Purchase of Real estate in Germany

The actual and legal conditions for a real estate purchase in Germany differ considerably from those in dịch vụ làm bằng other countries. The transfer of title is carried out in two steps: In conclusion of the purchase contract and the entry of the transfer of title into the land register.

The Land Register

The land register (Grundbuch) is administrated by the Land Registry at the particular Local Court. The function of the Land Register is to inform the public about the legal relationships regarding a specific parcel of land. Albeit being a public register only such individuals access to it who can demonstrate a justified interest, e. grams. banks and other creditors, public notaries, estate agents and potential purchasers.

In order to review the legal situation, each potential buyer is well advised to demand an authentic remove of the land register. It is a basic feature of the German real estate law that exchanges of ownership is irritated by the transcription of title in the land register. Any person who is nominated in the register is always and automatically the lawful owner of the property. Due to its publicity, the contents of the sheets are related public faith and credit. As a result, everyone can rely on their accuracy and further research the title held by the seller need not to be carried out. I

Each property has to be registered on a separate linen. Past entries in the sheets are erased by the reps of the Land Registry by underlining them in red. The files caused by each linen contain all relevant deeds regarding present or future entries in the register.

Every linen is divided into an inventory listing (Bestandsverzeichnis) and three sub-sections (Abteilung). The inventory listing identifies the cadastral region (Flur) and unit (Flurstueck) of the real estate and its size. The first section nominates online resources the est and the legal ground of his buy (purchase/ gift of money etc. ). The second section shows all encumbrances regarding the est such as easements on the real estate or personal easements, heritable building protection under the law, pledges or claims for frequent payments or services, usufruct, priority realises, the owners limitations the directly to dispose of his title. The entries in the third section document if the real estate has been used before as a collateral security. These informations are important for any potential consumer because irrespective of the individual who owns the property, each bailee of a lien on the real property is eligible to put the real est onto auction in order to put in force his money claim.

The Purchase Contract and its notarisation

A purchase contract should provide fine prints at least about the following issues at least:

Name of the parties

Description of the purchase object

Conveyance of property/ Priority notice of conveyance (important because it blocks further entries in the land register)

Sticker price

Change of ownership


Costs of the purchase and their distribution

The purchase of real estate is susceptible to a mandatory notarial recording. On the other hand to the legal situation in most other countries, unless the contract is notarized any agreement is ill. Therefore, any consumer should take care that the complete agreement he’s made with owner is presented to the notary (Notar) and included in the official deed. As the costs for the notary are usually born by the consumer it is custom that the consumer decides who will effect the recording. It is the notary`s duty to convert the parties mutual agreement into an efficient and legally executed set of rules. As a specialist and neutral lawyer, he advises the parties from an impartial point of view about protection under the law and obligations coming up of the purchase contract. Consequently, it is his main task to name contractual loopholes and to prepare the draft. Moreover, notaries offer to take and keep the sticker price in a notary trust account until all conditions for a vested transcription are met (approval by the municipality, payment of the est purchase taxes, entry of a priority notice in favour of the consumer in the land register). As the costs for the notary are usually born by the consumer it is custom that the consumer decides who will effect the recording. As the deed is established in German the notary would be obliged to call a sworn translator unless the parties waive this requirement and call someone who can translate for them.

During the notarization ceremony the notary reads the document out noisally to the parties before they sign the deed. Notaries have to explain the contract details to the parties if questions arise but they are forbidden to give advice in favour of one party. The notarization may take place in English or any other language if the notary is fluent. As purchase contracts may be complicated any consumer should study the draft and join the notarization personally. However, each party may also can be represented by an authorised representative. After the notarization the notary copes with the required entries in the land register. The transcription of title is accomplished after iphone app. six months. However, the basic contractual obligations (payment, entry of priority notice, transfer of ownership, benefits and the liability for public charges) are performed within a couple of weeks since the notarial recording.

The notary fees and the fees of the Land Registry are accounted according a schedule as provided in the Fee Act (Kostenordnung). They often soon add up to 1, 5 % of the sticker price. The commission for estate agents usually amounts to 3 % plus VAT for both parties. The tax rate on the purchase of real estate is 3, 5 %. In Berlin it is 4, 5 %.

The invest in a building developer

According to this contractual scheme, the consumer obligates himself to buy a house or a rental and effects payment ready at a time when the construction of the building is not completed. Such contracts (Bautraegervertrag) usually stipulate a purchase of undeveloped real estate plus the obligation of the developer to make a building on it. The prevalent conflict of interest between the building developer and the consumer concerns the time and mode of payment.

3 of the Agents-And-Building-Developers-Decree (Makler und Bautraeger Verordnung) becomes the progress payment as the statutory mode of payment. Furthermore, the building developer will several preconditions before he can claim any payments from the consumer. Finally, 3 Sec. 2 of the Agents-And-Building-Developers-Act provides maximum percentage installments of the sticker price how the developer can claim upon the accomplishment of particular steps of the construction.
Thereby, the developer haven’t the right to obtain any payments unless…

— a valid building agreement has been concluded,
— a priority notice of conveyance has been entered in the land registry (as a second step the transfer requires the entry of the consumer in the land registry),
— the release of the property from previous encumbrances created by the contractor to obtain financing for the project has been assured. It’s usually performed by finding a note of promise issued from the developer`s bank. As a condition for grating that note the bank demands that the sticker price is paid onto a particular account. Only upon receipt of the funds the bank has to clear the register. Legal issues stipulates the particular requirements for such promise note. It will also apply in case the building is not accomplished; instead of this the bank can reserve the right to pay the funds back, not more than the current value of the property)
— a building permission for the house has been granted and
— finally any right of the contractor to withdraw from the contract have ceased.

In spite of the granted promise note, there are substantial not covered risks in the event of the financial distress of the building developer because in that event the still outstanding sticker price is regularly not enough to complete the building. Furthermore, the consumer can be liable to his bank for a prepayment charges if the money is refunded by the bank that issued the promise note.

Instead of according the fore mentioned measures for securing the consumer claims the developer can also furnish a directly enforceable guarantee issued by a bank. The guarantee covers the total amount of claims for repayment of the consumer funds.