Purchase Review

Due Diligence - Due diligence is the systematic examination of all legal, financial, technical, and tax-related aspects of a property prior to purchase. It is intended to identify hidden risks, support the decision to purchase, and provide a sound basis for price negotiations.

Scope of the Review

The legal review includes a land registry extract (ownership structure, encumbrances, easements), a list of building encumbrances, a declaration of division (for condominiums), existing lease agreements, contaminated sites, and public law restrictions. The technical inspection assesses the building’s structure, building services, energy efficiency, contamination levels, and maintenance needs. The financial inspection analyzes rental income, vacancy rates, operating costs, and return on investment.

For rented properties, the review of lease agreements is a core component: lease terms, notice periods, rent adjustment clauses, security deposits, and pending legal disputes must be documented. Particularly for commercial real estate, the creditworthiness of tenants and the remaining term of their lease agreements are decisive value factors.

The Four Pillars of the Purchase Review

1. Legal Due Diligence

• Land Register (Sections I, II, III): Owners, encumbrances, mortgages, land charges
• List of public law obligations: registered obligations under public law
• Zoning plan and planning law: What may be built or used on the property?
• Declaration of division for condominium ownership: separate ownership, common ownership, voting rights
• Lease agreements and special provisions under tenancy law: special termination rights, graduated rents, broker clauses

2. Technical Due Diligence

• Condition of the building structure: foundation, exterior walls, roof
• Building services: heating, ventilation, electrical, plumbing
• Energy efficiency status and energy performance certificate
• Existing building permits for renovations
• Hazardous substance reports (asbestos, PCBs, mold)

3. Financial Due Diligence

• Rental income and operating costs for the past three years
• Vacancy rates and tenant turnover
• Maintenance reserve for condominium properties
• Yield calculation based on realistic assumptions

4. Tax Due Diligence

• Determination of the tax-relevant portion of the building
• Review of acquisition-related construction costs
• Existing tax obligations (e.g., 10-year speculation period)

Purchase Review - Typical Checklist

Review Area	Document / Action	Important for
Land Register Section I	Proof of ownership	Always
Land Register Section II	Easements, preliminary notices, real encumbrances	Always
Land Register Section III	Mortgages, land charges, annuity debts	Always
List of building encumbrances	Extract from the Building Authority	Always
Zoning plan	Current plan and bylaws	Always
Lease agreements	All lease agreements with ancillary agreements	Rented properties
Energy Performance Certificate	Consumption or Demand Certificate	Always
Minutes of Condominium Association Meetings (3 years)	Resolutions on special assessments, renovations	Condominium ownership
Operating Budget + Annual Statements	Maintenance fees, reserves	Condominium ownership
Building File (Building Permits)	Are all construction measures approved?	Always
Hazardous Substance Reports	Asbestos, PCBs, Heavy Metals	Older Buildings Pre-1990
Contaminated Site Registry	Soil Contamination	Former Commercial Properties

Costs of the Purchase Inspection

Property Type	Recommended Scope of Inspection	Typical Costs
Condo	Land registry + brief technical assessment	€800-2,000
Single-family home	Land registry + building expert report	€1,500-3,500
Small apartment building (4-8 units)	Full due diligence incl. lease agreements	€3,000-8,000
Larger multi-family home / commercial property	Comprehensive due diligence with attorney + structural engineer	€8,000-25,000

Practical Tip for Nuremberg and the Metropolitan Region

We recommend that every prospective buyer conduct a structured due diligence review before purchasing-even for seemingly straightforward properties. In the Nuremberg metropolitan area, contamination issues in former industrial zones (Gostenhof, Gibitzenhof, Südstadt) and outdated partition deeds in older buildings are typical risks that can only be identified through careful due diligence. An intensive technical assessment is particularly indispensable for foreclosures and estate properties sold without warranty.

The cost of a professional pre-purchase inspection should always be weighed against the purchase price and the potential risks. Undetected mold damage or a concealed legal dispute can exceed the cost of the inspection many times over.

Frequently Asked Questions

How much does a professional pre-purchase inspection cost?

Depending on the scope and type of property, between 1,500 and 10,000 euros. For a single-family home or a condominium, a technical expert report and a land registry check are often sufficient (1,500 to 3,000 euros). For multi-family homes or commercial properties with complex rental structures and a large number of tenants, the costs are correspondingly higher, as the financial and legal review is more extensive.

Who conducts the pre-purchase review?

Typically, a team consisting of a real estate agent, a building inspector, a tax advisor, and a lawyer. If you hire a competent agent with regional market knowledge, you will often receive an initial assessment of typical risks associated with the property type and location. For larger transactions or particularly complex properties, specialized due diligence consultants coordinate all aspects of the review and provide a consolidated report.

Can I withdraw from the purchase if the review uncovers issues?

At any time prior to notarization-a real estate purchase agreement is not finalized until notarization, not merely through the listing or a viewing. After notarization, withdrawal is only possible under the conditions expressly stipulated in the purchase agreement (e.g., lack of a financing commitment as a condition precedent) or in the case of defects fraudulently concealed by the seller pursuant to Section 444 of the German Civil Code (BGB). The pre-purchase review should therefore always be completed before the notary appointment.

What special considerations apply when conducting a pre-purchase inspection of existing properties from the 1960s to the 1980s?

In the Nuremberg metropolitan region, a significant portion of the residential property stock dates from the decades between 1955 and 1985. These properties exhibit specific risk patterns that warrant special attention during the pre-purchase inspection: building materials containing asbestos (e.g., in roof panels, window seals, floor coverings), polychlorinated biphenyls (PCBs) in sealants and paints, as well as outdated aluminum or aluminum-copper alloy electrical installations. Damage caused by waterproofing defects on flat roofs-which were commonly installed at the time-is also widespread. For properties built in these time periods, we generally recommend a hazardous substance screening as part of the technical pre-purchase inspection, as remediation costs in the event of positive findings can quickly eat up the entire purchase price buffer.

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