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TRANSFER OF OWNERSHIP WHEN BUYING PROPERTY
When do you actually become the owner of a property you have acquired? Many people think that ownership passes as soon as the purchase contract is signed at the notary. But that is not true.
WHAT DOES SIGNING THE PROPERTY PURCHASE CONTRACT MEAN?
The owner of the property only changes when the buyer is entered in the land register. However, the buyer is often already responsible for the property before that. This article answers the most important questions about the transfer of ownership of property.
By signing the property purchase contract, buyer and seller initially enter into a contractual obligation. Basically this means: the contract creates the seller's obligation to hand the property over to the buyer. Conversely, the buyer has also committed himself – to buying the property. So he can no longer simply withdraw from the contract.
But ownership has not yet passed. The seller is still entered in the land register as owner. However, a so-called priority notice of conveyance (Auflassungsvormerkung) may be entered in the land register. This means the seller can no longer encumber the property with a mortgage or sell it to another party instead of the buyer. The priority notice therefore protects the buyer until ownership is transferred.
WHEN ARE YOU THE POSSESSOR OF A PROPERTY AND WHEN THE OWNER?
When the property is handed over (handover of keys), the buyer becomes the possessor of the property. But this is still not a transfer of ownership. The term "possession" is defined in Section 854 of the German Civil Code (BGB): one acquires possession of a thing by "obtaining actual control over the thing".
The owner of a thing is defined in Section 903 BGB as the person who can "deal with it as he pleases and exclude others from any influence", "to the extent that the law or the rights of third parties do not conflict".
As possessor of the property, the buyer already has rights and obligations. For example, he may live in the property or let it. At the same time, from this point on he has to pay charges such as property tax.
If necessary he must clear snow and ice and he also bears the risk of damage to the building, for example from hail or storms. Sellers are advised not to hand over the property until the buyer has paid the purchase price.
WHEN IS THE ENTRY MADE IN THE LAND REGISTER?
In general, the notary initiates the transfer of ownership once the buyer has paid the purchase price and the real estate transfer tax. From then on it depends on the competent land registry how long it takes until the buyer actually becomes the owner of the property. Depending on the land registry, it can take several months for the transfer of ownership to be completed.
WHY IS AN ENTRY IN THE LAND REGISTER NECESSARY AT ALL?
The land register is a publicly accessible record in which anyone with a legitimate interest can see who owns a plot. Creditors, for example, can have a legitimate interest. The land register creates legal certainty. In addition to ownership, it records, for example, rights of way and any mortgages.