„The wealth pool contract forms a solid basis for the relationship between project organisers and investors.“

Dr. Markus Distelberger
Here is a brief summary of the key points of the contract. These fundamentals are customised specifically to suit the kind of investment, the project or business being financed.

People support a particular project that they know and whose organisers they trust by contributing money by way of a loan that is provided interest-free but value-protected in accordance with the 2010 CPI (Consumer Price Index) for an unspecified period.

The money is intended to be used only for the acquisition of objects of lasting value (e.g. purchase of land or erection of buildings). The providers listed in the land registry are protected by a trustee mortgage on these objects.

Unless a minimum period has been agreed, the money invested can be taken out again three months from the end of the next calendar quarter (31.3., 30.6., 30.9. or 31.12.). To make this possible,

  • it is agreed in the trust contract concluded with the trustee that a cash reserve of at least 10% of the total illiquid pool volume be retained in the escrow account.
  • The operator of the pool ensures that further deposits go into the pool.
  • The payout period is extended in 3-month stages and if, due to multiple overlapping payout requests, the cash reserve is insufficient to pay these until there is enough cash in the reserve again, the period may in extreme cases be extended to a maximum of 5 years.
  • The payout of contributions is always possible by selling parts of the property assets.
  • If none of these measures enables payouts to be made on time, it becomes the task of the trustee to auction the property and distribute the proceeds.

In order to ensure that a crisis in the association/business and the resulting delay in payment or insolvency does not initiate a panic-based negative spiral and to prevent the premature sale or auction leading to a loss, it is agreed from the outset that a debt conversion pool will be formed to distribute any potential loss, and that this will be retroactive for three years.

This means that in the event of the property having to be auctioned at a loss, the loss will be split equally across all concerned (including the participants who have withdrawn their contributions in full during the previous 3 years). Therefore, the operator of the wealth pool must ensure that the property is well maintained and, if possible, increases in value in order to reinforce the confidence of the pool participants and for the property to always remain attractive to new participants.

Participation in the wealth pool is a loan agreement and not participation in a company. The buildings are all to be erected by the association/company under its own economic and legal responsibility without investors in the pool being held liable for debts incurred in relation to the erection and maintenance of the buildings.

There is full transparency between the operator of the pool and its investors in terms of the holdings in and use of the real estate asset. Everyone will receive a list of all relevant details at least once a year.

The escrow agreement with the trustee sets out in detail the conditions under which he/she can transfer amounts from the escrow account to the association/company.

Investors incur no costs at all. These are borne by the pool operators.