GERMANY Law and Practice Contributed by: Wolfram H. Krüger, Barbara Rybka, Markus Wollenhaupt and Alexander Zitzl, Linklaters
barkeiten ), land charges ( Grundschulden ) and mortgages ( Hypotheken ). 2.2 Laws Applicable to Transfer of Title The Civil Code and the Land Registration Act apply to every transfer of title. In addition, per - mits under other laws, in particular, the Federal Building Code for properties located in spe - cial areas and the Real Properties Transfer Act ( Grundstücksverkehrsordnung ) for first-time sales in eastern Germany after 28 September 1990, might be necessary. Local authorities might have statutory pre-emption rights in cer - tain designated areas. The laws applicable to transfer of title do not distinguish between the types of use of the prop - erty. 2.3 Effecting Lawful and Proper Transfer of Title Transfer of title requires a deed notarised by a notary containing an agreement on the sale ( Kaufvertrag ) and an agreement on the transfer ( Auflassung ). The notary applies for the permits necessary for the sale and waiver of pre-emption rights, which are a prerequisite for transfer of title and usually also for the payment of the purchase price. The notary also informs the tax authorities about the conclusion of the sale and purchase agreement. They will issue a clearance certificate confirming that real estate transfer tax has been paid, which is necessary for the registration of transfer of title in the land register ( Grundbuch ). While economic transfer of title (transfer of pos - session, use and burdens) is usually agreed for the day following the payment of the purchase price, the actual legal change of ownership only takes place upon registration in the land register.
Title insurance is not relevant due to the title guarantee resulting from the so-called “public belief” in the land register. Its accuracy is pro - tected by law and, therefore, a buyer can acquire ownership in good faith (bona fide) even if the property is purchased from an unauthorised per - Legal and technical due diligence is usually per - formed on documents provided by the seller. Technical advisers often carry out site visits. Some information can be obtained from authori - ties with power of attorney from the seller and public registers. In some cases, separate envi - ronmental due diligence is performed. son registered in the land register. 2.4 Real Estate Due Diligence The typical legal report contains information about title and encumbrances, leases, public building and zoning issues and other permits (if required), environmental information and, if relevant, acquisition documents, service agree - ments and litigation. In a forward transaction where the building is still to be developed, the report also covers development, project man - agement, construction, architectural and other agreements relating to the development. 2.5 Typical Representations and Warranties The extent of representations or warranties agreed depends on the market climate. Ger - many is currently a seller’s market, giving sell - ers enough leverage to avoid granting the buyer large-scale representation or warranties. Instead of objective guarantees, guarantees to the sell - er’s best knowledge are often given. Remedies The parties can agree on the type of remedies – either compensation in cash or actual repair of the damages. The parties often agree on a cap
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