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Buying and Selling of Real Estate in Germany

Urban Thier Federer > Uncategorized  > Buying and Selling of Real Estate in Germany

Buying and Selling of Real Estate in Germany

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Buying and Selling of Real Estate in Germany

Urban Thier & Federer, P.A., with offices in the United States, Germany and the United Kingdom, advises US and UK clients with regard to buying and selling real estate in Germany. There are very substantial differences with regard to the transfer of ownership to real estate in Germany, compared with what our UK and US clients are used to seeing in their home countries.

I. Notar: Title to real property is transferred and registered via a contract which has to be concluded in front of a Notar. The German “Notar” is very different from the “Notary public” in the US. The “Notar” is a quasi-judicial entity who ensures that parties to a real estate transaction are fully informed of the consequences of their actions. The “Notar” has to be a fully qualified lawyer, with additional educational requirements. He/she does not represent any one party in the transaction but advises both parties with regards to the legal consequences, potential problems and issues of a real estate transaction. The German Notar cooperates closely with the attorneys of buyer and seller and last but not least insures that the public register (Grundbuch) for real estate is accurately changed. Urban Thier & Federer cooperates closely with Notars all over Germany to ensure an efficient transaction process. We provide our clients with translated documents and explain the unfamiliar details of such a transaction to the US or UK client.

II. Public register, “Grundbuch”: There is no such thing as title insurance in Germany. The buyer may rely in good faith on the correctness of the public register. We coordinate the payment process in Germany, we monitor the release or recording of encumbrances, such as mortgages (“Hypothek” or “Grundschuld”) or easements in Germany, while we advise the US client through our offices in the US or UK in his/her native language.

III. Escrow in Germany: Further, we hold funds in escrow for our client to ensure that there will be no payment delays due to international wiring delays. Urban Thier & Federer represents US and UK clients in negotiations with banks and other lenders in Germany. While we communicate with them in German and through our German attorneys, we explain the negation process and financing contingencies to our American and British client in their native language, through US or UK attorneys.

We also advise our clients with regard to the payment of real estate taxes in Germany, where applicable. Real Estate transactions are generally subject to a transfer tax in Germany (Grunderwerbssteuer). Currently, this amounts to 3.5% of the purchase price. Real Estate ownership itself is taxed separately (Grundsteuer). The Grundsteuer averages out to about one percent of the property value, as assessed for tax purposes. This is usually a value well below the actual market value.

Please note that Urban Thier & Federer, P.A. does not represent you and cannot take any action on your behalf unless and until you enter into a formal written Legal Representation Agreement.

By Carl-Christian Thier, Shareholder Urban Thier & Federer, P.A.

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