The purchase contract (Kaufvertrag) is the heart of every house purchase and, in Germany, must always be notarised. But what exactly does such a contract contain? Which clauses decide when you pay, when the house belongs to you and what the seller is liable for? For over 60 years we have accompanied buyers and sellers in Düsseldorf and North Rhine-Westphalia, and we explain the key components of a notarial property purchase contract clearly and step by step. This article is general information and does not replace legal advice.
Why the purchase contract must be notarised
A contract by which someone undertakes to transfer or acquire ownership of a plot of land requires notarial recording. This is expressly ordered by § 311b para. 1 BGB. A house purchase by handshake or with a self-drafted document is therefore invalid and creates no binding obligation.
The legislator demands this form because a property purchase has far-reaching economic consequences. Notarisation protects both sides from rushed decisions, ensures legally sound wording and makes certain that the contract can be carried out in the land register.
The notary here is not the representative of one party, but an independent and impartial holder of a public office (§ 1 BNotO). He instructs both sides on the legal significance of the transaction and ensures a balanced arrangement. He is therefore also independent of us as a property company: we accompany you to the appointment and explain the contract to you understandably, but recording is carried out solely by the notary.
Parties and precise description of the property being sold
Every purchase contract first names the contracting parties, that is seller and buyer, with full name, address and date of birth. With married couples, communities of heirs or companies, it must be beyond doubt who is obligated and who acquires rights.
Equally central is the precise description of the property being sold. What is decisive is not the address or the description in the brochure, but the details from the land register and the real estate cadastre:
- the responsible land registry office, land register sheet and serial number of the inventory list,
- district, parcel and lot as well as the size in square metres,
- for condominiums additionally the co-ownership share, the apartment number and any special-use rights.
Accessories sold along with the property, for example a fitted kitchen or an awning, should also be expressly listed so that no dispute over the scope of delivery arises later.
Purchase price, due date and payment terms
The contract fixes the purchase price as well as the time and the conditions of its due date. Contrary to common assumption, the purchase price is not payable immediately upon signing. The buyer must pay only once the notary sends him a notice of due date and confirms that certain security conditions have been met.
Typical due-date conditions are:
- the entry of the priority notice (Auflassungsvormerkung) in favour of the buyer in the land register,
- the availability of the cancellation documents for old encumbrances which the buyer is not to assume,
- the municipality's waiver of its statutory right of first refusal under § 28 BauGB (negative certificate).
As a rule, the buyer today pays the purchase price directly to the seller or to the seller's financing bank to redeem the old debts. A notary's escrow account is provided for only in special constellations. Default interest and the consequences of late payment are also regulated.
Conveyance, priority notice and transfer of ownership
Important to understand: with your signature under the purchase contract you are not yet the owner. The purchase contract only obligates the transfer. The actual transfer of ownership occurs only through the conveyance (Auflassung) and the entry in the land register.
The conveyance (Auflassung) is the agreement in rem on the change of ownership under § 925 BGB. It must be declared before the notary with both sides present at the same time and may be made subject neither to a condition nor to a time stipulation. It is usually recorded already in the purchase contract.
Until ownership is actually re-registered, several weeks often pass. During this time the priority notice (Auflassungsvormerkung) under § 883 BGB protects the buyer: it is entered in the land register before payment of the purchase price and means that later dispositions by the seller, such as a second sale or a new encumbrance, are ineffective against the buyer. The priority notice also continues to apply in the event of the seller's insolvency and is thus a central security instrument.
Handover, transfer of possession and benefits and burdens
The contract governs the day of handover, that is the point at which the buyer receives possession and actual control over the house. In practice this is mostly full payment of the purchase price, sometimes a firmly agreed reference date.
The handover day also triggers the transfer of benefits and burdens. From this point the buyer is entitled to the benefits, for example rental income, and bears the ongoing burdens and costs, for example property tax, insurance and house money. At the same time, the risk of accidental loss generally also passes to the buyer.
It is sensible to have a handover protocol in which meter readings, handed-over keys and the condition of the property are recorded. This makes it possible to prove later in what condition the house was taken over.
Warranty, exclusion of liability and the limit of fraudulent intent
In principle, under § 433 BGB the seller owes the handover of a defect-free thing. When buying used property, however, the warranty/defects liability (Sachmängelhaftung) is almost always excluded, often with formulas such as bought as inspected or under exclusion of any liability for material defects. The buyer then in principle buys the house in the condition in which it is at the time of purchase.
This exclusion of liability (Haftungsausschluss) has a clear limit, however: under § 444 BGB the seller cannot rely on the exclusion insofar as he fraudulently concealed a defect or assumed a guarantee of the condition. So if the seller conceals a hidden defect known to him, for example damp in the cellar or known contaminated sites, he is liable despite the exclusion.
For buyers it is therefore important to check before recording: are known defects listed in the contract? Were certain properties expressly agreed or guaranteed as condition? For unclear points a careful inspection is advisable, where appropriate with an expert.
Encumbrances, land charge and rescission in the contract
A separate section governs the handling of the encumbrances and restrictions entered in the land register. It is determined which rights remain in place, for example a right of way or pipeline right in section II, and which encumbrances are cancelled free of encumbrances, above all the seller's old land charges in section III.
If the buyer finances the purchase, the creation of a new land charge (Grundschuld) in favour of his bank is also prepared. Customary is an encumbrance power of attorney, with which the land charge can be entered already before the transfer of ownership, so that the bank pays out the purchase price.
Finally, the contract may provide for rights of rescission, for example for the seller in the event of non-payment of the purchase price despite due date and setting of a deadline. A free withdrawal from the recorded contract, on the other hand, is not possible. Anyone who pulls out without an agreed right of rescission risks damages and remains in principle bound to the contract.
