Real estate purchase agreement notarized – what now?

Processing a Real Estate Purchase Agreement

Does this sound familiar? After spending weeks or even months working towards the notarization of the purchase agreement, suddenly “nothing” seems to happen after signing. However, the notary actually begins processing the real estate purchase immediately afterwards. We explain which steps are required until the final transfer of ownership.

1. First Steps After Notarization

Preparation of Certified Copies of the Agreement
After notarization, the agreement is first assigned a deed register number (formerly known as: deed roll number). The notary prepares certified copies, authenticated and simple copies of the agreement for the parties and for the further processing of the agreement. The original, including any handwritten additions and signatures, remains with the notary.

A copy of the agreement is also sent to the real estate transfer tax office of the tax authority, which then sends a real estate transfer tax assessment to the buyer.
Registering Land Charges (if financing)
If the buyer is financing the property, they generally arrange for one or more land charges to be registered for their bank immediately after notarization, with the same notary, in a separate deed. This is based on the encumbrance authorization granted to them by the seller in the purchase agreement. The registration of land charges can optionally also take place at a later, separate appointment.

2. Entries in the Land Register and Required Consents

Priority Notice of Conveyance – find out more about this topic here.
The notary applies for the entry of a priority notice of conveyance (§ 883 BGB) in the land register, if this has been agreed upon in the purchase agreement, which is typically the case. This is intended to protect the buyer from the seller selling the property to a third party or registering new encumbrances in the land register that could impair the buyer’s right to unencumbered ownership. Should such an entry occur nonetheless, it remains relatively ineffective against the buyer. The notary typically submits the application for entry of the priority notice immediately after notarization by sending a copy of the agreement to the land registry office.
Obtaining Consents & Cancellations
The notary obtains the consent of the entitled parties who are registered in the land register with rights to the property, if these encumbrances are not to be assumed by the buyer. In most cases, these are the mortgage creditors (“banks”) registered in Section III of the land register. They grant the notary a cancellation authorization, which is subject to certain escrow conditions.

For further processing, the notary often also needs to obtain waiver declarations regarding pre-emptive rights or declarations confirming the non-existence of pre-emptive rights, or, in the case of condominium ownership, the granting of the property manager’s consent, if the declaration of division provides for this.

3. Due Date Notice and Payment of Purchase Price

Once the priority notice of conveyance has been registered and all required consents and approvals for the execution of the purchase agreement are in place (with the exception of the tax clearance certificate from the tax authority), and no further conditions precedent to be reviewed by the notary have been agreed upon, the notary issues the due date notice.

In it, the notary confirms that all conditions precedent within their scope of review have been met, i.e.:

• the priority notice of conveyance has been duly registered,
• all consents and approvals for the execution of the purchase agreement are in place, and
• the cancellation authorizations for encumbrances not assumed by the buyer are available.

The buyer must therefore transfer the purchase price within the payment period stipulated in the purchase agreement to the seller’s account or – in the event of discharge of encumbrances – also partially to the banks’ accounts. For this purpose, the banks have specified in their cancellation authorizations the amount still to be paid to them.

The seller receives a copy of the due date notice. The seller is then asked to confirm to the notary the receipt of the purchase price.

If only the standard conditions precedent have been agreed upon, the conditions are typically met approximately 4 – 6 weeks after notarization and the notary issues the due date notice.

4. Handover and Economic Transfer of Possession

Upon full payment of the purchase price, the economic transfer of possession and the handover of the property take place. The notary is not involved in this process. The following applies:

• Keys, documents & rental and warranty securities are handed over.
• Costs & obligations transfer to the buyer. The buyer assumes any existing contracts of the seller (for residential building insurance, this is the standard case, § 95 VVG) and bears the ongoing costs and charges for the property. The risk of accidental loss of the property and the duty to ensure public safety pass to the buyer upon transfer of possession.

For rented properties, an actual physical handover is regularly waived. The transfer of possession takes place automatically at a point in time specified in the purchase agreement (e.g. 0:00 a.m. on the day following full payment of the purchase price / the first day of the following month). The parties inform the tenants of the transfer of possession and instruct them to pay rent to the buyer going forward.

5. Transfer of Ownership in the Land Register

Once the seller’s confirmation of receipt of the purchase price is available, the notary submits the application for transfer of ownership. However, ownership is only transferred once the tax clearance certificate from the tax authority is also available (confirmation of payment of real estate transfer tax).
Additionally, the notary submits the following applications:

• Cancellation of the priority notice of conveyance. Prerequisite: There were no interim entries, as the protective function of the priority notice is then no longer required.
• Cancellation of the encumbrances not assumed by the buyer
• If applicable, registration of the buyer’s land charge, if this has not already been done previously

The parties receive an entry notification and, if applicable, a new land register extract regarding the various registration and cancellation processes.

Attention! The issuance of the tax clearance certificate often involves longer processing times, as does the transfer of ownership itself, meaning that it can take several months after payment of the purchase price before the actual transfer of ownership takes place.

Upon transfer of ownership, any tenancy agreements are now also transferred to the buyer by operation of law pursuant to § 566 BGB. The seller should inform the tenants of this – even if they were already aware of the sale beforehand – again after the transfer of ownership, in order to discharge their liability (§ 566 para. 2 sentence 2 BGB).

6. Costs of Processing

During processing, various costs & fees arise, including:

• Notary fees for notarization & processing as well as, if applicable, for the registration of the land charge
• Advance invoices from the land registry office
• Real estate transfer tax (tax authority)

Since various authorities make their further processing partially dependent on receipt of payment, corresponding cost demands should be settled promptly so as not to jeopardize the smooth processing of the purchase agreement.

Our Conclusion: Be Patient

The processing of a real estate purchase takes several months. The notary coordinates the process and ensures that all legal requirements are met.

Do you have questions about the processing of a real estate purchase or do you need legal advice? Contact us – we are happy to support you with all aspects of buying or selling real estate.