German court: builder without land ownership gets no compensation for house built
The Higher Regional Court of Munich rejected a builder's claim for compensation for the land's increase in value after she built a house on land she did not own. The court found she was not an entitled possessor, so no compensation claim arose.
In Germany, the Higher Regional Court of Munich (OLG) ruled on 16 March 2021 in a dispute between a builder and a landowner. It held that a builder who erected a building on land she did not own cannot claim compensation for the resulting rise in the land's value. The ruling matters to anyone building on someone else's land in the hope of buying it later. The agricultural portal agrarheute reported on the case on 6 November 2026.
The dispute
The builder constructed a house on a plot belonging to the defendant. The owner permitted construction only on the condition that a notarised purchase contract for the land be concluded. Before that, she objected to the building work. The builder sued, demanding compensation for the increase in the land's value caused by construction.
The court of first instance ordered the defendant to pay the builder €519,409.67 plus interest. It treated the defendant as unjustly enriched: the construction work was valued at €1,026,000, from which it deducted the defendant's counterclaims for defects and lost rental income, of which €506,590.33 was proven. Both sides appealed.
The appeal ruling
The Higher Regional Court found the defendant's appeal justified. Based on witness evidence, it concluded the builder was at best an unentitled possessor of the land. A witness, an employee of the company, recalled a fax from the defendant asking the builder to buy the land first and build afterwards. The wording of the later permission also indicates there was no prior consent.
The court noted that the case law of the Federal Court of Justice (Bundesgerichtshof) grants compensation to entitled possessors who built expecting future ownership. Compensation is also possible where both sides shared the expectation that the added value would benefit the builder. Neither condition was met here, so the builder receives no compensation. Since even a theoretical claim would have been extinguished by the defendant's set-off, the builder's appeal was dismissed.
