Real-Estate Purchasing Contracts
The notary is impartial by virtue of his office. He advises both contract parties equally and ensures a balanced and fair contract configuration. People searching for legal justice can rely on the official neutrality of the notary.
However, the advice given by the notary is limited to the legal aspects. Whether a purchase makes economic sense, is not examined by the notary. Therefore, he also cannot evaluate whether or not a purchase price is appropriate. This decision is the sole responsibility of the contracting parties, who can receive consultation on this matter by an expert architect, real-estate agent or civil engineer.
The notary’s primary concern is the protection of both of the contracting partners: On the one hand, the buyer must be sure that they will obtain the property unencumbered after payment of the purchase price under the contractually agreed upon conditions. On the other hand, the seller must be ensured that he will only forfeit possession of the title of the property, if he receives the purchase price.
As a precaution for the buyer, the purchase price is therefore only usually to be paid when four requirements have first been met: Firstly, a so-called priority notice of conveyance, which protects the future property acquisition against new entry of charges into the land register, must be entered into the land charge register. Secondly, all documents relating to the exemption of the property from existing encumbrances listed in the land register (encumbrance on property, etc.) must be available. Thirdly, all required permits must be issued, and fourthly, one or more right of first refusal waivers must be present. Whether these requirements have been met, is monitored for your protection by the notary.
In the same way, the notary also oversees the security for the seller. The notary lets the title of the property be transferred in the land register to the buyer, only when it is ensured that the seller has actually received the purchase price.
However, the notary is not only concerned from the view of safeguarding the contracting partners, but also with regard to the following points, which are typically to be settled in the purchasing contract:
Liability for Material Defects
Liability for Defects in Title
Transfers of Ownership, Usage, Encumbrances and Risk
Encumbrance Power of Attorney
Increasingly popular among older property owners, who do not want to inherit their property, are contractual arrangements, which are referred to as the retirement of the property. This means the following: The seller sells his property, but reserves a lifelong usufruct right or a lifelong housing right or leases the property back. This retirement of the real estate has the purpose that the seller extends by the receipt of the purchase price his financial clearance and at the same time he can use the real estate up to his death. Whether such a retirement of the property is possible and which type of retirement is meaningful depends on the individual case. Please arrange a consultation appointment with us.
For the preparation of the purchasing contract, I ask the buy and seller to please clarify the following questions and to bring the following documents to the meeting or notarization:
Questions: Who is selling: natural person (private individual), legal person, authorized representative, caregiver, executor of the last will and testament?
The following information is required by the parties:
Natural people: First name, surname, name given at birth, date of birth, address;
Businesses: Company, registered office, business address, district court, commercial registration number
Photo identification, commercial register excerpts, copies of the powers of attorney, in the case of heirs not registered in the land register, certificate of inheritance, grant of probate, certificate of appointment of the caregiver.
Questions: In accordance with Number 1 and in addition when acquired by spouses: In which participating ratio is the object to be acquired: in percentage community of partial owners, for example, to ½ co-ownership shares or in civil-law partnership? For spouses, where one of them did not possess a German citizenship at the time of marriage: In which, if applicable, foreign matrimonial property regime does the buyer live?
In accordance with Number 1.
3. Object of Purchase
Questions: What is being sold or being sold together: house, condominium, hereditary building right, building plot, unmeasured partial area of a property, with garage property or parking space in an underground carpark, portion of a private road, built-in kitchen with or without appliances, sauna, gardening equipment, heating oil? Which defects of the building, in particular, have been expressly pointed out to the buyer? For sub-plot sales: Has the surveying been applied for, or has it already been performed? If not, then who will carry the costs of the surveying?
Land registry certificate of title or land registry messages, for partial areas, excerpts from the cadastral map or site map, for ownership of residential apartments, declaration of division together with community regulations, including allocation plans.
4. Purchase Price
5. Rental and Tenancy Agreements/Vacating
Questions: For renting or leasing: Has a rental deposit been made? Is the tenant of an agricultural property, a farmer?
When vacating: When should the property be vacated and the object then be handed over?
Rental agreements, tenancy agreements.
6. Land Charge Registry Encumbrances
Questions: Which encumbrances entered into the land register (for example: right of residence, rights of way or other easements, land charges or mortgages) will be transferred? Is the property in a development, redevelopment, zone to be reallocated or land consolidation area?
For the deletion of encumbrances on property: Address of authorized parties, including loan numbers for banks, and if already granted by the authorizer: authority for cancelation and land charge certificates or mortgage deeds.
When taking over rights: Approval certificates, for land charges and mortgages: Current value status of the loan.
7. Exceptional Land Registry Encumbrances
Questions: Are there any clearance area acquisitions (for properties in Bavaria) or construction obligations (for properties in other federal states)? Has this been clarified by inquiry with the lower building supervisory authorities? Has it been clarified by the responsible municipality or city, whether development contributions, sewer connections or street-construction contributions or property levies are in arrears? Should the notary obtain this – which is then subject to fees – information; then it should be performed early before the contract of sale?
For ownership of residential apartments: Has an inspection of the last several protocols of the community of apartment owners’ meetings been made?
Notary fees cannot be levied or negotiated at the will of the notary, they are strictly regulated by law. Decisive is the Court and Notary Fees Act that applies throughout federal territory. Therefore, the same fees are always charged by each notary for the same notarial activity.
The notarization fees are based on the so-called commercial value; in the case of a deed of sale, according to the purchase price. The consultation and the preparation of the draft, including all changes is included. For the monitoring of purchase price maturity and property transfer, ancillary fees will be charged. In addition, there are usually some additional small expenses for copies, postage and telephone as well as the statutory value-added tax.
Rule of thumb: The transaction costs for a purchasing contract, for the acquisition of property in Bavaria, are approximately 5.5% of the purchase price (excluding real-estate agent commission): of this, 3.5% is property acquisition tax, 2.0% is notary and court fees. In most other federal states, a higher property acquisition tax is levied. The exact notary fees can only be determined on a specific case-by-case basis, since particularly the amount of ancillary fees depends on which permits and additional notifications must be sought out by the notary, which deletions he has to make, etc. Therefore, ask the notary about the exact fees before the acquisition.