The Grundbuchordnung or Land Register is a reliable record of all real property and its owners. Since all certificates of title must be registered, there are no doubts about the title to a property, at least in the area of the former Federal Republic. This greatly facilitates the operation of the land and property market.
Local valuation committees collect information about land and property values. All contracts, deeds and other documents of conveyance must be sent to the local valuation committee. The committee then provides information such as indices of land prices and rates of return for certain land uses in the local market. It is advisable to use this source of information, at least for a first overall survey of land and property prices.
Immobilienverband Deutschland e.V. (IVD), Littenstraße 10, Berlin, D-10179, Germany, Phone : +49 30 275 72 60, Fax : +49 30 275 72 649, e-mail : info@ivd.net, Web : www.ivd.de, The German real estate professional association, Immobilienverband Deutschland (IVD), is a professional organisation that represents the interests of service providers of the real estate sector. The approximately 6.000 member firms comprise commercial and residential property agents, real estate managers, financing and loan service providers, assessment experts, property developers and representatives of many other real estate-related occupations. The IVD was established in 2004 as the result of a merger of the until then autonomous traditional associations Ring Deutscher Makler (RDM) and Verband Deutscher Makler (VDM).
In contrast to France that has a deed system (A register of owners; the transaction is recorded - not the title), Germany has a title system meaning that the properties are registered and the title is recorded and guarantied.
Although the Anglo-American and German system of real estate ownership have the same roots, there are some major differences. The German concept of ownership is rather driven by "possession" of real estate ownership as distinguished from "ownership" of real estate. Consequently, ownership is organized by property rather than by right holders. Forms of real estate ownership regarding freehold and leasehold are similar and real estate can be hold by persons as well as by corporations.
Title & Contracts in Germany:
Deeds in the common law sense do not exist in Germany. Title to real property is transferred by a declaration of both parties before a notary and by entry of the transfer of title in the real estate register.
A land register, similar to a torrens system is used in Germany. This register is called the Grundbuchordnung and provides a reliable record of all real property and its owners. The land register also provides a reliable sample of information on property valuation and transactions.
The principal aspects of German contract law are similar to these prevailing in the U.S. (e.g., offer and acceptance, mutual consent, etc.). Contracts for the sale of real estate must be in writing. It is important to note, however, that consideration is not required for a valid contract.
Property Taxes:
Ad valorem: A real property tax is levied annually by municipalities. The tax varies according to the type and The real property transfer tax must be paid as a requirement for the entry into the Grundbuch (land register). Another important tax for the functioning of the real property market is the so-called "spekulationssteuer" (speculation tax). The seller has to pay this if property is sold at a higher price within two years after having been purchased. The spekulationssteur is a an attempt to prevent excessive speculation in the market.Special rules apply to real estate used in agriculture or forestry. (See also Section 8.6). Property taxes real property transfer taxes: The transfer of ownership in real property from one owner to another is taxed, (Grundsteuer) have to be paid by all owners of land, whether built up or not, and also by holders of hereditary leaseholds (Erbbaurecht, See 8.7). The base for taxation is the standard value of the property as set by the local valuation authority (see also Section 8.2).location of the real estate and may be in the range of about 0.5% to almost 1.4% of the assessed tax value of the property.
At the notary date the Real Estate agent's or broker's commission has to be paid. This ranges between 3,5% and 6% of the buying price, including VAT, depending on the federal country where one is buying in Germany.
Land Use & Control:
In 1986, the Federal Government enacted the Baugesetzbuch (Planning Code), which governs land-use planning and urban renewal. The Baugesetzbuch gives local municipalities the freedom to implement a local plan using the control of land use, density and public capital investment. Subdivision regulations which control how land may be converted into building lots are necessary for all developments in Germany.
Real property in Germany may be mortgaged to secure a debt. The mortgage is referred to as Hypothek and is a pledge, not a transfer of real property to the lender.
German real estate financing can be done either with mortgage banks or with any bank or financing institution for example a "Sparkasse"(Savings Bank), "Volksbank" (Credit Union), Insurance company, Bausparkasse (building and loan association). Financing usually is done for about 60-80% of the buying price by mortgage loan. Anything above 100% of the buying price needs to be secured either by additional securities like insurance or other financial securities that have to be deposited at the financing institution. Financing is based on the actual income a person or company has. Banks do finance non-residents but certain circumstances apply and normally does not exceed 60% of the buying price.
Administaror