AUSTRIA Law and Practice Contributed by: Christoph Urbanek, Irena Gogl-Hassanin and Mario Schiavon, Urbanek Law
3. Real Estate Finance 3.1 Financing Acquisitions of Commercial Real Estate
tailored to the transaction, risk profile and lender requirements. 3.3 Restrictions on Granting Security Over Real Estate to Foreign Lenders There are no specific restrictions on foreign lenders securing real estate in Austria. They can legally register a mortgage in the Austrian land registry, provided all formalities under Austrian property law are met, including notarisation and registration, both easily manageable for foreign creditors. No foreign exchange or capital controls hinder loan repayments or enforcement of collateral. However, tax and civil law aspects such as withholding tax on interest and compliance with double taxation treaties must be considered. Cross-border transactions also require checks on money laundering compliance and, where applicable, translations or apostilles. In summary, securing and servicing collateral for foreign lenders in Austria is legally permitted and widely practised. 3.4 Taxes or Fees Relating to the Granting and Enforcement of Security In Austria, various fees and taxes apply when ordering and enforcing collateral over real estate, such as when ordering a mortgage. Land Transfer Tax In principle, no land transfer tax is due if the security is provided in the form of a mortgage, since this is not an acquisition of property. However, land transfer tax may apply when real estate is sold.
In Austria, commercial real estate acquisitions are typically financed with a mix of equity and debt, with traditional bank loans being the most common. Loan-to-value ratios usually range from 50% to 70%, depending on the property’s location and type, and the buyer’s creditwor - thiness. For larger projects, mezzanine capital, project financing, bonds, or club deals with mul - tiple investors or banks are often used. Complex transactions, such as large portfolio or share deals, frequently involve structured financing, syndicated loans or private equity-like models, with international banks, insurers and institution- al investors acting as lenders. In these cases, thorough due diligence of the property, holding and financing structures is essential. Financing structures ultimately depend on the transaction size, risk profile and buyer’s capital structure. 3.2 Typical Security Created by Commercial Investors In Austria, commercial real estate investors financing acquisitions or projects typically pro - vide multiple forms of security to lenders. The primary security is a mortgage registered in the land registry, granting enforcement rights in case of default. Additionally, claims such as rental income, insurance proceeds or deposit accounts are often assigned. In project develop - ments, construction contracts, general contrac - tor agreements and future purchase price claims may serve as collateral. For larger transactions like portfolio purchases or share deals, share pledges, account pledges and guarantees (eg, letters of comfort or corporate guarantees) are common. A detailed security agreement usually governs the comprehensive security package,
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