Sales Contract

In real estate law, a purchase agreement is a contract notarized by a notary public through which the seller and buyer bindingly agree that ownership of a property will be transferred in exchange for payment of the purchase price. Notarization is legally mandatory under Section 311b of the German Civil Code (BGB)-an oral or written real estate purchase agreement without a notary is void and legally ineffective. Upon signing the purchase agreement, binding obligations arise for both parties: the seller must transfer ownership, and the buyer must pay the purchase price.

From Agreement to Transfer of Ownership

A purchase agreement alone does not yet transfer ownership-it merely establishes the obligation to do so (contractual obligation). The actual transfer of ownership occurs through two further steps: the transfer of title (agreement on the transfer of ownership, typically declared in the purchase agreement) and registration in the land register. Between the purchase agreement and registration, the priority notice of conveyance protects the buyer from the seller reselling or encumbering the property. The transfer of title takes place only after the purchase price has been paid in full and the real estate transfer tax has been paid.

Typical Contract Components

A complete real estate purchase contract contains: identification of the parties, a detailed description of the property (land registry data, parcel number, living area), purchase price, due date and payment method, date and condition of handover, provisions regarding liability for material defects, provisions regarding existing rental or lease agreements, tax information, and the declaration of conveyance. The notary reads the contract in its entirety and explains all legal implications.

Difference from the preliminary contract and the reservation

A preliminary contract obligates both parties to conclude the actual purchase contract at a later date; it must also be notarized. A reservation agreement without a notary is merely a contractual agreement without any real property effect and is hardly enforceable. The actual purchase contract is the legally binding instrument that binds both parties and forms the basis for all further steps (financing, transfer of title in the land register).

Liability for Material Defects and Exclusion of Warranty

A central element of nearly every real estate purchase contract in Germany is the exclusion of warranty: The seller excludes statutory liability for material defects. This means that, in principle, the buyer cannot assert any claims against the seller for hidden defects after the handover. Exceptions exist only in cases of fraudulent concealment of known defects (Section 444 of the German Civil Code (BGB))-in such cases, the exclusion does not apply.

This poses a significant risk for buyers: they must bear the costs themselves for damage to the roof, basement, plumbing, or facade that only becomes apparent after the handover. Professional purchase agreements therefore often contain clauses that oblige the seller to disclose defects known to them and to document them in writing. We generally recommend that buyers consult an independent building inspector before the contract is notarized-especially in the case of older buildings and houses that appear to be in poor condition.

Handover and Transfer of Ownership

The purchase agreement also specifies the date of handover: Only upon handover (transfer of keys) do ownership, use, and encumbrances of the property pass to the buyer. This usually occurs after full payment of the purchase price. Income (rent) is due to the seller until handover; thereafter, it belongs to the buyer. Costs (condominium fees, property tax, insurance) also transfer at the time of handover. For rented properties, the buyer automatically assumes all existing lease agreements by law (§ 566 BGB)-even without the tenants’ express consent.

Practical Tip for Property Owners in Nuremberg and Franconia

Anyone buying or selling a property in Nuremberg or Franconia should receive the notary’s draft purchase agreement at least two weeks before the scheduled date and review it carefully. Ask us at my-home.de: We’ll explain the typical clauses of a Franconian real estate purchase agreement and point out standard market terms (e.g., regarding warranty exclusions, handover, and ancillary costs).

In Nuremberg transactions, special attention should be paid to the clauses regarding the city’s right of first refusal (§ 24 BauGB) in certain redevelopment areas, as well as those concerning the handling of condominium ownership (administrator’s consent under the WEG). Provisions regarding maintenance fees-the monthly contribution to the WEG reserve fund-and liability for outstanding WEG resolutions should also be included in the contract for condominiums. Good preparation is half the battle when it comes to contract execution.

Frequently Asked Questions

Can I still withdraw after signing the purchase agreement?

Generally no, unless a right of withdrawal has been contractually agreed upon. The notarized purchase agreement is binding on both parties. Withdrawal is only possible if an agreed condition is not met (e.g., financing contingency), there is a legal ground for withdrawal (fraudulent misrepresentation, material defect), or both parties mutually agree to terminate the contract.

What does “exclusion of liability for material defects” mean in the purchase contract?

In Germany, real estate is typically sold with an exclusion of statutory liability for material defects. This means: The seller is not liable for hidden defects discovered after the transfer of ownership-except in cases of fraudulent concealment of known defects. Buyers should therefore conduct a thorough inspection and, if necessary, commission an expert appraisal before purchasing.

Who chooses the notary-the buyer or the seller?

As a rule, the buyer suggests the notary, since they bear the main costs of the notarization. However, both parties can agree on a choice. The notary is obligated to remain impartial, regardless of who appointed them.

What is a condition precedent in a purchase agreement, and when is it appropriate?

A condition precedent makes the validity of the purchase agreement contingent upon a future event-e.g., the issuance of a building permit or a binding financing commitment from the bank. If the condition is not met, the agreement automatically becomes void without the need for withdrawal. For buyers without secured financing, a financing contingency may be advisable; however, sellers often view it as a risk and prefer unconditional purchase price commitments. Negotiating this clause is an important part of drafting the contract.

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