Maintenance and Repairs: Managing Real Estate Expenses Before Estate Settlement

1. Introduction
Real estate is often a significant asset in an estate, but it comes with ongoing responsibilities. Maintenance, repairs, and associated costs must be managed to preserve the property's value during the interim period before the Certificate of Inheritance (Erbschein) is issued. Accessing estate funds to cover these expenses can be complex due to legal restrictions, leaving heirs with critical decisions about how to handle these obligations. This article explores the legal framework, practical solutions, and strategies for maintaining real estate before the estate is formally settled.

 
2. Legal Framework for Covering Real Estate Costs
2.1 Under German law, maintenance and repair costs are classified as necessary expenses for preserving estate assets. These costs can be reimbursed from the estate once the Certificate of Inheritance is issued.

2.2 The estate’s accounts are typically frozen upon the deceased’s passing. Banks may only release funds for essential property expenses if documentation, such as invoices and proof of necessity, is provided.

2.3 Executors (Testamentvollstrecker) may have the authority to manage and pay for real estate costs before the Erbschein is issued, provided their role is recognized by the probate court.

 
3. Responsibilities of Heirs and Executors
3.1 If a sole heir is named, they are responsible for managing the property. However, without the Certificate of Inheritance, their ability to access estate funds for these costs is limited.

3.2 For joint heirs (Erbengemeinschaft), decisions about maintaining or repairing the property must be made collectively. Disputes can delay critical actions, potentially leading to property damage or loss of value.

3.3 Executors have the legal authority to prioritize property maintenance and ensure repairs are carried out, protecting the estate's value for all beneficiaries.

 
4. Challenges in Managing Real Estate Expenses
4.1 Access to funds is restricted until the Certificate of Inheritance is issued, which can take months. This delay complicates the timely payment of necessary maintenance or repair costs.

4.2 Property damage or neglect during this period can significantly reduce the estate’s value, creating financial losses for the heirs.

4.3 Disagreements among heirs about the necessity or scope of repairs can lead to inaction, further jeopardizing the property.

 
5. Practical Solutions for Covering Maintenance and Repair Costs
5.1 Heirs may choose to pay for maintenance or repairs out of pocket during the interim period. These costs can typically be reimbursed once the estate funds become accessible. Keeping detailed records and receipts is essential for reimbursement.

5.2 Negotiating with contractors for deferred payment terms can provide short-term relief until the Certificate of Inheritance is issued.

5.3 Pre-financing services offered by professional estate management firms can cover necessary property expenses, ensuring that maintenance and repairs are not delayed due to funding constraints.

5.4 Collaboration among heirs in an Erbengemeinschaft can help distribute the financial burden of property costs equitably, reducing the likelihood of disputes.

 
6. Risks of Neglecting Real Estate Maintenance
6.1 Failing to address maintenance needs, such as roofing, plumbing, or heating repairs, can result in significant property damage and increased repair costs.

6.2 Neglecting regular upkeep, such as landscaping or pest control, can lead to deterioration that diminishes the property’s market value.

6.3 Unpaid utility bills or property taxes may result in penalties or legal actions, further complicating the estate administration process.

 
7. Differences Between Germany and Other Legal Systems
7.1 In Germany, strict regulations govern the use of estate funds, ensuring that property maintenance and repair costs are justified and documented. This approach protects the estate's value but can create delays in accessing funds.

7.2 In contrast, systems like Thailand’s often rely on family agreements for managing property expenses. While this allows greater flexibility, it may lead to disputes or lack of accountability without clear legal authority.

 
8. Key Considerations for Managing Real Estate Expenses
8.1 Proactively assessing the property’s condition can help identify immediate maintenance or repair needs, preventing further damage.

8.2 Open communication with banks and financial institutions is essential for seeking approval to release funds for critical expenses.

8.3 Engaging professional property managers or maintenance services can ensure timely and effective upkeep, preserving the property’s value for heirs.

 
9. Conclusion
Real estate maintenance and repairs are critical for preserving the value of estate assets, but managing these costs before the Certificate of Inheritance is issued requires careful planning. By understanding the legal framework, exploring practical funding solutions, and collaborating among heirs, families can ensure that properties are protected and maintained during the probate process. Engaging professional support, such as pre-financing services or property management experts, can further ease the burden, ensuring that the estate’s most valuable assets remain intact.