share in the company corresponding to the proportion of land or a specific unit they acquire. In many cases the company transfers the title of each individual unit to the respective buyer, while the remaining shares are retained by the original owner or held for a planned resale.

The legal framework obliges the Teilungsgesellschaft to register the division with the land registry and to provide a notarized resolution for the division. The company must manage common areas, upkeep, and any shared infrastructure, and it is usually governed by a board elected by the shareholders. Because ownership is held through shares, this structure allows for flexible financing, easier transfer of units, and the possibility of looser tax arrangements compared to direct freehold registration.

Nevertheless, Teilungsgesellschaften can be complex to administer. Shareholders must adhere to the company’s bylaws, and disputes may arise over the management of common assets or the valuation of shares. The company’s liability is limited to its assets, but in practice may be difficult to enforce, especially if the original landowner retains a controlling stake.