Attorney-at-law Daniel Olk
We advise and represent our clients in areas of commercial and civil law.
Real estate transactions
As a Düsseldorf law firm specializing in real estate law, we provide our clients with support by way of contract checks, contract negotiations, the implementation of a sale, for example, or in court. This distinguishes us from the work of an (impartial) notary. We would like to give you a brief overview of the topic:
1. The transaction object
Real estate as a transaction object is often divided into houses, condominiums and plots of land. For example, the real estate agent Homeday lists property types as: land, house, apartment. This is legally and linguistically misleading: An immovable building is generally not purchased or sold as such, but rather together with the ground in which it stands. The word “property” (German: Grundstück) does not only mean undeveloped land, and a “house” is also traded and viewed as property. The so-called “house purchase” or “house sale” is a ground-related transaction.
The majority of transactions in 2020 were made with residential properties. However, we also advise throughout Germany on commercial, agricultural or forest properties as well as other types of use (e.g. also holiday properties or heritage buildings such as castles which are under monument protection).
2. The ownership right
In legal terms, a distinction must be made between ownership and possession (German: Eigentum und Besitz), even if real estate ownership is often misleadingly referred to. The relevant transactions usually involve changes in the ownership situation, which are reflected in the land register or condominium register. In inheritance cases, the ownership status changes outside of the land register, which we, as a law firm also specializing in inheritance law, are happy to advise you on. The mere possessor is, for example, the tenant.
3. The notary
Real estate transactions must be notarized in accordance with Sections 311b para. 1 BGB and Section 4 para. 3 WEG. Notaries are legal professionals who hold a public office, are not on the side of one of the parties, and are responsible for ensuring that the transaction is legally correct. The notary is generally paid by the buyer. However, it is not always the buyer who chooses the notary they trust.
At our office city Düsseldorf, lawyers and notaries are separate from each other (so-called notary’s office only), while this is different in Duisburg or Frankfurt am Main, for example (so-called attorney-notaries, i.e. a lawyer can also act as a notary). Attorney-at-law Daniel Olk does not act as a notary. Rather, our law firm sees itself as a service provider and advisor who will help you where a notary's office will not. It is not the job of a notary to represent your personal interests, this is the job of a lawyer.
4. The contract
In legal terms, a distinction must be made between an obligation and a disposal transaction. In most cases, the obligation transaction is a purchase contract, i.e. in particular an obligation to pay the purchase price. In the cases considered here, the disposition is usually the transfer of ownership (conveyance), which is only completed with the entry in the land register. This typically takes some time. Due to the large number of aspects that have to be considered, real estate purchase contracts are of a certain length and are difficult to understand for non-lawyers without advice.
In some cases, there are legal parallels to company purchase agreements, which are also notarized and sometimes have a high level of complexity and high purchase prices. As a law firm also active in corporate law and M&A, we have relevant experience with such contract designs.
The draft contracts that originate from notaries are quite different and are sometimes more, sometimes less seller-friendly in the details.
5. The legal advice
We advise you on purchase contracts both on the seller's side and on the buyer's side. In both cases, we know the usual stipulations, negotiation points and risks. For the buyer, the paid service of a lawyer to examine or support the transaction is usually in addition to the notary costs. Due to the importance of the decisions and processes involved in the acquisition - the buyer often goes into debt for this or uses a significant part of his assets -, investing in legal advice or a thorough inspection of the provisions can still be sensible.
As a rule, the previous owner or owners do not bear the notary costs. Particularly if the notary's office was selected and instructed by the purchaser, or the notarial support does not appear to be satisfactory, it may be advisable for the seller to consult a legal advisor who is purely on his side and who can advise him confidentially.
In addition to advice in direct connection with a real estate transaction, there may also be legal situations in the run-up to or after the transaction in which notaries do not advise anyway, but which are part of the classic legal tasks of a lawyer, such as issues with preliminary contracts, side agreements or disputes, including possible reversal of the transaction (withdrawal from the agreement).
6. The land registry office
The land register is a directory that is intended to show the ownership status of real estate. The land registers are generally kept at the local courts (in German: Amtsgericht). The notary who notarizes the transaction submits applications to the judiciary as part of the transaction. An examination is carried out by both the notary and the land registry officials.
Land registry entries are difficult to understand. At our law firm, we are happy to help you with this. It is possible to inspect the land register, especially as the owner or authorised representative of the owner, but not for everyone. Prospective buyers should obtain an excerpt of the land register.
7. Any involved banks or savings banks
Banks would not necessarily have to be involved in the processing of real estate purchases. It is only prohibited that payments for purchases or barters are made using cash, gold, platinum, precious stones or “crypto assets” (Section 16a of the Money Laundering Act). A transfer to a bank account is not required.
In practice, however, it is not only common that bank money is remitted, but also that the buyer takes out a loan for this purpose. Since the financiers protect themselves with mortgages in the land register, and there is often another lender from the past in the land register, questions regarding these rights in rem usually also need to be clarified. The contract with the credit institution is a separate issue from the purchase of real estate.
8. Any real estate agents
The real estate agent (broker) has a commission interest in achieving a valid deal and therefore has a different interest than the seller or buyer. He plays a different role in the transaction process than the legal professionals involved (attorneys and notaries) and is not a legal advisor, but rather a practical market expert. There are also topics in brokerage law that can actually add further complexity to the sale of real estate and must be considered separately. The broker is not a party to the purchase contract, even if so-called broker clauses in the notarial drafts often confirm that a broker was active (in order to secure the broker’s commission).
9. The identification at the start of the engagement
The planning or execution of the purchase or sale of real estate (any sort of conveyancing) is one of the transactions in which the law also requires attorneys to always identify the client. This is regulated in the Money Laundering Act (Section 2 GwG) and also applies if the client is completely unsuspected of money laundering. We therefore ask for your understanding that, in accordance with the regulations, we ask for a scan of your identity document (e.g. identity card) to be presented to us for every mandate in the direct area of real estate transactions. You will also be asked for an identification at the notary if the notary does not already know you.
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