If an owner, contrary to his commitment, sells a condominium unit in a neighborhood preservation zone not to the tenants but to a civil law partnership (GbR) consisting of his own partners, this does not constitute a privileged “sale to the tenants” within the meaning of § 172(4), sentence 3, no. 6 of the German Building Code (BauGB). The Higher Administrative Court of Berlin-Brandenburg has therefore upheld the revocation of a preservation-law permit that had previously been deemed to have taken effect. The authority was permitted to revoke the unlawful administrative act within the one-year period because there was no legitimate expectation of protection.
What was the case about?
A limited partnership (Applicant No. 1) is the owner of a property located within the scope of a social preservation ordinance. The competent district office approved the conversion of the building into condominiums after the owner had agreed to sell certain units—including Apartment No. 46 (WE 46)—only to the respective tenants within seven years. This restriction was entered in the land register.
However, WE 46 was sold to a GbR whose partners also held interests in the selling KG (Applicant No. 2). A deemed approval under property preservation law had initially taken effect for this sale because the authority had not rendered a decision in a timely manner. In a decision dated August 28, 2025, the district office revoked this deemed approval and declared the revocation immediately enforceable. On December 18, 2025, the Berlin Administrative Court refused to restore the suspensive effect of the objection filed against this decision. An appeal against this decision was filed with the Higher Administrative Court—without success.
Why isn't a sale to one's own GbR considered a "privileged tenant sale"?
The court interprets Section 172(4), sentence 3, no. 6 of the BauGB narrowly: A tenant within the meaning of this provision is only someone who uses the apartment for residential purposes pursuant to a lease agreement governed by the law of obligations. A shareholder of the selling company does not meet this requirement, even if she is economically affiliated with the seller. According to the Higher Administrative Court (OVG), the Federal Court of Justice (BGH) also held in a comparable, reverse case (transfer of ownership to a GbR) that a sale to a party other than the tenant had taken place.
The Senate rejects a restrictive interpretation of the provision in favor of the petitioners. The purpose of the provision—that the owner should be permitted to sell the separately owned unit not to just any prospective buyer, but only to the tenants—requires two cumulative conditions. In any case, the purchaser does not meet the second condition because she is not a tenant of the apartment.
Do such arrangements pose a risk of circumventing tenant protection laws?
In the court’s view, there is a particular risk that the protection of the resident population intended by § 172 of the German Building Code (BauGB) will be undermined by the formation of companies on the part of both sellers and buyers. When individual apartments are transferred from a company’s joint assets (jointly held property) to individual shareholders, the risk of displacing the current residents through subsequent termination for personal use is “typically particularly high.” According to the court’s reasoning, this applies regardless of whether there is actually a threat of displacement in a specific case—it is sufficient that the measure is generally capable of setting such a trend in motion, thereby serving as a precedent.
Are there any exceptions for sales by shareholders?
The court examined but rejected a so-called “atypical exceptional case,” in which approval could have been granted at the court’s discretion despite the general grounds for denial. The fact that WE 46 was previously rented out is not sufficient, because the protective purpose of the preservation ordinance does not apply only to persons already living in the apartment, but is intended to preserve the structure of the resident population as a whole. Accordingly, even a purchaser who intends to live in the property does not automatically belong to the population worthy of protection if he or she has not previously lived in the building or within the preservation area.
The court was also not persuaded by the petitioners’ other arguments: A delay in the proceedings lasting several years on the part of the authorities does not justify an exception, especially since the seven-year sale deadline had not yet expired anyway. A settlement agreement reached in 2023 regarding a demolition permit did not concern the conversion permit at issue here. Since the owner could alternatively have rented out the existing building, a reduction of discretion to zero is out of the question. Finally, no claim to equal treatment can be derived from the differing permitting practices of another Berlin district, because each district is independently responsible for its own territory under the Berlin Implementation Act for the Building Code (BauGB) of November 7, 1999 (GVBl. p. 578).
Was the revocation of the deemed approval lawful?
The revocation took place within the one-year period specified in § 48(4), sentence 1, of the Administrative Procedure Act (VwVfG). The decisive factor for the court was that there was no legitimate expectation regarding the continued validity of the deemed approval. The petitioners had not invoked the deemed approval until their letter dated July 15, 2025—according to their own statements, “while preparing the lawsuit.”
In the Senate’s view, a legitimate expectation regarding the continued validity of an administrative act—whether it was actually or fictitiously issued—requires actual knowledge of its existence. No legitimate expectation can arise prior to such knowledge. Since the petitioners had not, moreover, taken any actions in reliance on the deemed issuance, the authority was entitled to give greater weight to the public interest in restoring lawful conditions than to the private interest in the continued validity of the permit.
Practical Conclusions
The decision shows that a contractually agreed sale exclusively to tenants cannot be circumvented by formally conducting the acquisition through a company in which the seller or its shareholders hold an interest. Anyone who has made such a commitment as part of a conversion approval should strictly adhere to it—even if the approval process drags on for years and, formally speaking, a deemed approval takes effect.
The decision also shows that a deemed approval does not enjoy greater protection of legitimate expectations than an expressly granted one: Without actual knowledge of its existence, no one can rely on it, and the authority may revoke it within the one-year period specified in § 48 VwVfG if its content is unlawful. Project developers should therefore document the occurrence of a deemed permit in a timely manner and assert it if they wish to rely on it later.
Source: Higher Administrative Court of Berlin-Brandenburg, Order dated September 14, 2026, Case No.: OVG 10 S 1/26
Jochen Mittenzwey
Attorney
Certified Specialist in Construction and Architectural Law
mittenzwey@mo45.de
