Transfer Contracts

Contract Configuration

Immovable property is not only sold for payment of the market value corresponding price, but also often for reasons that are not primarily economic. This particularly includes gifts, whether it is pure donation, in which the seller receives nothing in return, or a so-called mixed donation, in which some return in service is coupled to it, for example, the obligation to pay the equal-treatment payments to siblings, care obligations, etc. For all of these agreements, the term “transfer contracts” or “relinquishment of possession contracts” is used. Frequently, during their lifetime, parents give asset holdings – mostly for tax reasons - to their children; assets that they would have received later as an heir anyway. In this case, this is referred to an “anticipated succession”.

For all of the legitimate trust in their children, parents should not forgo certain safeguards on such contracts: You can for example, reserve a recovery right in the event that the recipient, during the lifetime of the parents, sells the landed property without their consent or gets into financial difficulties. In addition, as a general rule, it is appropriate that the parents retain a right of abode or right of usage (usufruct) when transferring ownership of their dwelling, or if possible, stipulating a value-guaranteed life annuity by means of a land charge secured in the land register. Also, parents will often express the desire to enter into a care agreement, which can also be secured by a land charge secured in the land register.

If several children exist, the notary ensures a balanced and fair transfer of family wealth. For example, an agreement can be made in the gift contract that stipulates that the other – yielding – siblings are then paid out. To prevent the recipient from having an advantage over their siblings, during inheritance, the notary advises you in the configuration of a flanking testament or inheritance contract

Gift Tax

For the transference of your assets, – be it through donation or through inheritance – in Germany, you must pay taxes and in both cases, the same amount of tax. This is regulated in the Inheritance and Gift Tax Act. There should not be a differentiation made as to whether the transference was performed before or after the death of the donor or testator.

However, certain tax allowances must be exceeded in this case. Currently, spouses have a tax exemption of Euro 500,000.00 (in some cases possibly beyond that for personal exemption pension allowance), children have a tax allowance, for each parent, of Euro 400,000.00, children-in-law and siblings have Euro 20,000.00. Inheritance and gift taxes are only applicable to assets exceeding those allowances. If you transferred assets during your lifetime, this may have tax advantages: On the one hand, compensation measures such as equality treatment benefits or reserved rights such as housing rights or usufruct, reduces the gift value. On the other hand, the tax allowances of the gift tax can be claimed again after a period of 10 years. If there is a large estate, it is important to begin early with the transfer of the assets.

The value of the taxable acquisition is also based on the value of the property, which is calculated, depending on the type of real estate, with various procedures by the financial authorities.

If the market value of the property to be transferred, reaches or even exceeds the tax exemptions, the advice of a tax consultant should already be obtained for the calculation of the taxable value of the property. In particular, with the case of usufruct, the effects of the transfer on the write-offs and the assertion of income-related expenses must also be examined. Ultimately, the transfers can lead to the disappearance of the home-ownership allowances.


Generally, the same questions arise for transfer contracts, as for property purchase contracts. Corresponding documentation also needs to be brought along.

However, instead of the purchase price, the notary will ask about the following return services or request the following documents:

  • Question: Acceptance of existing liabilities, including the corresponding mortgages and land charges attached to them? Documents: Loan agreements.
  • Question: Housing Law? Documents: Floorplan of the apartment.
  • Question: Right of usufruct, also for the surviving spouse?
  • Question: Life annuity or permanent burden?
  • Question: Settlement payment to siblings?
  • Question: Value securement of the settlement payment by index-linking (consumer price index)?
  • Question: Protection of return services by land register entry of housing rights, usufruct, land charges or mortgages?
  • Question: Deduction of the value of the gift from the inheritance or compulsory portion of the acquiring child for mother and father?
  • Question: Are there creditors of the transferor, who could challenge the gift? Bankruptcy risk for the transferor?
  • Question: Accompanying the transfer agreement, is a change of testamentary dispositions of the transferor sensible (testament, matrimonial contract)? Documents: Existing dispositions of property upon death
  • Question: Waiver of compulsory share of the acquirer?


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, and with a gift of property, consequently on the value of the property. In the above-mentioned fees, the costs for consultation and draft creation, as well as changes to it, are included. Ancillary fees are charged for the monitoring of the transfer of ownership. In addition, there are usually some additional small fees for copies, postage and telephone as well as the statutory value-added tax.

Rule of thumb: Notary and court costs are in total, about 1.5 - 2.0% of the market value of the property.