Conclusion of the contract

Conclusion of the Contract - In real estate transactions, the conclusion of the contract refers to the legally binding agreement between the contracting parties; for real estate purchase agreements, this agreement must be notarized (Section 311b of the German Civil Code (BGB)). The purchase contract only becomes effective upon notarization by a notary - verbal agreements or written preliminary agreements are not legally binding for the transfer of ownership. For lease agreements, the written form or even a verbal agreement is sufficient.

Process for Buying Real Estate

The conclusion of a contract when buying real estate follows a set process:

Draft Contract - the notary prepares a draft based on the parties’ agreements, which both sides must receive at least 2 weeks before the appointment (Section 17(2a) of the Notarization Act). This deadline is not a mere formality: it is intended to ensure that both parties understand the contract text, can ask questions, and, if necessary, seek legal advice. Anyone who receives the draft only one day before the appointment should reschedule the notary appointment.

Notarization Appointment - The notary reads the entire contract aloud in its entirety. The parties may ask questions and propose changes; subsequent changes are recorded in the minutes and read aloud as well. Subsequently, all parties involved sign the document. The notary is obligated to point out any unusual or disadvantageous clauses and to instruct the parties on the significance of their declarations.

Closing - the notary arranges for the entry of the notice of transfer in the land register (protects the buyer from a double sale), obtains the municipality’s waiver of preemptive rights, and prepares the notice of due date for the purchase price. The purchase price may not be paid until all conditions for payment have been met-this protects the buyer from paying before their legal status is secured.

The transfer of ownership in the land register takes place after payment of the purchase price and upon presentation of the clearance certificate from the tax office (proof of payment of real estate transfer tax) - typically 4 to 8 weeks after the notary appointment, sometimes longer, depending on the workload of the land registry office.

Requirements and Due Diligence Obligations

Before concluding the contract, both parties should conduct a comprehensive review:

Buyer - Financing secured (binding loan commitment, not just a financing confirmation), land registry extract reviewed (encumbrances, rights, ownership structure, priority of existing land charges), building specifications or condition report available, energy performance certificate reviewed, for condominium units, the last three meeting minutes and the collection of resolutions reviewed.

Seller - Verify the buyer’s identity and creditworthiness, disclose any environmental liabilities and known defects (liability for fraudulent concealment applies even after the contract is signed!), document existing leases, prepare land charges for cancellation, and obtain cancellation authorizations from the financing banks.

The notary verifies the seller’s authority to dispose of the property and explains the legal consequences-however, they are not an advisor in the economic sense and do not assess whether the price is reasonable or the property is free of technical defects.

Special Considerations for Purchasing New Construction and Developer Agreements

When purchasing a property yet to be built from a developer, special rules must be observed. The property development contract is a combination of a land purchase agreement and a contract for work and services. It is subject to the Real Estate Broker and Property Developer Ordinance (MaBV), which protects the buyer from losing their down payments: The developer may only demand installment payments after certain construction milestones have been reached.

Before signing a property development contract, the buyer should pay particular attention to the following points: the completion date provision (has a specific date been agreed upon?), the construction specifications (are they binding and detailed enough?), the developer’s guarantee obligation, and the acceptance rules (who performs the acceptance, and what claims for defects arise in the process?).

Practical Tip for Property Owners in Nuremberg

We recommend that buyers and sellers in the Nuremberg metropolitan area read the notary contract draft carefully and in its entirety and clarify all open questions before the appointment. Make active use of the two-week period: Have the draft reviewed by a real estate attorney or your real estate agent if necessary. By the time of the notary appointment, all questions should already have been resolved-changes to the contract are possible but usually require a follow-up discussion and significantly delay the process.

In Nuremberg, notarization appointments for standard purchase agreements take approximately 45 to 90 minutes. For complex properties (multi-family homes, developer contracts, WEG apartments with special regulations), you should plan for significantly more time. Bring a valid ID and ensure that all authorized representatives are present-if one party is missing, the appointment must be rescheduled.

Frequently Asked Questions

Can I still withdraw after the notary appointment?

Withdrawal after notarization is generally not possible-the contract is binding. Exceptions: a contractual right of withdrawal (e.g., in the event of non-fulfillment of conditions such as a financing commitment), contestation due to fraudulent misrepresentation (Section 123 of the German Civil Code [BGB], if the seller knowingly concealed known defects), or mutual termination (both parties agree-requires a new notarization and incurs additional notary fees). There is no right of withdrawal without cause in real estate purchases. This is why careful review before the notary appointment is so crucial.

What happens if the buyer does not pay?

If the buyer does not pay the purchase price by the due date, they are in default. The seller may then demand default interest (legally 5 percentage points above the base rate) and, after setting a reasonable grace period, withdraw from the contract (Section 323 BGB). In addition, the seller may claim damages-e.g., for lost rental income or costs associated with relisting the property. In practice, purchase agreements include a clause that allows the seller to withdraw from the contract and claim damages for the difference after the grace period has expired without result.

Do I have to appear in person at the notary appointment?

Generally, yes-the notarization requires the presence of the contracting parties or their authorized representatives. If personal attendance is not possible, a notarized power of attorney can be granted: A trusted person appears with a power of attorney that is either notarized or approved by the notary conducting the notarization during the appointment. For buyers living abroad, the power of attorney solution is common practice. The power of attorney must cover the specific terms of the contract (purchase price, property, conditions).

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