Property sale guide

The term priority notice of conveyance refers to the transfer of the property or the registration of the change of ownership.
The priority notice of conveyance is the most common notice in Part II of the Land Register: it secures the buyer’s claim to transfer of ownership until he is finally registered as the new owner.
The priority notice of conveyance, therefore protects the buyer and is intended to prevent the seller from reselling the property.

A division plan, according to § 7 para. IV WEG (Wohnungseigentümergemeinschaftsgesetz, German Commonhold Association Act) is “a plan with the building authority’s stamp or seal that shows the division of the building as well as the location and size of the parts that are private or common property”. When selling a residential complex, for instance, a detailed division plan is an essential requirement.

The division plan therefore delineates the private from the common property. All individual rooms belonging to the same apartment or partial ownership should be marked with the same number (§ 7 para. IV clause 2 WEG). This ensures that the partial ownership relations are clear.

An easement is a right in rem to use a foreign property. Properties may have different types of rights of use:

• Land easements (rights of way, public utilities easement)
• Restricted personal easements (right of residence, right to nominate tenants, right of use)
• Beneficial interest

All easements and restrictions can be viewed in the Land Register. Part II of the Land Register contains all information on beneficial interests, rights of pre-emption, and land easements, while liens on the property are listed in Part III.

Every owner wishing to sell, rent or lease a property in Germany is in principle obligated to issue an Energy Performance Certificate, as this is prescribed by the German Energy Savings Act (Energieeinsparverordnung, EnEV).

The Energy Performance Certificate presents the key energy figures of a property and states the final and primary energy requirements in kWh/m2a. It also assigns the property to an energy efficiency class (A+ to H).

The Energy Performance Certificate is consumption-oriented, as it is based on the energy consumption of the residents/users in the past three years. The last three energy bills of the respective energy supplier are generally referred to. The consumption-oriented Energy Performance Certificate always refers to the energetic, effective building surface area, which may deviate from the actual living area.
For residential buildings with up to four residential units that were built prior to 1977, an energy consumption certificate is additionally prescribed. In this case, an expert inspects the building’s structures and determines how high the object’s energy consumption must be.

The Land Register is a public, official directory of land plots. It includes all ownership relations and possible rights and burdens connected with the plot. Every plot has its own Land Register folio at the administrative court.

The Land Register consists of several parts. The Land Register index holds information on the location and size according to the cadastre. It shows the district, plot, and plot section. The index is followed by the three parts.

Part I defines the ownership relations. In addition to the owners, Part I also notes the distribution of the ownership; for married couples, for example, there will usually be a note “half each”.

Part II lists the easements and restrictions placed on the property. These include rights of way, rights of residence, rights of pre-emption, and similar.

Part III lists the burdens: liens on the property, mortgages and land charges. Since land charges are not automatically deleted with the payment of the final installment of the loan, they can remain in the Register even if the owner no longer has any payment obligations. Should a loan-taker change banks in the course of follow-up financing, the land charge doesn’t have to be deleted, and a new one entered. A much cheaper alternative is to assign the rights from the land charge to the successor bank.

The Land Register extract is a complete “copy” of all Land Register entries for a plot.

A commonhold association (Wohnungseigentümergemeinschaft, WEG) usually sets up an adequate maintenance reserve, the amount of which is defined by resolution of the commonhold assembly (§21 para. 5 No. 4 WEG).

The maintenance reserve is a provision both for future larger maintenance expenses (for instance repainting the façade) and to finance sudden repairs. This reserve is usually paid as part of the monthly commonhold fees paid by each owner. The commonhold association decides on how to set up the reserve by majority vote.

The declaration of division governs the ownership relations within a commonhold association (e.g., in a residential building).
It establishes the property as residential ownership, defines the usage of the spaces, and settles the rights and obligations of the individual owners. The assignment into private and common property is based on the provisions of commonhold property law.

Usually the declaration of division consists of the following parts:

1. Division plan
2. Certificate of self-containment
3. Bye-laws

1. The division plan separates the private from the common property. The division plan is a construction plan of a building at a scale of 1:100 that operates a numerical separation of the residential units.

2. The certificate of self-containment is the basis for the establishment of a residential unit or partial ownership. It states that the formed ownership units are self-contained, i.e., their space is separate from the rest.

3. The bye-laws govern the relation of the apartment owners between each other, taking into consideration the specificities of the particular commonhold complex. It, therefore, acts as the constitution and basic law of the commonhold association (Wohnungseigentümergemeinschaft, WEG).

German commonhold property law prescribes that minutes should be taken to record commonhold assembly resolutions (§ 24 para. 6 clause 1 WEG).

These minutes are generally recorded by the facility manager (usually under a facility management contract). What is important is that the minutes record not just the passed resolutions but also those that failed to pass – i.e., the resolution suggestions and their negative voting results.

The facility manager must then register the resolutions passed at a commonhold assembly in the record of resolutions without delay. This record collects all resolutions ever passed.

The sale of a property requires the last three minutes of the commonhold association and the record of resolutions for the time preceding that.

A commonhold association (Wohnungseigentümergemeinschaft, WEG) always requires sufficient financial means to ensure the management of the common property. The expenses are borne by all apartment owners, based on their shares, in the form of commonhold fees. These are pre-payments to cover the planned costs for the full financial year. Every commonhold association, therefore, requires a good financial plan.

The financial plan is drawn up by the facility manager of a commonhold association for one calendar year. It presents a forecast of the costs for the following year. Expected expense increases, fixed additional costs or expected losses in commonhold fees are estimated.

Every apartment owner is sent the amount of their contribution in the form of an individual financial plan based on the distribution scale prescribed by the bye-laws.

According to §16 II WEG, every apartment owner is obligated towards the commonhold association to bear the costs of the common property as well as the costs of

• maintenance
• repair
• management
• and common use

based on their share of ownership.

The amount of the monthly commonhold fee is set in the financial plan. The facility manager informs the owners in the annual statement of accounts about the due pre-payments for the following calendar year.