Before the notarization
Once the buyer and seller have agreed on the essential elements of the contract, a notary has to be commissioned with the drafting and notarization of the contract. This is usually the responsibility of the buyer.
The notary examines the land register and reviews the entries contained within it. The notary then draws up the purchase agreement and forwards the draft to the involved parties.
According to the 'Beurkundungsgesetz' (German Notarization Act), the notary may grant a 14-day review period between the submission of the draft contract and the notarization in case one of the parties is a consumer, i.e. if the contract of sale is concluded for private purposes.
During the notarization process, any questions that may arise can be discussed with the notary and any final changes can be incorporated into the purchase agreement if both parties consent. In case the purchase item is a condominium, the purchase contract furthermore refers to the declaration of division as well as the certificate of completion.
The notary will inform the involved parties about any pre-emption rights that may exist (e.g.: in case of first sale after division, pre-emption right of the commune). Once no more objections concerning the drafted contract remain, the notary will notarize the contract. For this purpose, the notary is obliged to read out the entire contract and have both parties sign it.
The buyer must not appear him/herself at the signing of the contract, he/she may instead be represented. If a consumer is involved, the notary may encourage the consumer to attend the notarization in person. However, this is not mandatory. If the buyer cannot appear him/herself, the possibility of a so-called proxy without power is popular. In contrast to a separate notarization of the declarations by buyer and seller this procedure is more favorable, since the involved parties are only charged for the certification of signatures afterwards.
After the notarization
Immediately after the notarization, the notary notifies the sale to the tax office, which issues the real estate transfer tax notice based on this information. Only after the real estate transfer tax has been paid, the tax office sends the notary the clearance certificate. Without this certificate, the notary is not entitled to record the transfer of ownership.
If a municipal pre-emption right may be applicable, the notary also informs the municipality about the sale. More details on the pre-emption right can be viewed in another article.
For the execution of the actual purchase contract, the notary arranges for the land registry to enter a priority notice of conveyance in favor of the buyer. If the property is burdened with land charges or other encumbrances, although it was agreed upon an encumbrance-free transfer in the purchase contract, the notary will ensure the fulfillment of this condition. Once the relevant approval for deletion has been submitted, the notary deletes the encumbrances from the land register. Under certain circumstances, these authorizations are granted on condition the notary clears the outstanding debts by partially transferring the purchase price to the financing bank.
The purchase price has to be paid only when it becomes due. The notary sends the buyer a notice of maturity as soon as all the conditions agreed upon in the notarized contract are fulfilled. Common maturity conditions are the registration of the conveyance notice, the submission of all required deletion permits and, in the case of condominiums, usually also the administrator's consent. Only when these conditions are fulfilled the purchase price becomes due.
If the purchase agreement was concluded by a proxy without power of attorney, a post-approval of the represented person is subsequently required. For the post-approval, no notarial certification is required, rather a mere signature certification is sufficient.
Particularities apply to foreign buyers and sellers. The post-approval can be done abroad. Under certain circumstances, an apostille or even legalization of the document may be required for foreign documents. Apostille is a simplified way of authentication of foreign documents in the form of confirmation of authenticity by the authorities of the state in which the document was issued. Legalization of documents, on the other hand, is the much more complex standard procedure. In the case of legalization, the document is first authenticated in the same way as an apostille (in some cases, additional authentication may be required) and this authentication is confirmed by the local German embassy or consulate. A list of which countries require which confirmation of authenticity can be accessed at the German Notary Institute. Signatures can usually also be authenticated at German embassies abroad; in this case, an apostille or legalization that would otherwise be required is not necessary. This may save considerable fees.
Entry in the land register
The entire process comes to an end with the entry of the buyer as the new owner in the land register. This concludes the acquisition process and the transfer of ownership is completed. The notary now has to delete the priority notice of conveyance in favor of the buyer from the land register, as this has now fulfilled its intended purpose in terms of security.
Due to the many factors and authorities involved, it is difficult to estimate how long it takes to complete a real estate purchase contract from the draft of the purchase contract to registration as owner in the land register. In simple cases, the registration may be done in a few months; in more complex situations the final registration may take up to a year.
What the district right of pre-emption is all about. How great a risk of exercise it actually is and what the temporal implications are.