Buying Real Estate in Germany as a Foreigner
Compared with the UK and the USA, relatively few Germans own their own home. As Guardian recently titled: “Brits buy homes, Germans rent”. To rent an apartment or even a house is much more common in Germany, especially since a tenant (lessee) is extremely well protected by German law. A landlord cannot simply terminate a residential rental agreement but must have legitimate cause (). These protection against eviction laws are sometimes abused by unfair tenants to delay their move for months or even years. The relevant . So, in short, being a tenant in Germany is quite attractive from a legal perspective. But still:
Having said that, many Germans of course still dream about owning their own home, the proverbial “die eigenen vier Wände” (meaning “my own four walls”). Traditionally, buying property is seen as a once in a lifetime investment. The idea of buying a house and then to resell it for a larger one a few years later is a strange concept. The typical German approach is to buy a family home and take out a loan / mortgage which is then repaid over 30 to 40 years. To use the term “first time buyer” in the UK estate agent’s parlance (i.e. a buyer who is looking for a first property that he or she will sell again after a while) therefore makes no sense in Germany. In practice, almost all German buyers are “first time buyers”. And at the same time last time buyers for that matter.
In Germany, the legal procedure of conveyancing is also quite different. Unlike in the UK, where the sale mostly involves two solicitors, in Germany a house sale must take place before a , who is a neutral and highly qualified German lawyer (). The notary (Notar) does not represent either party but must instead be independent. His duty is to draft the agreement (for sample land sale agreement see here), inform both parties about the risks and then oversee the entire transaction. He must, in particular, make sure that the new owner will not be entered in the official land registry (Grundbuch) until the agreed price is paid to the seller in full. The technicalities are quite complicated. For the actual sale, both parties (or their empowered representatives) must appear in person before the notary and the notary reads the entire agreement aloud before the parties are allowed to sign. If either party does not speak German, then the document must either be bilingual (we can recommend notaries who are capable of drafting such bilingual contracts) or the non-German speaking party must bring an interpreter.
Since the notary – at least in theory – is strictly impartial, there is no legal necessity for the parties to hire their own lawyers and as far as private house sales are concerned, only few Germans have the notary draft agreement counter checked by their own lawyer. However, in certain circumstances this may be somewhat risky, because institutional sellers of course do have a strategic advantage due to more experience and economic power.
More information on buying or selling property in Germany, the German Land Registry, the conveyancing process and the rights and duties of tenants and landlords in Germany is available in these posts:
- Tenants beware of Waiver Clauses in German Property Lease Agreements
- Buying German Property as Brexit Counter-Strategy
- Template of German Land Sale & Purchase Agreement
- Is “Miteigentum” in a German Property the same as “Tenancy in Common”?
- Is there German Capital Gains Tax when Selling a German Property?
- Apartment Prices in Germany: How to get a quick Overview
- Searching for Property Information in the German Land Registry
Or simply click on the sections “Property” or “Conveyancing in Germany” in the right column of this blog.
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The law firm Graf & Partners and its German-English litigation department GP Chambers was established in 2003 and has many years of experience with British-German and US-German legal issues. If you need legal advice or representation in Germany please contact German solicitor Bernhard Schmeilzl, LL.M. (Leicester) at this number +49 941 463 7070