Hofgut am Mühltal: Attorney Thorsten Masuch Explains the Terms "Leasehold" and "Ground Rent" to Horse Owners

Thorsten Masuch is a fully qualified lawyer who teaches at universities; he learned about the case of the Hofgut am Mühlbach in Niddatal, Hesse, more or less by chance. He first spoke out about the case in the *Wetterauer Zeitung*.

He first learned about the farm because he had taught one of its operators at the Hessian University of Applied Sciences for Public Management and Security. Anja Nehls and Jan Tönjes spoke with Masuch about this on the podcast“Erzähl mir was vom Pferd.”

Jan Tönjes: How exactly did you first become aware of this case, and what was your first impression when you took it on?

Thorsten Masuch: Yes, it actually happened rather by chance. I was teaching one of the estate’s operators at the Hessian University of Applied Sciences for Public Management and Security. One day, after class, he took me aside, described the situation to me, and asked for my opinion. I have to tell you, I immediately had this nagging feeling that something wasn’t quite right. So I asked for the documents, looked them over, and my initial feeling actually grew even stronger. I’d just like to take this opportunity to emphasize once again that I am not being commissioned by the operators or anyone else. I am not being paid; I simply want to offer my legal assessment of the case—including publicly—because I consider the city’s conduct to be legally rather questionable.

Anja Nehls: And that’s exactly why we asked them—because they aren’t being paid by anyone. It’s actually quite complicated: the buildings belong to Ms. Herrges, while the land still belongs to the town of Niddatal. Perhaps you could start by explaining, in very general terms, the difference between a purchase, a lease, a hereditary lease, and a rental. After all, there are many horse owners who have leased a pasture, a farm, or rented a stall. What are the differences, essentially speaking?

Thorsten Masuch: To put it very simply: When I buy something, I acquire ownership—that is, ownership of the item. I become the owner through the purchase and the subsequent transfer of ownership. So I have the full set of rights. When I rent something, I’m allowed to use it. It doesn’t belong to me, but I’m allowed to use it.

Anja Nehls: Just like with an apartment, most of the time.

Thorsten Masuch: Take an apartment, for example—rent is a prime example. If I lease something, I’m allowed to use it, and at the same time, I’m also allowed to reap the benefits (in the case of a land lease) from that property. And finally, with a hereditary lease—which is essentially what we’re talking about here—the land doesn’t belong to me under the terms of the lease. If the land belongs to the city, then it remains the city’s property. Under a hereditary lease, however, I’m allowed to erect a building on that property—say, an indoor riding arena, stables, and so on and so forth.

Anja Nehls: And in exchange for being allowed to do that, I pay ground rent, right?

Thorsten Masuch: Yes.

Anja Nehls: So, it’s something like a monthly fee that you’re not allowed to call rent or a lease payment, because it’s actually a ground rent.

Jan Tönjes: Even though a leasehold is not the same as a purchase, the procedure is similar. Does that mean I’ll be listed in the land registry as the owner under this leasehold?

Thorsten Masuch: No, not as the owner. But of course, this legal transaction will be notarized—you’re right about that. It will be recorded in the land registry.

Anja Nehls: Well, a horse farm depends on operators being able to plan for the long term—building new stalls, maintaining and establishing pastureland, hiring staff… Legal certainty is extremely important here. Can horse owners—or citizens and business owners in general—rely on the fact that a commitment once made by the city—in this case, the approval and this long-standing leasehold arrangement—will still hold true years later? Surely they must be able to count on that?

Jan Tönjes: It’s undisputed that the mayor signed it. As an expert in public law, are there any precedents where people have said, “Yes, that’s right—a second signature should have been required,” and where a transaction has actually been reversed as a result?

Thorsten Masuch: No, that’s exactly the point. As you ultimately mentioned, the settlement can only be considered as an exception due to the existing protection of legitimate expectations. It simply cannot be the case that the municipality makes some kind of internal error—even if that were to happen—or perhaps fails to obtain approval from the municipal supervisory authority, or that a second signature is missing, and as a result, the hereditary building right—which was established by a notary and entered in the hereditary building register—is automatically revoked. This right, which has now been transferred to the new operators for six years, would then simply disappear.

Jan Tönjes: Are there any plausible reasons that you can think of that might have prompted the city to take this action?

Thorsten Masuch: Of course, we’re venturing a bit into the realm of speculation here. I can’t really fathom the city’s internal motivations right now. The question that arises here—or that the city should also be asking itself—is: Is it really in the best interest of the citizens to just shut down this riding stable out of the blue? The city should also ask itself: Is it really in the citizens’ best interest if I don’t engage in any substantive dialogue with the operators at all and make no effort whatsoever to find a solution? Mistakes may have been made, but perhaps they can be rectified in some way.

Anja Nehls: We could just submit a second signature now, and then everything would be fine.

Thorsten Masuch: But for whatever reason, the city isn’t looking into this at all. I can only imagine that there’s some background to this that none of us are aware of. And finally, since you’ve already brought up the claims for damages, is it really in the best interest of the city’s residents if the city of Niddatal doesn’t even address these potential claims for damages and doesn’t take them into account at all?

If, as a city, I now have various legal options—and perhaps one of those options is to share responsibility for any errors—then I think the fact that this is a long-established business should certainly be taken into account. The fact that it’s operating, that there are 203 students there, that there are employees there, and that there’s now also an apprentice there. In my view, the city should take all of that into account in a case like this, where it has various options.

Jan Tönjes: I just have one very last quick question: A piece of pasture here, a possibility there to house a retired horse—when I think about things like that and then read “hereditary building right,” meaning a leasehold, in a contract, should that set off alarm bells for me?

Thorsten Masuch: I just have to keep reminding myself that I don’t own the land. Whether I build a riding stable or a residential building on land held under a leasehold, the land doesn’t belong to me, and at some point it will revert to the owner. So, in a sense, I have a limited-time right to use the entire property. But the whole thing is legally governed by a specific law.

Jan Tönjes: So, does that mean a leasehold interest is safe in and of itself?

Thorsten Masuch: It has certain unique features, but you can’t say that, based on general considerations, one should never sign a leasehold agreement.

Thanks for the interview!

You can hear the full story about the leasehold rights and the Hofgut am Mühlbach estate in detail on the podcast “ERZÄHL MIR WAS VOM PFERD.”