Are you planning to purchase a property and only see the opportunities? A wise investor is also aware of the risks. This article reveals the five greatest dangers, from unexpected costs to legal liabilities, and shows you how to protect your assets.
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The topic briefly and concisely
Plan to set aside at least 15% of the purchase price for additional costs such as property transfer tax, notary, and broker fees.
Check with the municipality about the development status before purchase, as additional costs for road and sewer connections can amount to up to €30,000.
If you suspect contamination (e.g., previous commercial use), be sure to have a soil survey conducted, as you, as the new owner, are liable for costly renovations.
The acquisition of land is one of the most significant investment decisions for many heirs and owners. But what if the dream of the perfect plot turns into a nightmare due to unforeseen costs and legal hurdles? The risks involved in purchasing land are real and can exceed your financial plan by tens of thousands of euros. Insufficient scrutiny may lead to serious consequences, from liability for soil remediation to the inability to develop the site. This guide provides you with a data-driven analysis of the most common dangers and offers you concrete strategies to minimise these risks and lay a solid foundation for your investment.
Purchase-Related Costs: The First Financial Hurdle
Many buyers focus solely on the purchase price and underestimate the additional costs, which can quickly amount to 15% of the total price. These extra expenses are not insignificant but represent a substantial cost factor. The property transfer tax alone varies depending on the federal state, ranging from 3.5% in Bavaria to 6.5% in North Rhine-Westphalia. In addition, there are notary and land registry fees, which amount to about 1.5% to 2.0% of the purchase price.
If the purchase is handled through an estate agent, their commission is added. Since the new regulation in 2020, buyers and sellers share the costs, which can still mean a share of 3.57% (including VAT) for you. For a property value of €300,000, these three items alone can add up to €30,000. An incomplete financial plan can already jeopardize the entire project. A precise understanding of these costs is therefore essential for sound financial risk planning. However, these initial expenses are just the tip of the iceberg, as additional costs often lurk beneath the surface.
Development status: The risk of future invoices
Is your dream property already fully developed? This question is crucial, as the costs of development can be a nasty surprise. A plot is considered developed when it is connected to the public road, water, sewage, and electricity networks. If these connections are missing, the owner can face significant costs, which are often demanded by the municipality years after the purchase through a notice. The municipality can involve property owners in up to 90% of the technical development costs.
The total costs for public development can range from €15,000 to over €30,000, depending on the region and local conditions. Therefore, consulting the development plan and contacting the relevant building authority is essential. Explicitly clarify the status, as the designation "ebp" (contribution to development costs required) in the prospectus means these costs are still pending for you. A professional risk assessment helps identify such items in advance. Once the visible and planned costs are clarified, it is important to check for the invisible dangers underground.
Ground Risk: When the Soil Itself Becomes a Problem
Not every type of soil is suitable for every construction project. The ground risk refers to the dangers inherent in the geological and hydrological characteristics of the plot. A soil survey, which often costs only about 0.5% of the building's total cost, can protect against damages worth six figures here. For example, a high groundwater level can significantly increase the cost of building a basement or make it impossible.
The load-bearing capacity of the soil is another critical metric. It is specified in kilonewtons per square meter (kN/m²) and determines how much weight the soil can support. Inadequate load-bearing capacity can jeopardize the stability of the entire building and necessitate expensive foundation measures. You should have the following points checked:
Soil type: Are there rocks or clay that make excavation and foundation more difficult?
Load-bearing capacity: Is the stability sufficient for your planned construction project?
Groundwater level: What is the maximum water level and what sealing is necessary?
Slope: Does the incline require special and more costly construction measures?
The warranty from a property developer is typically limited to five years, but problems due to the ground often only appear later. In addition to the physical properties of the soil, the legal framework conditions must also be precisely analyzed.
Legal Burdens: What the Land Register Reveals (and What It Doesn't)
The land register extract is one of the most important documents when purchasing a property. It provides information about ownership structures and registered encumbrances in Section II. These include, for example, rights of way for neighbours, easements for utilities, or a right of usufruct that allows a third party to use the property. Such entries can significantly restrict the development potential and value of your property. The removal of the seller's mortgages is standard, but other encumbrances often remain.
However, not all legal obligations are recorded in the land register. Checking the building encumbrance register of the local authority is equally important. Here, public law obligations can be recorded, such as a building obligation or the duty to keep an area free for a neighbour's access. These registers do not exist in all federal states, which makes the examination more complex. Also clarify whether there is a right of first refusal for the municipality or third parties. An incomplete examination of these valuation uncertainties can become costly. However, the greatest financial risk often lurks invisibly in the ground.
Contaminated Sites: The most expensive risk lies hidden beneath the surface
Contaminations of the soil due to previous industrial or commercial use are referred to as 'Altlasten'. The purchaser of a property is liable for remediation, even if they did not cause the contamination. The costs for soil remediation can far exceed the value of the property. Annually, nearly 50 million tonnes of contaminated soil need to be treated in Germany, emphasising the magnitude of the problem.
There is particularly suspicion of Altlasten with former petrol stations, dry cleaners, workshops, or industrial plants. To minimise risk, you should undertake the following steps:
Check the history of the property: What has taken place here in the last 50 years?
Consult the Altlasten registry: Does the relevant authority list the property as a suspicious area?
Question the seller: Get written assurance of freedom from Altlasten in the purchase contract.
Commission a soil report: Only a chemical analysis can provide clarity if there is a justified suspicion.
Ask your local council whether the property lies in a suspected Altlasten area. A specialised assessment of Altlasten is crucial. With our ImmoGPT, you can quickly and easily resolve initial questions about potential risks.
Conclusion: Minimise risk through data-supported auditing
Buying property is a complex transaction with significant financial and legal risks. The additional purchase costs alone can exceed your budget by over 15%, while undiscovered development obligations, contaminated sites, or problematic building land can quickly lead to a financial disaster. A thorough due diligence is not an optional step but the foundation for a secure investment. Do not rely on verbal promises; instead, carefully check the land register, building encumbrance, and contaminated site registers.
A data-driven, neutral assessment protects you from costly surprises and gives you the confidence to make an informed decision. Use tools like a professional property valuation to objectively analyse all risk factors and determine the true value of your future property. This way, a potential risk becomes a secure opportunity for your wealth.
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Additional useful links
The Federal Ministry for the Environment offers comprehensive information on contaminated sites and their remediation in Germany.
The Federal Environment Agency provides data and further information on contaminated sites and their remediation.
On Verwaltung.Bund.de, you can find an entry in the federal service directory that deals with the management of contaminated sites.
Deutsche Bank Immobilien provides guide information on monument protection for property buyers.
Schwäbisch Hall provides detailed information on the development costs that can arise when building a property.
The Federal Office of Civil Protection and Disaster Assistance (BBK) offers important information on flood protection and risk management for natural hazards.
FAQ
What costs are incurred in addition to the pure purchase price for the property?
In addition to the purchase price, you should expect significant additional costs. These include the property transfer tax (3.5% - 6.5%), notary and land registry fees (approximately 1.5% - 2.0%), and potentially a broker's commission (around 3.57%). Overall, you should budget 10-15% of the purchase price as a buffer for these expenses.
What does 'erschließungsbeitragspflichtig' mean?
This note indicates that the costs for developing the property (connection to road, water, electricity, etc.) have not yet been fully paid. As the buyer, you should expect the municipality to demand these costs from you, which can amount to several tens of thousands of euros.
How do I find out if a property is contaminated with residual pollution?
Initial clues are provided by the previous use of the site. You can obtain official information by consulting the register of contaminated sites at the relevant environmental or building authority. However, absolute certainty in case of specific suspicion can only be provided by a chemical soil analysis conducted by an expert.
Can I withdraw from the purchase if I discover defects after the contract?
A cancellation is only possible under very limited circumstances, such as when the seller has fraudulently concealed a defect. Generally, the purchase contract excludes warranty for material defects ('sold as seen'). Therefore, a thorough inspection before signing is essential.
What is the difference between the land register and the building encumbrance register?
The land register regulates civil law matters such as ownership and private encumbrances (e.g., easements). The building obligations register contains public law obligations towards the building authority (e.g., a tolerance obligation for access), which are not listed in the land register but also restrict buildability.
What can I do if my property has poor ground conditions?
If a soil survey reveals low load-bearing capacity or a high water table, you should anticipate significant additional costs for special foundation measures (e.g., pile foundation) or a more elaborate basement sealing (white tank). You should be aware of these costs before purchasing and factor them into your financing plan.
