Regulation No. 650/2012 (SR) was intended to simplify cross-border succession cases by limiting the inheritance procedure to a single Member State. However, German inheritance cases concerning real estate located in Lithuania have led to numerous unresolved conflicts.
Before the entry into force of the SR, several inheritance proceedings were conducted in different EU Member States in cross-border succession cases. If, for example, a testator whose last habitual residence was in Germany, owned a Lithuanian property, inheritance proceedings were opened in both Germany and Lithuania in accordance with local law. In the case described, a German heir had to assert his inheritance additionally in Lithuania under Lithuanian law – due to a lack of language and legal knowledge, this was often costly and time-consuming.
According to the SR, this procedure should be considerably simplified. In the present case, the inheritance proceedings would only be carried out in Germany under German law. No second inheritance procedure can be opened in Lithuania. However, according to Art. 1 (2) lit. l) SR an entry of change of ownership in the Lithuanian Real Estate Registry would still be required under Lithuanian law.
In order for the heir to be able to prove his status to the Real Estate Registry, Art. 62 (1) SR introduced the European Certificate of Succession, which is issued for use in another Member State and takes effect there as proof of legal succession.
Problem 1: Is the European Certificate of Succession compulsory?
According to Art. 62 (2) SR, use of this certificate is not actually mandatory (see also ECJ, judgment of 21.06.2018 – C-20/17). According to Art. 60 (1) SR, the heir can also present other documents. For example, an authentic deed drawn up in one Member State has the same formal evidential value in another Member State as in the Member State of origin (Art. 59 (1) SR). A person wishing to use an authentic deed in another Member State may request the authority which establishes the authentic deed in the Member State of origin to issue a certificate in accordance with Annex 2 Form II of the Implementing Regulation (EU) No 1329/2014. This must then be presented together with the deed in the other Member State.
Although the SR expressly provides for this possibility, the Lithuanian Real Estate Registry has so far – probably also due to lack of practice – always required submission of a European Certificate of Succession (Art. 22 Para. 1 No. 5 Law on the Real Estate Register of the Republic of Lithuania) for registration of the new owner in inheritance cases.
Problem 2: Identifying specific property in the European Certificate of Succession
In addition, the Lithuanian Real Estate Registry requires identification of specific property in the certificate, i.e., which makes it clearly identifiable. In detail it requires an indication of the address as well as the so-called Unikalus-No. (unique number) of the real estate. Without this information, the Real Estate Registry office has refused any registration so far.
There is a currently unresolved conflict between German inheritance law and Lithuanian real estate register law. The reason for this is the practice of German probate courts, which (as with the German certificate of inheritance) do not enter the property in the European certificate of inheritance, but only the proportion of heirs (Munich Higher Regional Court, Order of 12.09.2017 – 31 Wx 275/17). The property is not specified in this way as required by Lithuanian real estate register law. Registration of change of ownership without stating the real estate in the certificate of inheritance is not possible at present.
Problem 3: Special case of bequest
A problem of another nature exists in the case of bequests. Here, the testator gives the legatee a certain asset in the will, which the legatee is to receive in addition to or independently of the portion of the inheritance to which he is entitled. A classic case is bequeathing certain property.
In Lithuania, this bequest is structured as a so-called legacy by vindication, i.e. the legatee receives direct entitlement to the estate (similar to the heirs). This stems from the Roman law and its Latin term: legatum per vindicationem, which was abolished in German law at the end of the 19th century with the creation of the German Civil Code (BGB).
In Germany, on the other hand, the bequest is structured as a legacy by damnation. This means that the legatee does not receive any direct entitlement to the estate, but only a claim against the heirs to transfer the bequeathed property to him. The transfer of ownership itself takes place only by notarised contract of performance of the bequest. This stems from the Roman law and its Latin term: legatum per damnationem, by means of which the testator imposed an obligation upon the heir to do a legacy performance contract to transfer ownership.
The legatee would have the advantage (in comparison to the heirs) that the property would be registrable in his European Certificate of Succession (since he not only inherits a share, but is bequeathed the concrete property) and the German probate court could also register this under German law.
The problem, however, is that the legatee would not be entitled to file an application under German law. According to Art. 63 (1) SR, the certificate serves only for use by a legatee “with direct entitlement to the estate”. From the perspective of German probate courts, however, a legatee under German law would only have an indirect entitlement to the estate, since on the basis of the legacy of damnation he only receives a mere claim. This claim has yet to be asserted and fulfilled by means of a bequest performance contract.
The aim of the wording “direct entitlement to the estate” in the SR was actually to exclude only estate creditors from filing an application. Under German law, legatees are regarded as estate creditors. Strictly according to the SR, however, they are not – thus legatees and estate creditors are always treated separately in the SR.
Another symptom of the overall situation is that the German version of an application for issuance of a certificate of inheritance (Annex 4 Form IV of Implementing Regulation (EU) No. 1329/2014) and Art. 63 (1) of the SR as well as the certificate form (Annex 5 Form V of Implementing Regulation (EU) No. 1329/2014) contradict each other. Contrary to the SR and the wording in the certificate form, the application form does not refer to a legatee with direct entitlement to the estate, but to a legatee with direct claims arising from the estate (Clause 4.2). Under German inheritance law, the legatee would have no direct entitlement to the estate, but a direct claim against the estate.
Here the question arises as to whether only a translation error occurred in the application form for the European Certificate of Succession or whether this wording was deliberately chosen – for example in order to make it possible to register the bequest in Germany. According to the European interpretation, a direct entitlement could also arise, for example, as soon as a bequest performance contract has been concluded.
If one goes solely after the wording of the SR in connection with whether the legatee is also the heir, a legatee could file an application in his capacity as heir, provided that he is at the same time the heir. He would be entitled to file the application as heir according to 63 (1) of the SR. Since he has a direct claim from the estate, he could register the real estate (including all data required for registration) under 4.2. Due to lack of practice, it is questionable whether the German probate courts would follow this reasoning.
In its judgment of 12 October 2017 in Case C-218/16, the ECJ ruled that Article 1(2)(l) of the SR should be interpreted as meaning that it is intended to prevent registration of property in a state with a legacy of damnation from not being registered simply because the institution of the legacy of vindication is not known or recognized in its legal system. In the present case, however, the situation is reversed. The ruling of the European Court of Justice does not provide any clarity in this respect.
Due to lack of practice and decisions by the highest courts, there are no conclusive solutions to the problems mentioned so far. The high costs involved in applying for a European Certificate of Succession in Germany have so far discouraged many heirs and legatees from making any attempt to do so. Actually, the authorities of both countries should be cooperating. The authority issuing the certificate, i.e. the German probate court, should observe the formalities required for registration of real estate in the Member State where the register is kept (i.e. Lithuania) (Recital 68 of Regulation (EU) No 650/2012). The SR clearly provides for an exchange of information between Member States on these formalities. In practice, however, this cooperation has not yet taken place, leading to numerous pending inheritance proceedings.
Moreover, there are indications that the authorities in both countries would reject any attempts. Neither of the authorities at the lower level seems to want to touch this “hot potato” and both are waiting for an adaptation of the SR or a ruling by the ECJ. There is also the risk that the competent courts in both countries will have an interest in “passing on” such a case to the ECJ. There are similar experiences in the Czech Republic (The fight for European Certificates of Succession continues in Olomouc and Luxembourg, First signs of a coalition fighting for a European Certificate of Succession that has actual use value, New Austrian Supreme Court ruling on European Certificates of Succession, Entry of land plots in a European Certificate of Succession issued in Germany). German legacy by damnation and foreign legacy by vindication compete with each other. At the same time, the real estate register rules in many countries (such as Lithuania) have not been adapted to the SR.
Source: Regulation (EU) No 650/2012 ECJ, judgment of 21.06.2018 – C 20/17 Law on the Real Estate Register of the Republic of Lithuania Munich Higher Regional Court, Order of 12.09.2017 – 31 Wx 275/17