Public burdens

Public Encumbrances - Public encumbrances are levies and obligations imposed on a property under public law and borne by the owner. These include, in particular, property tax, development contributions, resident contributions for road construction and sewer connections, sewage fees, and special municipal levies. Public encumbrances are transferred to the new owner upon a change of ownership and must be taken into account in the purchase agreement.

Overview of Types of Public Encumbrances

Property Tax: The most important public encumbrance on real estate. It is levied annually by the municipality and is based on the property tax assessment value and the municipal assessment rate. In Bavaria, property tax has been calculated according to a new model since the 2022/2025 reform. In Nuremberg, the assessment rate is currently 555% (as of 2024).

Development contributions: One-time contributions for the initial construction of infrastructure (roads, sewer systems, water supply) pursuant to Sections 127 et seq. of the German Building Code (BauGB). They are levied on the property owner when the property is developed for the first time. In Bavaria, the obligation to levy road improvement contributions (for the renewal of existing infrastructure) was abolished in 2018.

Sewer connection fees and wastewater fees: One-time contributions for connection to the public sewer system as well as ongoing fees for wastewater disposal. These are regulated at the municipal level and vary considerably depending on the municipality.

Municipal special levies: Contributions for specific public measures that directly benefit the property-e.g., the creation of sidewalks, street lighting, or noise abatement measures.

Distinction from private-law encumbrances

Public encumbrances must be distinguished from private-law encumbrances in Sections II and III of the land register. Land charges, mortgages, and easements are private-law encumbrances and are entered in the land register. Public encumbrances are not entered in the land register but result from notices issued by the municipality or other authorities.

Nevertheless, public encumbrances have priority over private-law creditors in foreclosure proceedings: Property tax arrears are given priority over registered land charges. Buyers thus assume not only the current property tax liabilities but also any arrears owed by the seller.

Significance When Buying Real Estate

Buyers should check before purchasing whether there are any outstanding public encumbrances-in particular:

• Property tax arrears: Arrears are attached to the property and are transferred to the buyer.
• Unsettled development contributions: For properties in new development areas, development costs may not yet have been fully settled.
• Planned municipal projects: Road construction, sewer system upgrades, or similar projects may result in future charges, even if the work has not yet begun.

The notary typically recommends obtaining a certificate of no encumbrances from the municipality. The purchase agreement typically stipulates that the seller bears all public encumbrances incurred up to the date of transfer.

Property Tax and the 2025 Reform

The property tax reform in Bavaria took effect on January 1, 2025. Bavaria uses an independent state model (Bavarian Property Tax Act - BayGrStG) based on an area component (area of the property and buildings) rather than on unit values. The impact on the actual property tax burden varies significantly depending on location and property type-some owners pay more, others less.

Buyers should ask the seller about the current property tax burden on the property being purchased and check whether the new property tax assessment (effective 2025) is already available or still pending. For rented properties, property tax is generally passable on to the tenants.

Practical Tip for Buyers in Nuremberg

We recommend that buyers in the Nuremberg metropolitan region contact the Nuremberg City Treasury before purchasing to inquire whether there are any outstanding property taxes or development contributions. Especially for properties on streets that have not yet been fully developed, the municipality may levy development contributions retroactively.

Also, specifically inquire about planned development measures in the area that were planned after the assessment cutoff date but have not yet been approved. Our network of local architects and planners helps assess future costs early on.

Frequently Asked Questions

Are public encumbrances visible in the land registry?

No. Public encumbrances are not entered in the land registry. They result from municipal notices and bylaws. You can obtain information about existing public encumbrances from the city treasury or municipal treasury of the respective locality-in Nuremberg, this is the City Treasury of the City of Nuremberg.

Who is liable for outstanding public encumbrances after the purchase?

Property tax and other public encumbrances are real encumbrances-they are attached to the property, not to the person. The seller’s arrears can therefore be enforced against the new owner, even if the new owner was unaware of the arrears. The purchase agreement should therefore stipulate that the seller settles all arrears before the transfer and provides proof of this.

Can I claim public charges as tax deductions?

For rental properties, property tax and development contributions are deductible as income-related expenses. However, one-time development contributions for initial construction are part of the property’s acquisition costs and are included in the depreciation base. For owner-occupied properties, public charges (property tax, development contributions) are not tax-deductible.

How much is property tax in Nuremberg?

In Nuremberg, the assessment rate is currently 555% (as of 2024). Due to the 2025 property tax reform, the tax burden may change compared to previous years. The specific property tax assessment for a property is issued by the tax office or the municipality. Prospective buyers should request the current assessment from the seller.

Which public charges are particularly common after a purchase in new development areas?

In new development areas of the Nuremberg metropolitan region-such as newly developed residential areas in Stein, Zirndorf, or on the outskirts of Nuremberg-development fees are often not included in the purchase price of the property. The municipality often does not bill for development until all measures have been completed-which can be years after the property is purchased. In addition, there are sewer connection fees, which are charged as a one-time fee for connecting to the public sewer system and can amount to several thousand euros depending on the municipality and the size of the property. Anyone purchasing a property in a new development area that has not yet been fully developed should obtain written confirmation from the seller regarding which development measures have not yet been finally billed. In case of doubt, we recommend making a direct inquiry with the municipality’s relevant building authority or development office before signing the notarized purchase agreement.

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