Buying in Germany: The Buying Process
The system of purchasing property in Germany is very sound ensuring a safe title for both sides. The notary is legally bound to act as an impartial middleman between the buyer and seller ensuring that an investor is protected.
The notary checks the land register to ensure that the property can be sold at all and if it can be sold ensuring that there are no restrictions on the properties use.
The buying contract spells out the obligations of each party and the measures that both side take in the event of default on the contract. Once the contract is signed the notary will register at the municipal government the change of ownership and will enter the property in the land register.
It is not common and not widely recognised that the buyer may choose their own notary however it is recommended that whatever chosen notary is used that they speak English or an interpreter is present, (there will an additional cost for this) since the reading of the contract must be in the German language. In order to ensure that you have a full understanding of the act, it is recommended that you undertake his option.
A copy of the purchase contract should be available for you to review prior to going to the notary, which should be reviewed carefully and translated if necessary. Any questions should be prepared in advance and should be asked during the act insuring that sufficient time is allowed for full answers.
The notary will read the contract of sale verbatim to ensure that both parties understand its content. Should any part of the contract be unclear the buyer may ask questions and interrupt the notary to request clarification.
All persons involved in the signing of the contract must be present and must bring their passports as proof of identification. Crucially, the contract must show the following:
- Names and addresses of all parties including the details of the property. The buyer must check that this information is correct as incorrect information could invalidate or partially invalidate the contract.
- The agreed purchase price of the property including the terms and conditions of payment.
- Full clarification and consequences as to what will occur if either the seller or the buyer is unable to fulfil their terms of the contract.
Payment terms are at the liberty of the buyer and the buyer has the complete freedom to decide how to pay for the property.
A change of ownership can occur only when, an entry is made by a notary into the land register, which is located at the district courthouse. This will be completed when all or any previous mortgages or finance have been addressed and that there are no previous taxes outstanding on the property.
The purchase price is often then deposited into a notarised account and the money is then transferred once the land register entry has been completed.
It is important to ensure that the buyer checks all descriptions relating to the property are correct and although he/she is not obligated to, they should point out any hidden defects the buyer must or should consider.
The land registry will also confirm the rights of any third party, which will include tenants. The new owner will be bound by the lease agreements currently in place and agreed by the previous owner, therefore the new owner will inherit the existing tenancy and rental agreements.
It is important and adviseable for the buyer to have visibility of any existing tenancy agreements that are in place, as the purchaser will be legally bound to the tenancy agreement upon the purchase of the property.