A German court has released an art trove valued at €1bn to an elderly recluse who had kept it stashed away for decades in his flat before its confiscation in a tax inquiry.
The decision followed an agreement by Cornelius Gurlitt, 81, to co-operate with German authorities to determine if some of the 1,280 art works had been stolen or extorted from their original owners, many of them Jewish.
Mr Gurlitt's father took orders from Adolf Hitler to buy and sell so-called 'degenerate art' to fund Nazi activities.
The collection includes masterpieces by Pablo Picasso, Henri Matisse, Otto Dix and Ernst Ludwig Kirchner.
"We have come across new evidence in the course of the investigation ... that leads us to re-evaluate the legal situation," said Augsburg state prosecutor Matthias Nickolai in a statement announcing the decision to release the art works.
Mr Gurlitt's lawyer Tido Park applauded the decision to release the art work: "It's a good day for Cornelius Gurlitt," he said.
It remains unclear whether all the confiscated works will now be returned to him, his spokesman Stephan Holzinger told Reuters, adding that the Gurlitt team was working to find a storage solution due to concerns about theft.
German prosecutors seized the art trove in February 2012 as part of a tax investigation after Gurlitt aroused the suspicion of German customs officials who stopped him on a train from Switzerland carrying a large sum of cash.
Under the deal struck on Monday with the German authorities, Gurlitt agreed to allow a task force of art experts to continue researching works whose provenance remains in doubt. He may keep any works that have not been examined by them within one year.
The German government has come under fire - especially by families whose relatives were robbed by the Nazis - for keeping silent for almost two years about the trove of art works.
Gurlitt had filed a formal complaint at the Augsburg court in February, challenging the search warrant and seizure order prosecutors issued in 2011 on grounds of suspected tax evasion.