I. Introduction
Importance of a Notary in Buying a House
When purchasing a house, the notary plays a crucial role, ensuring that the transaction is legally sound and binding for both parties. A notary is a state-appointed and sworn-in legal professional who verifies and certifies the authenticity of signatures and the legality of contracts and legal transactions.
In the context of a house purchase, the notary is primarily responsible for drafting and notarizing the purchase agreement. The notary ensures that the contract is legally correct and includes all necessary clauses. The notary also oversees the payment process and the registration of the new owner in the land registry, verifying and certifying these steps.
Moreover, the notary can offer valuable advice and guidance to the buyer, helping resolve any legal questions. For instance, the notary can check if there are any restrictions in the land registry or if there are specific agreements that might be relevant to the buyer.
In summary, the notary ensures legal security in the house purchase process and helps prevent potential disputes. Therefore, it is important to involve a notary early in the process and complete all necessary steps with their assistance.
The process of buying a house with a notary
First, the buyer and seller must agree on the terms of the purchase and put them in writing. The purchase agreement is then drafted and reviewed by the notary. The notary ensures that the contract is legally sound and that all necessary clauses are included.
Once the purchase agreement is signed, the next step is to secure the financing of the purchase price. The buyer needs to consult their bank and explore financing options. After the purchase price is paid, the contract is registered in the land registry. This step is crucial to ensure that the buyer becomes the legal owner of the house.
Next, the handover of the house takes place. The notary is also present at this stage to certify the handover. After the transfer, the purchase is finalized, and the buyer becomes the new owner of the house.
The following steps can be summarized:
- Express purchase interest and check financing options
- Clarify the need for warranties and liabilities, and include them in the purchase contract if necessary
- Draft the purchase contract and have it reviewed by the notary
- Pay the purchase price and register the contract in the land registry
- Have the handover certified by the notary and complete the purchase
II. Vorbereitung des Hauskaufs
1. Express purchase interest and check financing of the purchase price
The first step in buying a house is preparation. This involves the buyer expressing their interest in the purchase, after which the seller presents an offer. It is important that both parties agree on the terms of the purchase and document them in writing.
Next, the financing of the purchase price needs to be examined. The buyer should consult with their bank to assess their creditworthiness and explore financing options. It is advisable to compare offers from different banks and choose the best option.
It is also essential for the buyer to undergo a financing pre-qualification check. This provides information on whether the buyer is actually able to pay the purchase price. The financing pre-qualification is usually conducted by a bank and can be done online or in a branch office.
Once the buyer and seller have agreed on the purchase price and payment terms, the purchase agreement can be drafted. The contract must be reviewed by a notary to ensure it is legally sound—though, in most cases, the notary will draft the contract themselves.
2.Clarify the need for warranties and liabilities, and include them in the purchase contract
When drafting the purchase contract, it is crucial to clarify the need for warranties and liabilities. Warranties relate to the seller transferring the house to the buyer in a specific condition and being liable for any potential defects. Liabilities, on the other hand, pertain to the buyer’s responsibility for the house and the associated risks.
It is important to document the need for warranties and liabilities in the purchase contract. This is particularly significant in cases involving disputed issues, such as the condition of the house or the assumption of debts.
The notary can assist in clarifying the need for warranties and liabilities, offering valuable tips and advice to the buyer. The notary can also help draft the relevant clauses in the purchase contract and ensure that they are legally sound.
III. Drafting and Signing the Purchase Contract
3.Considerations for Drafting the Purchase Contract
When drafting the purchase contract, it is essential to take into account the relevant sections of the German Civil Code (BGB). These include, among others, Section 433 (Object of Sale), Section 437 (Purchase Price), and Section 441 (Payment Terms). Section 433 stipulates that the object of sale must be clearly described in the contract. Section 437 regulates the purchase price and requires that it be agreed upon in the contract. Section 441 governs the payment terms, stating that these must also be included in the contract.
Another important section of the BGB is Section 437 (Warranties), which outlines that the seller is liable for any defects in the property if they were present at the time of handover. This section ensures that the buyer receives the house or apartment in a specific condition.
Additionally, Section 441a (Liability) is relevant. This section governs the buyer’s liability for damages to the property, stating that the buyer is responsible for damages they have caused. However, the buyer is not liable for damages caused by force majeure or by the seller.
Overall, it is crucial to carefully draft the purchase contract, ensuring that all relevant sections of the BGB are taken into consideration. The notary can assist in drafting the contract and ensure that it is legally sound.
Collaboration with the Notary in Drafting the Contract
Collaboration with the notary (see also 10 Tips for Successful Collaboration) is crucial when drafting the purchase contract. As a state-appointed and sworn legal professional, the notary is responsible for reviewing and certifying contracts and legal transactions. In the context of a house purchase, the notary is particularly responsible for drafting and certifying the purchase agreement.
Collaboration with the notary (see also 10 Tips for Successful Collaboration) is crucial when drafting the purchase contract. As a state-appointed and sworn legal professional, the notary is responsible for reviewing and certifying contracts and legal transactions. In the context of a house purchase, the notary is particularly responsible for drafting and certifying the purchase agreement.
In addition, the notary can offer the buyer valuable advice and guidance regarding the purchase and assist in resolving any legal questions. For example, the notary can check if there are any restrictions in the land registry or if there are specific agreements that may be relevant to the buyer.
4. Scheduling the Notary Appointment
Typically, the notary is chosen jointly by both parties, the seller and the buyer. It is important that the notary remains independent and neutral, with no personal connection to either party.
IV. Certification of the Purchase Contract and Registration in the Land Registry
4.1 Process of the Notary Appointment
At the beginning of the notary appointment, the notary will greet the participants and verify the identity of all present. All parties must present a valid form of identification, such as an ID card or passport.
Next, the relevant documents are presented and reviewed. These include the purchase contract, the land registry excerpt, any building and energy certificates, and proof of payment for real estate transfer tax, notary fees, and court costs (see notary fee calculator). The notary checks whether all documents are complete and correct and whether the contract complies with legal requirements.
Following this, the notary will read the contract aloud in its entirety. All important points will be explained to ensure that everyone understands the content of the contract and gives their consent. The notary will also emphasize that the contract is binding and that signing it carries legal consequences.
Once the contract has been fully read out, the parties will be asked to sign the document. The notary will certify the signatures and then forward the contract to the land registry office, where the ownership transfer will be officially recorded.
5. Signing of the Purchase Contract by Buyer and Seller
The signing of the purchase contract by the buyer and seller is a key step in the house buying process. The purchase contract is drafted by the notary and includes all the important clauses and conditions relevant to the sale. Once the contract is finalized, the notary presents it to both the buyer and the seller for their signatures.
Both the buyer and the seller are given the opportunity to carefully review the contract and ensure that all conditions meet their expectations. Once both parties agree to the terms of the contract, they sign it, making the agreement legally binding. The signing of the purchase contract must take place in the presence of the notary, who will then officially certify the agreement.
After the contract is signed, the purchase is legally valid and binding for both parties. The notary certifies the contract and submits it to the land registry for the official transfer of ownership.
V. Post-Purchase Formalities
6. Handover of the House Keys to the Buyer
The handover of the house keys to the buyer is the final step in the home buying process. Once the purchase contract has been signed and registered in the land registry, the key handover can take place. The timing and conditions of the key handover are typically outlined in the purchase contract and must be conducted in the presence of the notary.
Before the handover occurs, it is confirmed that the buyer has fully paid the purchase price. Once this is verified, the seller hands over the keys to the buyer. The notary certifies the key handover and records it in the land registry.
After the handover of the keys, the buyer officially becomes the new owner of the house and can take possession of their new home. The seller no longer has any access to the property and must relinquish all claims to ownership. The key handover marks the conclusion of the house purchase, signifying that the buyer is now in full control of the property.
7. Review of the Purchase Price and Agreement on Additional Payments if Necessary
Reviewing the purchase price and agreeing on additional payments if necessary is an important step in the home-buying process. The purchase price is specified in the contract and must be agreed upon by both parties. The price may be structured as a one-time payment or as installments.
The notary reviews the purchase price to ensure it is fair and corresponds to the value of the house. If the purchase price seems too high or too low, the notary can mediate discussions between the parties to agree on a revised price.
If the buyer cannot pay the purchase price in full at once, additional payments can be negotiated with the seller. The notary assists in drafting the installment or additional payment clause in the contract, ensuring that all conditions regarding these payments are clearly and comprehensively outlined.
8.Changes in the Land Registry
The registration in the land registry following the house purchase is a key step to legally certify ownership of the property. Once the purchase contract has been signed and the purchase price paid, the notary initiates the process of registering the new ownership in the land registry.
The land registry entry documents who owns the house and provides information about any restrictions on the property. For example, the land registry might include encumbrances, usage rights, or easements that are relevant to the buyer. The notary will review the land registry and update the ownership details accordingly.
This registration is crucial for the buyer, as it legally confirms the transfer of ownership. Once the entry is made, the buyer is recognized as the legal owner of the property and can exercise full control over it. Therefore, the land registry update represents the final step in the home-buying process, ensuring that the transaction is legally flawless.
Duration of Land Registry Registration
The duration of the land registry entry can vary based on several factors. Typically, the registration process takes a few weeks. The exact time frame depends on the workload of the responsible land registry office and the complexity of the registration.
The notary is responsible for initiating the registration by submitting the application to the relevant land registry office. The office reviews the application and proceeds with the registration once all necessary documents are in order. The time frame can also be influenced by factors such as objections from third parties or other discrepancies that need to be resolved. In some cases, the process could take up to a year.
VI. Conclusion
The notary plays a crucial role in the house purchase process, ensuring legal security.
The notary is a key figure in home buying, providing essential legal security. As a state-appointed and sworn legal professional, the notary is responsible for reviewing and certifying contracts and legal transactions. Specifically, during a house purchase, the notary is in charge of drafting and certifying the purchase contract.
The notary ensures that the purchase contract is legally sound and contains all necessary clauses. They also oversee the payment transfer and the registration in the land registry, certifying these steps. By overseeing these processes, the notary ensures that the transaction is legally flawless and binding for both parties.
For greater transparency regarding notary fees in home purchases, we have introduced a notary fee calculator.
Additionally, the notary can provide the buyer with valuable advice and guidance on legal matters related to the purchase. For example, the notary can check for any restrictions in the land registry or highlight agreements that may be relevant to the buyer.
Although property transactions can technically proceed without a notary, this comes with numerous risks, which are detailed in a further article: Buying Real Estate Without a Notary: Is it Possible and Advisable?
House Purchase with an Asset Management Company (Vermögensverwaltende Gesellschaft)
An asset management company (Vermögensverwaltende Gesellschaft) can offer advantages in certain situations when purchasing a house. For example, it can be a beneficial option for individuals working for a company or business based abroad who want to acquire property in Germany without having to register themselves as the direct owner.
It can also be advantageous for individuals without a German tax ID who wish to purchase a property, as they can appoint an asset management company as the legal owner. In such cases, the company can act as a trustee and handle the purchase and sale of the property, without the actual owner having to appear personally.
Another advantage of purchasing a house through an asset management company (Vermögensverwaltende Gesellschaft) is the potential for tax savings when the property is resold. Depending on the individual circumstances and the amount of profit generated from the sale, tax rates can reach up to 50 percent.
However, if the property was acquired through an asset management company, lower tax rates of 15 percent or 25 percent may apply, depending on whether the company is a corporation (Kapitalgesellschaft) or a partnership (Personengesellschaft).
However, prospective buyers should be aware that purchasing a house through an asset management company usually incurs higher costs, as additional fees for the company's services are involved. Therefore, it is important to carefully weigh whether using an asset management company is truly beneficial in your case and whether the additional costs are justified.