Have you set your sights on a plot of land but are unaware of the legal risks that may lurk beneath the surface? An inadequately examined plot can quickly lead to a financial disaster with six-figure consequential costs. This guide will show you the six crucial legal steps to secure your investment and avoid costly surprises.
Chat with ImmoGPT for free now.
With access to Google, BORIS, and Deep Research.
The topic briefly and concisely
A comprehensive legal examination of a property always includes the analysis of the land register, development plan, encumbrance register, development status, and potential contamination.
Hidden encumbrances such as easements (Land Register Section II) or building obligations can significantly restrict the value and development possibilities of the property.
The costs for development and remediation of contaminated sites can subsequently increase the purchase price by tens of thousands of euros and must be clarified in advance.
Purchasing property is one of the biggest financial decisions most people will make in their lives. However, beyond location and price, there are often invisible legal pitfalls that can significantly diminish its value. Whether it's contaminants in the ground, unexpected building restrictions, or registered rights of way for neighbours – the legal assessment of a property is not optional but an essential necessity. By adopting a systematic approach, you protect your assets and ensure that your dream of owning a home does not turn into a nightmare. We guide you through the critical points, from examining the land register to drafting the contract.
Step 1: Analyse the land register as a record of truth
Every legal examination of a property begins with the inspection of the land register, which is maintained at the competent district court. This register documents all ownership and legal relationships comprehensively and is divided into three sections. Errors in the analysis can lead to a loss of value of over 15%.
The three sections provide precise information:
Section I: This records the current owner (or community of heirs) with names and acquisition basis, such as purchase or inheritance.
Section II: This section lists all encumbrances and restrictions, except real charges. These include rights of way for neighbours, residential rights or pre-emption rights, which can significantly limit your usage and disposal options.
Section III: This includes all real charges such as mortgages and land charges that have been taken out to finance the property.
A thorough look into all three sections is essential before taking further steps. More details can be found in our article on land register regulations for buyers. The analysis of the land register lays the foundation for the subsequent building law assessment.
Step 2: Review the development plan for clear construction guidelines
What and how you are allowed to build on your property is mostly regulated by a development plan. This regulatory framework, enacted by the municipality as a statute, is legally binding and based on the Building Code (BauGB). If you ignore its guidelines, the building authority can halt the construction or even order demolition. A qualified development plan contains at least four key specifications: the type of structural use (e.g., purely residential area), the extent of use (floor area ratio), the buildable plot areas, and the local traffic areas.
Approximately 70% of all building projects in Germany are regulated by development plans. Therefore, early consultation with the relevant municipality or city planning office is crucial. This will help determine whether your planned construction project is even eligible for approval. A professional building law assessment can assist in correctly interpreting the complex requirements. Without this clarity regarding buildability, the risks of hidden obligations are all the greater.
Step 3: Reveal building charges and easements
Not all encumbrances on a property are recorded in the land register. Public law obligations, known as building encumbrances, are found in the building encumbrance register maintained by the building control authority. A typical building encumbrance might require an owner to permit access to a rear property. These obligations automatically transfer to the new owner upon sale and can significantly reduce the property's value.
It is important to distinguish between these two types of encumbrances:
Servitudes: These are of private law nature, entered in Section II of the land register, and regulate relationships between two specific properties (e.g., rights of way).
Building encumbrances: These are of public law nature and recorded in the building encumbrance register. They ensure, for example, setback areas or the laying of service lines.
The existence of a building encumbrance can reduce the buildable area by up to 25%. Ensure you address these legal challenges before purchasing. Another critical cost factor is development contributions.
Step 4: Fully calculate the development costs
A property is considered developed when it is connected to the public road network as well as the supply networks for water, sewage, and electricity. The costs for this are typically borne by the owner. These development costs can amount to €10,000 to €20,000 or more and are often underestimated. Therefore, be sure to check the development status with the local municipality.
Undetermined development contributions can retroactively increase the purchase price by up to 20%. Request a certificate confirming that all previous contributions have been paid. Otherwise, you could be held liable for old claims. These financial risks when buying property are just as serious as undiscovered issues with the building ground itself.
Step 5: Minimise the risk of contamination through a soil report
Underground, costly surprises can lurk. So-called contaminated sites – that is, soil contamination from previous uses such as petrol stations or dry cleaners – pose a significant financial and health risk. If a seller deceitfully conceals a known previous usage that justifies suspicion of contamination, they are liable. However, proving this is often difficult. The costs for remediation can quickly reach a six-figure sum, with the removal of a single cubic metre of contaminated soil potentially costing up to 800 €.
A soil survey costing between 1,000 € and 2,500 € is a small investment compared to potential remediation costs of over 100,000 €. It provides you with certainty about the soil quality and protects you from unforeseen expenses. A thorough assessment of contaminated sites is therefore a must. Once all technical aspects are clarified, the final legal step follows: the purchase contract.
Step 6: Securely notarize the purchase contract
The purchase agreement for real estate must always be officially notarised in Germany. The notary acts as a neutral party and ensures the legal correctness of the transaction. They prepare the draft contract, which both parties must receive at least 14 days before the notarisation date for review. Use this period thoroughly to examine all details and ask questions if anything is unclear.
Ensure that all important agreements are recorded in the contract, especially:
The exact purchase price and payment terms.
The agreed condition of the property (e.g., “fully developed”).
Provisions on liability for defects such as contamination.
The date of transfer of possession.
A precisely formulated contract is your most important legal safeguard. Clarify all questions about purchase agreements and contract conditions before providing your signature. Unsure about the assessment or legal steps? A talk with our ImmoGPT or a neutral Auctoa assessment can quickly provide clarity.
grundstuck-rechtlich
The legal examination of a property is a multi-stage process that requires diligence and expertise. From land register analysis to reviewing building rights, and uncovering hidden encumbrances and costs – every step is crucial to protect your investment. Incomplete assessments can lead to depreciation, costly renovations, or even the failure of the entire construction project. Take the time for thorough due diligence, as a solid legal safeguard is the best foundation for your property's value.
Additional useful links
The Federal Ministry of Justice offers online access to land registry information.
The official platform Gesetze im Internet provides the German Land Registry Code (GBO).
Wikipedia offers a comprehensive article on German building law.
The German Building Code (BauGB) is available on the Gesetze im Internet platform.
The Federal Environment Agency provides comprehensive information on contaminated sites.
The Federal Environment Agency offers guidance on how to find information on possible contamination of a property.
On Verwaltung.Bund.de you can find information on how to apply for an excerpt from the land registry.
The Federal Notary Chamber provides a useful glossary with terms related to property purchase.
Verwaltung.Bund.de offers information on accessing the contaminated sites register.
FAQ
How can I access the land register?
Inspection of the land register is only possible with proof of a 'legitimate interest'. As a prospective buyer, you can have the owner issue you a power of attorney to apply for a land register extract at the competent district court.
What happens if there is no development plan?
If there is no development plan, the permissibility of a building project is determined by § 34 or § 35 of the Building Code (BauGB). In built-up areas, the project must blend with the character of the surrounding environment. In non-urban areas, building is only permitted in exceptional cases (privileged projects).
Can I withdraw from the purchase if I find liabilities after the contract?
A withdrawal is difficult if the warranty for material defects was excluded in the purchase contract, which is common. There is a chance if you can prove fraudulent misrepresentation by the seller, meaning they were aware of the environmental liabilities and deliberately concealed them.
Are development costs negotiable?
The obligation to contribute to the municipality is non-negotiable. However, you can negotiate in the purchase contract with the seller who will bear any outstanding or future development costs. A clear regulation in the contract is crucial here.
What is a land charge prenotation?
The priority notice is an entry in Section II of the land register, made after the notarisation of the purchase contract. It secures the buyer's claim to the transfer of ownership and protects them from the seller selling or further encumbering the property to someone else in the meantime.
Why do I need a notary for purchasing property?
In Germany, notarial certification is legally required for real estate transactions (§ 311b BGB). The notary ensures the legally secure formulation of the contract, informs the parties of their rights and obligations, and arranges for the necessary entries in the land register.
