If you inherit a company, you are liable for its liabilities. For the sole proprietorship, liability is regulated in § 27 HGB. We explain when and to what extent you are liable, how you can limit this and which method is the most adept.

If you are an heir, you enter the legal position of the decedent by universal succession (§ 1922 BGB). The heir is already liable for inheritance in accordance with § 1967 BGB for all debts of the deceased with his entire property. Therefore, he is also liable for the business liabilities. The liability mass includes both the inherited assets and his private assets. However, the heir may limit his liability to the estate by applying for estate administration or estate insolvency (§§ 1975 ff. BGB). In addition, the heir can collect the deficiency statement according to § 1990 BGB.

§ 27 HGB establishes a stricter liability of the heir in the case of continuation of the commercial business under the previous company. According to § 27 (1) HGB, § 25 HGB applies if a commercial transaction belongs to the estate and the inheritance continues it. § 25 HGB regulates the liability of those who take over a commercial trade by way of a legal acquisition.

The heir is liable for old liabilities for the time being only if the commercial business actually belongs to the estate.

The commercial transaction does not belong to the estate if the heir rejects the inheritance or has effectively contested the acceptance. In this case, the liability according to §§ 27 (1), 25 HGB does not intervene. If, on the other hand, the heir has limited his liability only for inheritance tax, the business is still in the estate. Therefore, the mere inheritance tax restriction does not exclude commercial liability because you continue to inherit the business.

In order for the heir to be liable according to § 27 (1), § 25 HGB, he must also continue the commercial business and the company. If he changes the company, however, the liability does not apply to him. However, the company is not yet changed if only a successor has been added. Rather, he has to change defining characteristics of the company, i.e. the name of the company.

The heir can exclude liability according to § 27 (1) HGB. However, he cannot do so by estate administration or estate insolvency. He will only be released if he makes use of the limitations of liability regulated in § 27 paragraph 2, § 25 paragraph 2 HGB.

According to § 27 paragraph 2 HGB, unlimited liability does not occur if the heir ceases the business within three months after obtaining knowledge of the inheritance. The operation is discontinued when the business is completely terminated or the operation is sold to a third party without a company. If, on the other hand, the company is sold to a third party, including the company, there is no attitude within the meaning of § 27 (2) HGB, since the inheritance then makes economic use of the company.

The heir can also initially continue the operation under the original company and only subsequently change the company. The question then arises whether this subsequent company change also constitutes an attitude within the meaning of § 27 (2) HGB. According to the prevailing view, the subsequent change of company does not constitute a voluntary cessation. Therefore, the subsequent change of company does not exclude liability. Therefore, § 27 (2) HGB does not give the heir the opportunity to reconsider during the operation of the company whether the advantage of the company outweighs the disadvantage of liability. Rather, he must assess whether he retains the company before continuing operations.

Another possibility to exclude liability in the case of continuation of the commercial trade under the original company could be to enter a corresponding disclaimer in the commercial register. This possibility exists in the legal acquisition of a commercial trade according to § 25 paragraph 2 HGB.

Since § 27 (1) HGB refers to the entire § 25 HGB, the possibility could also apply to liability for acquisition by inheritance. On the other hand, there is no further liability of the previous owner (heir) in the case of the liability of the heir according to § 27 HGB, unlike in the case of the liability according to § 25 HGB. In addition, § 27 paragraph 2 HGB sets out stricter requirements for the exclusion of liability.

However, there is no reason to place the heir worse than the legal acquirer. In particular, shortly before the death of the deceased, he could still legally acquire the business and would then be able to bear limited liability more easily. In addition, the entry of the liability exclusion in the commercial register also serves the legal certainty of creditors. They can check whether the new farmer is liable or not by simply looking at the register. In addition, despite the removal of the original debtor, there is the liability of the heir under civil law instead of the decedent. In any case, the heir is always liable with the estate, as the liability cannot be limited in this respect.

Therefore, even if you inherit a company, the liability according to § 27 (1) HGB can be limited by entering it in the commercial register. The different agreement between the heir and the previous owner (i.e. the deceased) is no longer possible due to the death of the owner. However, a unilateral declaration by the deceased is sufficient.

The heir of a business is liable for the liabilities of the business, both inheritance and commercial law. However, the heir may civilly limit his liability to the estate. However, this does not yet apply to commercial liability. In order to no longer have to be liable for business liabilities under commercial law, the heir must at the same time limit commercial liability. For this purpose, he can stop the continuation of the business within three months or have a disclaimer entered in the commercial register.