You have found a buyer for your property. Now you need to have a purchase agreement drawn up, legally documenting the results of your negotiations. The agreement should reflect the interests of both parties.
You often hear people say these days: “I don’t have to worry about the contracts. The buyer takes care of that, and the notary checks everything!”
But be careful: The notary public authenticates your wishes. They also check the legal validity of your agreements and ensure the proper transfer of ownership.
However, don't leave the drafting of the contract entirely to the buyer. You should also consult with the notary to ensure your interests are protected!
Security
The fact that a regular real estate sale must be notarized provides you with a high degree of security. At least formal errors are unlikely to occur. The notary is a neutral advisor. Many clauses in real estate purchase agreements are standardized, ensuring that everything is above board.
The notary's office also handles all the necessary official procedures, obtaining negative certificates, registering a notice of conveyance, and transferring ownership. They will also instruct the buyer to make payment once everything is complete. You don't need to worry about any of these things, which provides peace of mind.
Special agreements
In addition to the usual and necessary sections of a purchase agreement, further agreements can be made. These include, for example, special payment terms, the date of transfer, down payments, inventory included in the sale, services to be provided by the seller, and much more.
All these agreements are reviewed by the notary for their legal validity. However, the notary cannot know whether the content of the agreement actually corresponds to what you negotiated beforehand. Therefore, it is essential not to leave the drafting of the contract to the buyer, but to be involved. Choose a notary you trust together, discuss the matter with them or the responsible clerk, and have all the provisions and their implications explained to you in detail. Then, nothing should go wrong.
Some important points of the purchase agreement:
Personal details
The notary will verify the identity of all parties involved before the notarization. This means that you, as the seller, as well as the buyers, must present valid identification documents at the notary appointment. The notary will also ensure that all parties are proficient in German and therefore able to understand the contents of the contract.
Preliminary registration of transfer of ownership
After the conclusion of a purchase agreement, the notary will have a so-called preliminary entry of transfer of ownership (Auflassungsvormerkung) registered in the land register for your property. You can think of this as a kind of reservation. It means that the buyer's claim to your property is registered by name. Afterwards, you cannot initiate any further entries in the land register without the buyer's consent.
The registration of this preliminary notice is usually also one of the prerequisites for payment of the purchase price. It serves as security for the buyer.
Payment date/due date
The deed specifies the purchase price and payment terms, as well as the date and conditions under which the purchase price becomes due.
It is usually agreed that payment becomes due when the notice of conveyance is entered in the land register and the deletion of all unassumed encumbrances (e.g. land charges) in the land register is ensured.
It is also common for a specific date to be entered before which payment is not due. Further conditions may be agreed upon.
The notary will handle the registration of the transfer of ownership and the authorization to remove encumbrances. However, you may need to contact your bank yourself to fulfill the requirements for the release of the lien. Discuss this with your bank advisor and the notary.
Power of attorney to encumber property
Most properties are financed by a bank. This means the buyer won't pay you directly; instead, you'll receive the money from a bank. Since you still own the property, the buyer can't yet register a mortgage in the land register, which would serve as security for the bank's loan. Therefore, you'll typically grant the bank a power of attorney to encumber the property, allowing them to obtain security in advance.
This procedure is quite common, but rather complicated. However, the notary can explain to you exactly how your security is guaranteed by ensuring that the bank only makes payments to you.
Further agreements
All agreements relating to the sale of a property must be included in the deed of sale. Side agreements are not permitted and jeopardize the validity of the entire contract.
We can only offer some pointers here on what to look out for. We cannot replace consultation with a notary. Take the time to carefully study the draft contract and have anything that is not immediately clear explained to you.
We wish you every success!
