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Transfer of property rights of untraceable co-heirs to the compensation fund held constitutional
Press Release No. 59/2010 of 05 August 2010
Order of 21 July 2010
1 BvL 8/07
Numerous assets in the GDR - in particular pieces of real property - that had not been expropriated were under compulsory state administration. This meant that although those affected retained formal ownership of their assets, their rights to use and dispose of such assets were restricted and the economic effect was largely comparable to expropriation. The Property Act (Vermögensgesetz - VermG) was amended on 14 July 1992 by the insertion of a new § 11a, which provided for the revocation of all state administration of affected assets by direct operation of law with effect from 31 December 1992. However, thereafter much of the real property that had been previously been administered by the state was "effectively ownerless" because the respective owners or their whereabouts were still not known. The Compensation Act (Entschädigungsgesetz) that entered into force on 1 December 1994 provided that assets that were effectively ownerless should be transferred to the compensation fund administered by the Federal Office of Central Services and Unresolved Property Issues (Bundesamt für zentrale Dienste und offene Vermögensfragen) if the owners could not be ascertained or did not come forward even after a public notice procedure was carried out. Among other things, compensation under the Compensation Act and the Federal Act for the Compensation of the Victims of National Socialist Persecution (NS-Verfolgtenentschädigungsgesetz) as well as equalisation payments for irreversible expropriations are paid from the compensation fund. Finally, the Amending Act (Änderungsgesetz) of 10 December 2003 amended § 10.1 sentence 1 no. 7 sentence 2 EntschG so as to provide that even those assets to which unknown or untraceable co-heirs were entitled would be subject to transfer to the compensation fund. As a result, the compensation fund becomes a member of the community of owners or community of heirs in relation to assets formerly administered by the state. Current law makes no provision for the restitution of a co-owner's or co-heir's share which has been transferred to the compensation fund in the event that the excluded legal owner or his or her legal successors later come forward.
The plaintiff in the original proceedings whose case was brought by a curator absentis is entitled as co-heir to a one-third share of the property that was owned by her father in Brandenburg. Both of her sisters registered their inheritance claims within the required period. After failing in spite of intensive research to establish the whereabouts of the plaintiff, who had already moved to Great Britain in 1965, the Federal Office of Central Services and Unresolved Property Issues excluded the plaintiff from her co-heir's share in the property and declared that her share would pass to the compensation fund owned by the Federal Republic of Germany. The action brought by the curator absentis against this decision led the Federal Administrative Court (Bundesverwaltungsgericht) to refer § 10.1 sentence 1 no. 7 sentence 2 EntschG to the Federal Constitutional Court for a decision on its constitutionality. According to the Federal Administrative Court, the provision was incompatible with Article 14.1 of the Basic Law (Grundgesetz - GG) insofar as it related to the rights of untraceable co-heirs.
The First Senate of the Federal Constitutional Court has decided that § 10.1 sentence 1 no. 7 sentence 2 EntschG is compatible with the Basic Law to the extent that it also allows an untraceable co-heir to be deprived of his or her rights in respect of assets formerly under state administration where at least one other co-heir is known and can be traced.
In essence, the decision is based on the following considerations:
The status of co-heir acquired under former GDR law enjoys the protection of the fundamental right to property (Article 14 GG). Nonetheless, the encroachment on this legal interest which results from the deprivation of an untraceable co-heir of his or her legal status provided for in § 10.1 sentence 1 no. 7 sentence 2 EntschG meets the requirements that must be placed on a fair reconciliation of interests when determining the content and limits of property. The provision serves the legitimate goal of promoting the public interest since it eliminates the problem of the assets previously administered by the state in the accession territory being effectively ownerless and establishes ownership rights in respect of them; it thereby improves the marketability of the properties. It thus contributes to an orderly legal and economic development in the new Länder (states). When exercising its discretion in connection with the promotion of economic development in the new Länder, the legislature was entitled to assume that the inability to trace a co-heir would limit the community of heirs' capacity to act. Without the untraceable co-heir the only options available to the community of heirs are to take measures whose purpose is the proper administration of the deceased's estate or to take action under the power granted to heirs to protect a deceased's estate against imminent harm. Even if one were to appoint a representative or curator to take only certain measures, this would not allow such obstacles to be removed with the same swiftness as the transfer of an inheritance share to the compensation fund, which will normally dispose of the assets.
Nor does § 10.1 sentence 1 no. 7 sentence 2 EntschG impose a disproportionate and unreasonable burden on the untraceable co-heir who is excluded from the inheritance. In this context, it must be taken into account in particular that only those assets are affected where a long period of time has elapsed in which the rightful owner (who has remained untraceable in spite of the exhaustion of all possible means of ascertaining his or her whereabouts) has not claimed them although the opportunity to do so existed. In this case, the untraceable co-heir had 13 years to claim her inheritance. In addition to this, a public notice procedure may not be commenced until after the Federal Office has satisfied its duty to find the rightful owner with the means available to it. Against this background and in view of the special situation existing after the restoration of German unity, the public interest in the revival of the real estate market and economic development prevails. The fact that an untraceable co-heir is deprived of his or her legal status without compensation is also unobjectionable. The reason for this is that the money transferred to the compensation fund does not serve general fiscal purposes, but benefits other persons who are in the same position as the original legal owner because they also suffered the loss of assets for which they are entitled to be compensated.
The restriction of the property right is also drafted in such a way as to afford equality before the law (Article 3.1 GG). It is true that communities of heirs with untraceable co-heirs can also arise in cases where under the Property Act compensation is made through retransfer (restitution) of withdrawn assets and where the untraceable co-heir's inheritance shares are not, however, subject to a public notice procedure. This unequal treatment is, however, permitted under constitutional law in view of the legislature's broad operating latitude. It is factually justified and thus not arbitrary. The legislature was entitled to take into account that, compared with other assets covered by compensation under the Property Act, the fact that those assets were effectively ownerless after the removal of state administration by the Act of 31 December 1992 had acquired a completely different significance.
Neither the constitutional position of the other available co-heirs arising from Article 14.1 GG, nor that of the testator is violated. To the extent that the other co-heirs have the compensation fund forced on them as a co-heir, this does not in and of itself amount to an encroachment on a legal position that has the value of an asset, in particular since the community of heirs is anyway only a temporary arrangement. The fundamental-rights position of the testator is not affected since the encroachment at issue does not affect his or her testamentary freedom or his or her right to leave his or her assets in accordance with the statutory provisions governing inheritance by relatives, but instead only the legal position of such person who has on this basis become a co-heir.