Real Estate Due Diligence in Germany - Complete Services for Companies and Individuals
Real Estate Due Diligence in Germany
Updated on Wednesday 03rd August 2022 Rate this article
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Real estate due diligence in Germany is not only recommended but required in most real estate transactions.
Building and sale-purchase contracts must comply with a set of rules, and the before making a real estate purchase it is advisable that the contract observes all the legal aspects.
Moreover, clients should obtain all the relevant information on the property title, existing encumbrances (if any) and verify the seller.
In addition to the needed documentation verification, clients are advised to work with a structural expert, a constructor and an architect (if needed) in order to property verify the construction.
Our team of real estate lawyers in Germany assist clients looking to purchase commercial or residential property.
In addition to the real estate due diligence in Germany, our attorneys are also able to provide services related to real estate litigation.
Real estate laws in Germany
Germany has a very specific legislation that protects an individual or a corporation when purchasing a real estate property.
Among these, the German Civil Code, the Notarization Act, the Land Register Ordinance and the Act on Transfer of Real Estate Property are the most important.
For German companies the Capital Investment Act represents one of the key legal frameworks when investing in real estate.
Germany imposes strict laws on construction projects and the Federal Building Code and the Federal Town Planning Regulation play an important role in the safety of properties that will be built.
Our lawyers in Germany can provide complete details on the relevant laws before investors engage in significant construction or real estate projects.
Although mainly focused on issued related to corporate matters, such as incorporation or bank account opening, our team also offers a number of other relevant services to investors.
Not only do we assist investors looking to open companies or purchase real estate, we are also able to provide services relate to trademark registration.
If you would like to know more about our services, you can reach out to our local team.
The real estate due diligence procedure in Germany
Even if real estate due diligence is not specifically regulated by the law, the procedure is carefully considered in Germany.
Real estate due diligence in Germany can be a very complex process comprised of legal, tax and financial due diligence.
Commercial due diligence will require an in-depth due diligence procedure that comprises loan documents, employee agreements, insurance policies, business licenses and environmental and engineering inspections according to the activity to be carried out in the building.
Our attorneys in Germany will carry real estate due diligence procedures for their clients and will also help them find the suitable property according to their need. You can also contact us for information about investment opportunities in Germany.
Foreign investors and citizens are strongly advised to contact a German law firm before making a real estate purchase in order to clarify all legal aspects of the contract but also to make sure all regulations are respected.
Our law firm will conduct a thorough real estate due diligence process with the German Land Register in order to gather all important information about the property title, if any encumbrances exist on the property to be bought and will also expand the process to verify the seller’s reputation.
You can read more about the due diligence steps below.
The due diligence verification checklist
Some of the most important aspects verified during real estate due diligence in Germany include the following:
- Sale/purchase agreement: one of our lawyers will review the draft of the purchase agreement, as well as any other relevant preliminary documents that will be signed by the buyer and the seller;
- Property title: German land register verification for information on civil law relationships concerning the respective property;
- Financial: utility bills and expenses, tax statements, mortgages and any other and related and relevant information;
- Litigation: our team will determine if there are any liabilities or open claims against the property;
- Insurance: we will review the certificate of insurance and nay other third party property management agreements, if they are in place;
- Physical inspection: together with a certified expert, our team will make sure that the property meets the building plans, as well as environmental issues, electrical, mechanical and structural requirements; any prior building permits will be reviewed as well as if the parking meets the current requirements.
Our tax lawyers can assist investors who have already interested in making real estate investments and have questions about the taxes for the transaction, including but not limited to the VAT in Germany.
The German real estate market
According to the German Federal Statistical Office, the number of dwellings in the country increased:
- at the end of 2021 there were 43.1 million dwellings;
- compared to 2020, the growth is of 0.7% (280,000 dwellings);
- compared to 2011, the growth is of 6.0% (2.5 million dwellings);
- however, in 2020, 8.5 million people lived in overcrowded dwellings.
If you would like to know more about the local real estate market, our lawyers can answer your questions and can help you purchase a home.
Contact us for more information about the process of real estate due diligence in Germany and other services we provide to local and foreign clients.
