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Real estate law in Italy and Germany

Purchase and sale of residential and commercial real estate in Italy and Germany

Assistance and consultancy in connection with real estate sales and purchases, real estate contracts and representation/assistance in notarial procedures and deeds

We advise on all issues related to the purchase and sale of real estate.

We provide our clients with our expertise and decades of experience in negotiations with the other party, assignments to mediation agencies, drafting and verifying preliminary agreements and deeds of sale, searching for and arranging appropriate real estate financing and all other issues that may arise in connection with the purchase and sale of real estate.

Our real estate law services in detail

Good advice minimises the risk of having to deal with unpleasant and damaging situations after the purchase or sale, and therefore also possible damages and financial losses due to a lack of professionalism in pre-contractual and contractual verification.

For your real estate projects, we are able to offer personalised assistance and advice both nationally and internationally, always with a view to individual solutions. Our many years of experience in the real estate sector, as well as our constantly updated specialist and market knowledge, enable us to immediately identify the most important aspects and problems in individual real estate transactions and to implement the appropriate measures to safeguard our clients' interests.

We offer in particular:

  • Expertise and knowledge of the market
  • Assistance and advice on all aspects of real estate during the entire transaction
  • Acquisition and verification of documents, such as cadastral extracts and visas, request for tax codes, etc.
  • Assessment and verification of the state of the property as reflected in public registers
  • Advising and assisting in negotiations, from the signing of the preliminary contract to the notarial purchase contract and final registration
  • Drafting and verification of purchase offers, preliminary contracts, sales contracts and powers of attorney for sale
  • Assistance with real estate financing and company incorporation
  • Specialist translations

Special features of real estate law in Germany

The procedure for purchasing a property in Germany shows some differences and peculiarities compared to the Italian one.

Transfer of ownership

The transfer of ownership (which in Germany can only take place in the form of a notarial deed) is perfected only with the transcription in the land register and not only with the agreement of the parties as in Italy. In Germany, therefore, transcription is not only for disclosure purposes.

This is referred to as the principle of "abstraction" (Abstraktionsprinzip), which, in a nutshell, states that the bond-type transaction and the real transfer transaction are two autonomous legal entities. This is in contrast to the consensual system in force in Italy.

The actual transfer of property therefore takes place in Germany with the actual consent of the parties (Auflassung) and also with an entry of the change of legal status in the appropriate registers (Grundbuch).

Payment of the purchase price

Also for this reason, the purchase price is not paid at the time of the notarial deed, but after the notary has obtained any necessary authorisations (it is sometimes necessary, for example, to obtain the authorisation of the condominium administration or a communication from the municipality waiving any pre-emption) and has requested an entry in the land register in favour of the purchaser (Auflassungsvormerkung: entry on the transfer of ownership). Following this entry, the Notary will inform the contracting parties that the purchase price can be paid in accordance with the terms and conditions of the contract. After payment of the price, the Notary will then proceed with the final registration of the transfer of ownership.

This operation of the Auflassungsvormerkung guarantees the right to the subsequent transfer of ownership, which has been acquired through the bond (Auflassung) covering the period between the agreement on the purchase before the notary and the actual acquisition of ownership through the entry in the register. On the basis of this mechanism of registration prior to payment of the sale price, there is certainly a sufficient guarantee for the purchasing party to safeguard against other negative registrations that may be made by third parties.

Registration in the land register

In Germany, real estate, with its cadastral references, the history of its owners, including inscriptions, transcriptions and third party rights, is registered in the land register (Grundbuch), which is kept locally at the local magistrate's court (Amtsgericht) and is similar to the tavolar system used in South Tyrol and other former Hapsburg provinces.

The Grundbuch, in addition to the so-called inventory (Bestandsverzeichnis), which describes the main characteristics of the estate, such as its location, type, and size, and identifies the estate with specific figures (from sheet numbers, estate number), is composed of three sections (so-called Abteilungen) that contain

  1. the name of the owner or building right holder, possibly with the relevant ownership shares or joint ownership, and the details of the registration title;
  2. any encumbrances or encumbrances, which may not be entered in Section III, such as easements, pre-emptions, usufructs, etc.);
  3. rights and encumbrances in respect of pledges or mortgages (mortgages and land debts - Grundschuld).

Land debt (Grundschuld)

In this context it must be taken into account that in Germany "Hypotheken" are never used to secure a loan, but rather land debts (Grundschuld). The Grundschuld is much more flexible than the Hypothek, as it can also be used for a new loan once the original one has expired. It can also be used to cover several credits. This is why many homeowners do not ask for the Grundschuld to be cancelled once the debt has been paid off, as it could be used for a new loan.

No irrevocable purchase proposal

In the procedure of buying real estate in Germany there is also no place for the much used (in Italy, especially by brokers) irrevocable proposals to purchase, and the like.

In Germany brokers may sometimes require the signing of a Reservierung (reservation).

The same applies to preliminary contracts or compromises, which are used in Germany only in very rare cases (e.g. waiting for a building permit, etc.) and are only valid if notarised. According to ยง 311b BGB any legal transaction of alienation and/or acquisition of real estate requires a notarial deed. This means, therefore, that the bond transaction must absolutely be made by public deed, otherwise it is void.

Choice of notary

In principle, any notary may draw up a deed for a property located in Germany, there being no territorial or other determining factors. Within the notary's office, the working methods may of course differ, e.g. it is usually the case that an employee, even one who is not a lawyer, prepares the standardised version of a real estate contract.

Costs

As far as the costs associated with a real estate purchase transaction in Germany are concerned, it can be roughly calculated that the notary costs together with the registration fees amount to 1.5% of the purchase price. In addition, the buyer has to pay the so-called transfer tax (Grunderwerbsteuer), which ranges from 3.5 % to 6.5 % (depending on the Land where the property is located) of the agreed price (minus the value of any inventory/furniture that may be purchased with the property).

The brokerage commission is then usually due at the time of the conclusion of the contract.

Capital gain taxation

Finally, the capital gain generated between the purchase and sale of a property is taxable in Germany if the property is resold within a period of 10 years (in Italy 5 years).

If the owner has lived in the property for a period of at least 3 years, the capital gain is not taxed.

If more than three properties are purchased and resold within a period of 5 years, there is a presumption of commercial real estate activity and taxation.

Special features of real estate law in Italy compared to Germany?

You are German and you are interested in the real estate law specifics in Italy? You will find information on the German version of this page.

Frequently asked questions from our clients

In contrast to the procedure in Italy, the purchase price is not paid immediately at the time of the deed of sale, but after the notary has taken care of certain formalities, such as the registration of a reservation in favour of the buyer. Payment is usually made 3-4 weeks after the deed has been signed.

A preliminary contract is an exceptional case in Germany and therefore not usual. In any case it is not possible to have preliminary contracts in the form of a private contract, as is mostly the case in Italy. All real estate transfer contracts must be notarized.

Commissions are generally paid when the deed is signed.

Yes, you must issue a special power of attorney to sell or buy, which must be signed in front of the notary. If the power of attorney is in Italian, a certified translation must be prepared and submitted to the German notary. Our firm can also prepare bilingual powers of attorney.

The notary can only notarize the deed in the presence of an interpreter who will translate the deed and the conversations that take place during the notarization into Italian. In this case, it is important to have a legal interpreter present during the deed, who can also advise you during the deed. Our office also offers such a service.

Consultation?

Let us talk about your specific concerns.