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Property purchase

When you purchase real estate, you generally invest much of your savings and borrow the remainder. Notaries ensure that your purchase contract is fair and help to identify and avoid risks. They oversee the conveyance of title and protect you from paying the purchase price without acquiring title in exchange. They also obtain the documents needed to carry out the transaction and handle the correspondence with the land registry and government authorities.

In other words, we notaries are responsible for the legal aspects of land purchases; financial matters – especially the fairness of the purchase price – are not ours to judge. Likewise, it is the buyer’s responsibility to come up with the necessary funds. Financing should be discussed with your bank early on. In the contract, we will adjust the due date and payout date of the purchase price based on the final financing package.

Property purchases involve the following:

1. Property
To be able to prepare the deed of sale and consult the land registry, we will need information about the land or apartment, including its location or the land registry folio where the land is recorded. If the property has any special characteristics, they should be pointed out to us early on so we can draft the contract accordingly. This includes known defects or additional services promised by one of the parties.

2. Encumbrances on land
Land is frequently encumbered by rights such as mortgages, easements, personal servitudes, rights of habitation, cautions to protect subsequent heirs and notices of foreclosure. Most of these encumbrances are shown in the land registry. Generally, the seller agrees to cancel the mortgages by paying back the secured loan or mortgaging another property.

If you finance a property purchase with a loan, you will have to create a non-accessory mortgage in favour of your bank (see Mortgages for details).

3. Due date of the purchase price
One of the most important aspects of any property purchase is ensuring the exchange of goods and services. Sellers will only transfer ownership if they are sure to receive the purchase price; buyers will only pay the purchase price if they know that they will acquire ownership. For this reason, most purchase contracts require certain criteria to be met before the seller receives the purchase price. They generally include:

  • receipt of all necessary approvals or declarations of consent,
  • priority notice securing the buyer’s claim to ownership in the land registry,
  • receipt of the documents required to cancel unassumed encumbrances from the land registry, especially the banks’ declaration of satisfaction of the mortgage,
  • receipt of waivers of the right of first refusal signed by rights holders such as the local government in the case of a land purchase.

One way to ensure concurrent execution is to pay the purchase price into a notary trust account.

4. Date of closing
The purchase contract must specify the date on which the property transfers to the buyer. The buyer has the right to occupy the property from that date on. Any leases also transfer to the buyer who, however, also has to pay the costs and expenses of the property (waste pickup and wastewater fees, property tax etc.) starting on the closing date. The transfer generally takes place upon payment of the full purchase price.

If possession of the property must be delivered before the purchase price is paid out from the notary trust account, the notary must immediately be given proof of the delivery of possession. This is generally done by submitting a delivery declaration signed by both contracting parties upon delivery of possession.

Sample: Delivery declaration (PDF)

5. Conveyance of title
If the notary has all the documents required to convey title and all the lenders’ trust conditions can be met, he will ask the land registry to convey title – provided, obviously, that the pur-chase price has been paid. This way, the sellers can trust that they will not lose title to the property before receiving the stipulated purchase price.

6. Draft contract We need information on the parties and property in order to draw up an initial contract draft. Please complete the information form and return it to us. We will then contact you.

Sample: Information form (PDF)

7. For further details
- Land and building purchase contract glossary (Glossar_Hauskauf.pdf)
- Fact sheet for purchasing a pre-owned home (Hauskauf-Info.pdf)