Gültigkeitsgebiet: Bundesweit
Here you will find information on applicable regulations regarding the purchase and sale of real estate.
Requirements and procedures for acquiring real estate
German law distinguishes between the law-of-obligations legal transaction, which is the purchase agreement, and the in-rem disposition transaction in the form of the transfer of ownership, also known as conveyance.
Purchase agreement
Conclusion of a real estate purchase contract and typical contractual obligations
The Purchase of a property is subject to the general sales law provisions of Sections 433 et seq. of the German Civil Code (BGB). Pursuant to Section, a real estate purchase agreement obligates the seller to Section 433, paragraph 1, sentence 1 of the German Civil Code (BGB), to hand over the property to the buyer and to transfer ownership of the property to them. In doing so, the seller must, pursuant to Section 433, Paragraph 1, Sentence 2 of the German Civil Code (BGB), provide the buyer with the property free from material defects and defects of title. The buyer undertakes, pursuant to Section 433, Paragraph 2 of the German Civil Code (BGB), to pay the seller the agreed purchase price.
For a sales contract to be concluded effectively, an agreement between the contracting parties on the key points of the purchase agreement. These include:
For a sufficient identification of the property, stating the land register details is sufficient for real estate. title deed. The prerequisite is that only the property in question is registered on it. In the event of a purchase agreement for condominium ownership a distinction must be made as to whether the subdivision of the building has already been completed in the land register or not. According to Section 1, paragraph 2 of the Condominium Act (WEG), condominium ownership is understood to be the ownership in severalty of a separate apartment in conjunction with the co-ownership share in the common property, i.e., in the land and in parts of the building. In the case of an entry that has already been made in the land register, a reference to the corresponding page in the so-called is sufficient here as well Condominium land register. The property description in the condominium land register shows which co-ownership share is the subject of the purchase and with which separate ownership it is connected. No further separate details regarding the number, type and location of the rooms as well as the living space size are required for the validity of the purchase agreement. If the division into condominium ownership has not yet been officially completed in the land register, the Deed of division Reference can be made.
The purchase agreement is concluded through the offer of one contracting party and the acceptance of this offer by the other contracting party. The offer to conclude the contract can be made by the seller or the buyer. An offer must at least specify which property is to be the subject of the contract and what purchase price is to be paid for it.
Requirement for notarization
Every contract by which someone undertakes to transfer or acquire ownership of a piece of land requires, pursuant to Section 311b paragraph 1 sentence 1 of the German Civil Code (BGB) notarial attestation. The requirement of notarial attestation serves to protect against hasty and ill-considered contract conclusion and to inform the parties involved.
Because the parties involved must visit a notary, it is made clear that this is by no means an ordinary everyday transaction. The notarization fulfills a Advisory and protective function. This is intended not only to ensure that the contracts comply with statutory requirements and are valid—the so-called „guarantee of validity“—but also to provide unambiguous documentary evidence of the agreements reached, the so-called „evidentiary function.“ Notarization thus serves to prevent disputes and litigation, and consequently also relieves the burden on the courts. Section 311b (1) sentence 1 of the German Civil Code (BGB) applies to all transactions involving the transfer and acquisition of real estate and therefore strictly applies to fractional shares of real estate, as well as residential and non-residential property ownership.
The Requirement for notarization includes not only the payment of the purchase price and the sale of the property, but also all Collateral agreements, which, according to the intention of the parties, are to form part of the contractual agreement. Such collateral agreements may, for example, concern agreements regarding the condition of the property within the meaning of Section 434 (1) sentence 1 of the German Civil Code (BGB). The notarization is to take place before the parties legally bind themselves. Therefore, the requirement for notarization also extends to legal transactions that indirectly establish obligations to transfer and acquire property. Examples of these include the conclusion of reservation agreements with brokers or the granting of irrevocable powers of attorney to sell or purchase.
Notarial certification is generally intended to be a simultaneous certification. This means that the seller and the buyer in a Notary appointment appear before the notary public and conclude the purchase agreement there by offer and acceptance. The declarations of both contracting parties are recorded by the notary in a transcript. Upon completion of the transcript by the notary, the purchase agreement has taken effect.
It is past Section 128 of the German Civil Code It is also possible that first the offer to conclude the purchase agreement and then the acceptance of the offer are notarized by a notary public. This means that the declarations of the contracting parties are notarized sequentially in two separate notary appointments. With this type of notarization, the offer is first recorded in a written transcript.
Binding offer
The offer becomes effective when it is received by the person with whom the purchase agreement is to be concluded. A notarized offer is received when a certified copy of the transcript in which the offer was recorded is received. After Section 145 of the German Civil Code (BGB) is the person who offers another the conclusion of a contract bound for a specific time to the effective Offer expired, unless this binding has been excluded. The period for which the offer is to remain valid may, in accordance with Section 148 BGB be expressly specified by the person making the offer. If a time limit for the acceptance of the offer is not specified, the offer can only be accepted until such time as the offeror may under regular circumstances expect to receive the reply to their offer. (§ 147 BGBAccording to case law, this period of time in real estate transactions is usually 4 weeks.
The Offer expires according to Section 146 BGB, if it is rejected or not accepted in time. With its expiration, the offer lapses, so that acceptance of the offer is no longer possible. After Section 152 of the Civil Code (BGB) does the purchase contract fundamentally come into effect with the notarization of the acceptance, provided that the offer has not yet expired at the time of acceptance. The delayed acceptance of an offer is deemed pursuant to Section 150, paragraph 2 of the German Civil Code (BGB) as a new application, which due to the after Section 311b paragraph 1 sentence 1 of the German Civil Code (BGB) cannot be implicitly accepted – for example, by payment of the purchase price – in the required form.
Procedural design and instruction by the notary
For the purpose of preparing the contract, the notary discusses the desired contract contents with the contractual parties, explains regulatory options, and points out existing risks and alternative structuring options. The notary also typically undertakes the drafting of the purchase agreement draft in accordance with the wishes of the parties involved, without incurring any additional costs as a result. In addition, the notary inspects the land register prior to notarization in order to inform the buyer and seller about existing legal relationships (§ 21 Authentication Act - Yuck!.
Procedure of the notary appointment
As part of the notarization, the notary public identifies the parties involved. (§ 10 BeurkG) and determines their legal capacity (§ 11 BeurkG). In addition, further due diligence measures may be considered to rule out any potential risk of money laundering. Then, the real estate purchase agreement is read out in full to all parties present. (§ 13 BeurkGThe reading aloud is a mandatory part of the contract notarization, which cannot be waived. If a party to the contract cannot be present at the notarization, they can generally also be represented when the contract is concluded. The notary public also explains the legal significance of the contract contents to the parties present and instructs them on the legal consequences. (§ 17 BeurkG) and points out important aspects such as
existing permit requirements (§ 18 BeurkG), the need for a tax clearance certificate from the tax office (Section 19 BeurkG) and statutory preemptive rights (§ 20 BeurkG) as well. Additions and amendments to the contract contents can also be made in this context after expert advice from the notary. At the end of the notarization, the real estate purchase contract is signed by all parties present and the notary, thereby becoming legally effective and binding. (§ 13 BeurkG).
Real estate purchase agreement between businesses and consumers
If a consumer is involved in the real estate purchase agreement alongside a company, the notary must ensure that the consumer's legal declarations are made by them personally or through a trusted person before the notary. Furthermore, the notary shall ensure that the consumer is given sufficient opportunity to examine the subject matter of the notarization in advance. The latter is normally achieved by providing the consumer with the intended text of the legal transaction 2 weeks prior to the notarization. (Section 17 Paragraph 2a Sentence 2 Number 1 and 2 of the German Authentication Act (BeurkG)). The statutory deadline is intended to give the parties the opportunity,
With regard to the notarial duty to instruct, the Splitting of a real estate purchase agreement in offer and acceptance is only permissible if there is a sufficiently weighty reason, as it can lead to a deficiency in instruction. If a splitting is factually justified, the notary must in principle design the procedure in such a way that the offer originates from the parties more in need of instruction or more worthy of protection, so that they receive the full extent of the notarial advice both with regard to the offer and with regard to the offered contract.
Consequences of failure to comply with the notarization requirement
Non-compliance with the Section 311b paragraph 1 sentence 1 of the German Civil Code (BGB) prescribed notarial form has according to Section 125, sentence 1 of the Civil Code (BGB) resulting in the Purchase agreement void is. The contract does not establish any rights and obligations for the contracting parties. However, if ownership of the property is transferred from the seller to the buyer by means of agreement (Auflassung) and entry of the buyer in the land register, the nullity of the purchase contract is cured and the contract [becomes valid / according to] Section 311b, paragraph 1, sentence 2 of the German Civil Code (BGB) valid in its entirety. However, the curing of the formal defect does not have retroactive effect to the time the contract was concluded.
Transfer of ownership to the buyer by conveyance of the real estate to the buyer and registration of the buyer in the land register
By notarizing the purchase contract as a law of obligations transaction, the buyer does not yet acquire ownership of the property. To Transfer of ownership rather, a real property transfer transaction is required with respect to the buyer, the validity of which requires:
The Transfer of Ownership is usually notarized together with the purchase agreement. In order for the buyer to be registered as the owner in the land register, the conveyance must be Land Registry Office must be evidenced by a public document or a document certified as public (Section 29(1) of the Land Registry Code—GBO). Corresponding land registry authorizations (Section 19 GBO) must also be submitted in this form. As a rule, the notary is authorized and commissioned to carry out land registry procedures, in particular to declare the authorizations and file the necessary applications with the land registry office.
Costs associated with a real estate purchase agreement
According to the statutory regulation in § 448(2) of the German Civil Code (BGB) The buyer of a property is responsible for
According to case law, the costs of notarizing the purchase agreement also include the real estate transfer tax, as this tax is inextricably linked to the purchase transaction.
Pursuant to § 448(1) of the German Civil Code (BGB), the seller must bear the costs of transferring the property.
The aforementioned statutory cost regulations are not mandatory. Deviating agreements between the parties in the purchase contract are therefore permissible.
Other professional groups that may be involved in a real estate purchase agreement
In addition to notaries, Lawyers Provide legal advice to buyers or sellers in connection with the transaction. Attorneys may also represent buyers and sellers. This is particularly relevant when the interests of one party to the contract are to be represented. Notaries, however, do not represent just one party; rather, their role is to advise the parties involved independently and impartially.
Attorneys are independent officers of the judiciary whose role is to provide legal advice and representation in all legal matters. They are subject to a wide range of professional regulations, in particular the Federal Attorney’s Act.
What kinds of taxes do you have to pay when buying a property?
The purchase of a property is generally subject to Real Estate Transfer Tax.
Legal transactions involving domestic real property are subject to real property transfer tax to the extent that they are intended to acquire ownership of the property or a position analogous to ownership. This includes, in particular, purchase agreements and other legal transactions that establish a claim to the transfer of ownership of domestic real estate. The tax rate ranges from 3.5 percent to 6.5 percent, depending on the federal state. Certain transactions are exempt from taxation, such as the acquisition of real property by the seller’s spouse or domestic partner.
What kinds of taxes do you have to pay when selling a property, including taxes on capital gains?
When selling real estate as part of mere asset management, the proceeds from the sale—if applicable—are subject to income tax. This is the case if the period between acquisition and sale does not exceed 10 years.
If the property constitutes business assets, the profit realized from the sale is subject to Income- and furthermore also Trade tax. If the seller is a corporation, the gain is subject to Corporate tax and, if applicable, business tax.
What kind of taxes should one pay for owning property?
While owning a property, you may be subject to property tax, income tax on rental income, or a second-home tax.
The Property tax is levied on real property. This includes land, including buildings, as well as agricultural and forestry operations. It is generally paid by the owners. In the case of rental properties, the property tax may be passed on to the tenants as part of the operating costs. The Federal Constitutional Court has declared the previous property tax assessment system unconstitutional. It also ruled that new legislation must be enacted. However, property tax may continue to be levied in its current form on a transitional basis until December 31, 2024.
Starting January 1, 2025, property tax will then be levied on the basis of the new law.
If the property is rented or leased, the income from Rental and leasing income tax or rather the Corporate tax and if applicable, the Trade tax.
For owning a second home in the municipal area, some municipalities charge a Secondary residence taxlevied. The second-home tax is a local tax on expenditure. To levy and design the second-home tax, the municipalities issue bylaws, which in turn have their legal basis in the municipal tax laws of the federal states.
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