Buyer’s Guide to Purchasing German Property
A Brief Overview:
A sale of property is only legally recognised in Germany when authenticated by a German Civil Law Notary.
When you enter into agreement to purchase real property in Germany, be it at auction or directly with the seller; you enter into an agreement to complete a German property contract known as an authentic instrument of purchase.
An authentic instrument of purchase (or sales agreement) can only be executed in Germany and in the presence of a German Civil Law Notary. Of course the purchase may be done remotely through a German consulate or embassy, but ultimately this document must go to the notary in Germany to complete the process.
Civil Law Notaries are legal professionals appointed by the German State to ensure all property transactions are properly executed between the parties and comply with German Law to ensure a smooth transfer of title. The German Civil Law Notary represents the State in a property transaction, individual assignment of counsel by the parties are generally not required.
Properties sold through Sneddon & Lock are professionally managed by a property management company located in Dresden, Germany. Each sale includes 6 months of free management for the Buyer at no extra cost. After this period, this highly regarded service can be discontinued or continued at very favorable rates.
The property manager is charged to work with the Civil Law Notary to ensure that as the contract stages as summarised above are reached.
- Agreement to purchase signed and returned to the Seller.
- A deposit in the amount of 10% of the agreed purchase price to be transferred to Seller or Seller’s Agent to secure the property.
- Buyer provides personal details (Full name, address and date-of-birth) as should be recorded with the Land Register’s office.
- Upon completion of the above a Notary appointment will be made and a draft of the sales contract will be distributed.
- Once the purchase agreement is executed in Germany the balance of the purchase will be required to be deposited on account details provided by the property manager. At this time an additional 10% deposit of the purchase price will need to be transferred to the care of the Property Manager to pay for the conveyance costs.
General Cost Estimate on Conveyance Costs:
- 3.5 % - 6.5% of purchase price for German property transfer tax (Stamp Duty). “Grunderwerbssteuer”.
- Approx 1.5% of purchase price for the notary’s fees. (The notary’s fees are governed by statute.) The Notar will invoice the buyer’s agent directly.
- Various disbursement fees for the land registry and search certificates from local authorities. These certificates vary from around 5 Euros to approximately 70 Euros. No more than 4 certificates are usually required.
- £100 fee for the German Agent to represent the buyer in signing the deed of purchase in Germany, if required.
- The cost of maintaining the management account (approx. 100 EUR) monthly after the free 6 month period has elapsed.
Once the Property Manager has been contacted by the Notary to inform the parties that the sale is now legally registered the Property Manager will make arrangements with the Buyer to handover the keys to the property and ensure all related utilities and services are properly handed over.
The transaction is at this point complete and the Buyer will receive a printout of the Land Register extract which shows the legal transfer of the property has been effected.
The entire process takes approximately 3- 4 months. The Buyer can expect the economic transfer of the property to occur within 6 to 8 weeks of the purchase agreement execution.
Note the following:
- The property cannot be used or resided in by the buyer until ownership entry is complete in the land registry. We have been asked before if it would be possible for the buyer to take immediate possession, but this is not and never has been possible without other instruments being put into place first, insurance being a concern amongst other things.
- The role of the property manager has proved invaluable for our current clients, see our property management page for more info on this service.