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What are the legal aspects to consider when buying real estate property?


Immobilienkauf Immobilienrecht Risiko Kauf Eigentumswohnung Tipps

Buying a property is a long-term and economically important decision. It should therefore be carefully considered. Below you will find 5 legal aspects that you should definitely consider when buying a property:


  1. Freehold or leasehold?

You should already check in the exposé whether the property is being sold as a freehold or as a temporary leasehold. There is a significant legal difference here.



2. Deletion of land register encumbrances

All property-related documents must be requested and thoroughly checked. These documents include, in particular, the extract from the land register, existing rental agreements and official information (e.g. information on building encumbrances, contaminated sites, urban planning information). If easements or land charges are entered in the extract from the land register, the seller should be asked to delete them. If this is not possible, the underlying contracts should be checked in order to be prepared for possible claims by third parties.


3. Redevelopment / Conservation area

It is important to know whether the property is located in a redevelopment area (§ 142 BauGB) or a conservation area (§ 172 BauGB). If the municipality has designated the area in which the property is located as such an area, this has far-reaching legal consequences for property owners. Among other things, the designation as a redevelopment area means that the municipality has a pre-emptive right to purchase the properties located there (§ 24 BauGB), redevelopment measures may be approved by the authorities (§ 144 BauGB),  and you as the owner must pay a compensation amount to the municipality after the redevelopment has been completed (§ 154 BauGB). These scenarios must be mitigated by drafting the purchase contract correctly.


4. Inspection of defects

The property must be inspected in detail and checked for defects. Experts can also be consulted for this purpose. Existing defects affect the purchase price and the liability provisions to be agreed.


5. Warranty clause

Particular attention should be paid to the warranty clause in the purchase contract. The wording of this clause is important if defects subsequently become known and the buyer wishes to derive claims from this. The model purchase contracts provided by the notary usually exclude the seller's liability for defects. This is of course bad for the buyer, but can - and usually should - be negotiated and amended before the contract is concluded. This is because certain defects, such as asbestos, are not recognizable at first glance and cannot be easily detected even during an inspection by experts. Liability should therefore be agreed in the purchase contract, at least for such defects.


Tip:

What to look out for when buying real estate property always depends on what exactly you intend to do with the property: do you want to live in it yourself, rent it out or renovate it and resell it at a higher price? In addition, every property is individual, so unfortunately there is no standard checklist. Legally, the purchase agreement, especially the liability regulations, must always be tailored to the individual case. It is therefore advisable to carry out a legal due diligence of the property before buying and to have the purchase agreement checked by a lawyer and amended if necessary.




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