| Legal Rights |
General Information for Investing in German PropertyLike Great Britain Germany has a well structured legal process to enable the successful purchase of German real estate. The German system does however have some key differences that the investor should be aware of.
The German Buying ProcessAs a rule, unlike Great Britain Germany does not have very often leasehold property. Most properties for sale are Freehold. There are sometimes hereditary lease agreements written into sales contracts but this is not the norm. This type of lease is known as ‘erbpacht’. Where an agent is used for the sale of a property, the agent is normally instructed by the seller but the agents fee is paid by the buyer. (This does not apply if the property is purchased in a U.K. auction house) When the sale and purchase of a property is agreed a German Notar (Notary Public) will certify this agreement in the form of a contract at the Notars office. Notars fees vary between 1.5 and 3.5 % of the purchase price with 19% VAT in addition The Notar is appointed by the German state, and works on behalf of the German state and is therefore neutral and able to act on both the sellers and the buyer’s behalf at the same time. This is in accordance with the German Civil Code. Once all contracts are prepared all parties concerned meet at the Notars office by appointment, identifications from passports are made for all those involved. The contract is then read aloud in front of all parties. This in turn is then signed by the seller, the buyer and the Notar. At this point the contract is binding and can not be reversed. Once signed the Notar sends the contracts to the land registry known as the ‘grundbuchamt’ where the relevant new entries are made and registered confirming the new owner. This would normally take around 2 months. In the meantime the Stamp Duty (3.5% of purchase price; in Berlin city 4.5 %) is due to be paid. This is also known as land transfer tax. Final entry into the land register will not be completed unless this tax is paid buy the buyer. Furthermore the purchase price funds are normally transferred by the buyer into a special account set up by the notar so as to be ready to transfer to the seller when the notar is satisfied all is in place. Once the funds are transferred the transfer of ownership is complete. One now awaits confirmation from the land registry (the two month period)Please have look into our Purchase Guide in the menue bar on the left site. Or click here
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