Buying property in Germany

A person interested in buying property in Germany can choose between the purchase of real estate property or of an apartment, which is allowed under the restrictions of Condominium Law.

Buying property with an estate agent
The search for suitable property can easily be done with the help of a real estate agent.
Additionally some local Haus & Grund associations run a real estate agency. The estate agents
are usually engaged by the sellers. That is why an estate agent will usually present real estate of
his customers to interested buyers. Therefore one should contact different estate agents to get a
broad range of offers. In these cases the agent works for the seller, so the buyer will not have to
make a contract with him. Also the buyer is not obligated to pay the agent ?but the seller will add the cost for the agent to the price of the property.
Of course it is possible, to engage an estate agent to search the market for an object which corresponds to the criteria of the buyer. The contract with the real estate agent does not have to
be in a written form, but usually the estate agent will submit a written contract. The most important obligation ? paying the commission ? only comes into being after the contract about the property is signed.

The contract of sale
The contract of sale has to be signed in the presence of a notary. The notary is a neutral person, who is obligated by law to inform both sides about the significance of the contract. Since the
contract is written by the notary, it regularly is fair for both parties of the contract.
If an apartment is bought the buyer will be registered in the land register once the contract is signed. He then becomes a joint owner of the real estate on which the apartment building is build and a sole owner of the flat he purchased. The distribution of the joint owner parts is regulated in the partition agreement, which is a part of the contract of sale. If real estate is bought, the buyer purchases the property and the buildings located on the real estate.

Property transfer
The German legal system distinguishes between the conclusion of the contract attested by a notary and the property transfer of the object to the purchaser. After the conclusion the change of the property ownership has to be registered in the land register. Only from this moment the buyer is the legal owner of the property. Both the buyer and the seller receive an extract from the land registry, which documents the property transfer. Concessions are required if purchasing an agricultural real estate or when a person under age is involved.

Costs and Taxes
Additional to the price there is legally defined charge for the notary and the charges for registration in the land register. Both are usually to be paid by the buyer. The rate of the charges depends on the value of the property, which is usually defined by the price.
Property transfer tax (Grunderwerbsteuer) is the turn over tax on property purchase. The tax is 3.5 % of the purchase price. The courts, which run the land registries, are instructed not to do a registration without the evidence, that the tax has been paid.
The local property taxes are raised annually on property. The tax rate is set by the local authorities and is based on the value of the real estate. Additionally local taxes have to be paid by the property owners for sanitation, roads, garbage service and other local services.