GERMANY Law and Practice Contributed by: Wolfram H. Krüger, Barbara Rybka, Markus Wollenhaupt and Alexander Zitzl, Linklaters
of the overall maximum amount of compensa - tion. This agreement is regularly accompanied by both a de minimis method, granting damages only if the claim exceeds a certain amount, and a basket method, granting compensation only if the sum of all claims exceeds a certain thresh - old, resulting in the seller having to cover the total amount of the claims rather than just the difference between the total and the threshold. The buyer carries the risk of the seller’s insolven - cy often without being especially secure. Pos - sible security would be paying a certain amount into an escrow account, holding back on a cer - tain amount of the payment, or simply lowering the purchase price. In some cases, a joint liability of or comfort letter by a parent company can be agreed with the seller. Less often a W&I insur - ance is contracted as security for the given seller guarantees. Limitation of Liability The statutory period for expiration of claims of approximately three years is often contractu - ally limited to 12 or 18 months. Depending on the seller’s negotiation skills, a cap, de minimis amount and basket can be agreed to limit liabil - ity. The liability is often limited to approximately 5–10% of the purchase price (cap); claims can only be raised if the individual claim reaches at least 0.1–1% of the purchase price (de mini - mis) and exceeds 0.5–1.5% of the purchase price (however, approximately EUR500,000 maximum) either by itself or together with other claims (basket). It remains to be seen how the changed market environment influences these values in favour of purchasers. 2.6 Important Areas of Law for Investors In addition to the civil and public law provisions mentioned in 1.1 Main Sources of Law , the provisions contained in the Anti-money Laun -
dering Law ( Geldwäschegesetz ) are particu - larly important for investors and the required know-your-customer checks sometimes create unexpected bureaucratic hurdles. Company register excerpts, passport copies, etc, must be provided to those who are obliged to carry out the checks. Corporations, partnerships and foundations operating on the financial market and/or buying real estate in Germany have to report their beneficial owners to the register of ultimate beneficial ownership ( Transparenzreg - ister ). Checks and notifications not only have to be carried out by providers of financial services, but also to a certain extent by brokers, law firms and notaries. 2.7 Soil Pollution or Environmental Contamination Under the Federal Soil Protection Act ( Bundes- bodenschutzgesetz ), the polluter, all current and former users, and all current and former owners of a property can be held liable for environmental laws irrespective of whether they are aware of the contamination or if it was caused by them. When requesting remediation measures, the authorities act solely on the basis of the princi - ple of effectiveness and will usually charge the most financially sound party, which is often the owner. However, the owner may take redress from the actual polluter if their actions or fault can be proved. 2.8 Permitted Uses of Real Estate Under Zoning or Planning Law A property owner has a right to a building per - mit if the proposed building complies with pub - lic building law. The issued building permit will ensure the legality of the building and its permit - ted use.
350 CHAMBERS.COM
Powered by FlippingBook