Advisor

What needs to be considered when buying real estate?

26 August 2025

Scharf Attorneys at Law

Buying a property is one of the biggest investments in most people's lives - and the process is correspondingly complex and legally demanding. In Germany, notarization is required by law for a property purchase agreement. The notary plays a central role here: he is a neutral advisor to both parties and accompanies the entire purchase process. This guide explains what you should pay particular attention to when buying a property - from the role of the notary to the notarization process and important terms such as conveyance and priority notice of conveyance. It also shows how a clever notarial contract design covers typical risks and what needs to be considered in special constellations (such as existing encumbrances, purchases by spouses or purchases from property developers).

Role of the notary in the purchase process

A notary is indispensable for every real estate purchase and is required by law. Important to know: Notaries are obliged to maintain strict neutrality - there can be no buyer or seller-friendly notaries. Contrary to what is often assumed, their task is not limited to reading out the contract. The notary drafts a purchase agreement tailored to the individual case in advance, taking into account all the information provided by the parties and data from the land register. He sends this draft to the buyer and seller and incorporates any requested changes.

When it comes to the notarization appointment, the notary first checks the identity of the parties involved using identification documents. He then reads out the entire text of the contract word for word and explains the individual provisions. In doing so, he responds to questions from the parties and ensures that both parties fully understand the content of the contract. Any final ambiguities can be clarified immediately during the appointment and - if necessary - the contract text can be amended. Once all points have been clarified, the buyer and seller sign and the notary confirms the notarization with his signature. The purchase contract is then legally binding. After signing, the real work begins for the notary: he takes over the often time-consuming processing of the transaction up to the final transfer of ownership in the land register.

Procedure for notarization

Typically, the purchasing process can be divided into several steps:

1. contract preparation

As soon as the buyer and seller agree, a notary is appointed. The notary drafts the purchase agreement and gathers all the necessary information (details of the parties, property description, purchase price, etc.). At this stage, the notary checks the status of the property in the land register and clarifies any special features (e.g. existing land charges, rights of way or tenancies) so that they can be taken into account in the contract. Both parties receive the finished draft for review - in the case of property development contracts, this is even required by law at least 14 days before the deadline to ensure sufficient time for consideration.

2nd notarization date

All parties to the contract meet at the notary's office on the agreed date. After establishing the identity of all parties involved, the contract is read out in full and explained by the notary. The parties have the opportunity to ask questions and the notary ensures that every point is understood. If necessary, final changes can be made. The buyer and seller then sign the contract and the notary notarizes it with his signature. From this moment on, the purchase contract is binding.

3. settlement after notarization

Immediately after the contract is concluded, the notary arranges the contractually agreed security measures. This includes, in particular, the entry of a priority notice of conveyance in the land register in favor of the buyer. In addition, the notary procures documents to have existing financing liens (such as the land charge of the seller's bank) deleted. He obtains the necessary approvals and waivers, such as a waiver of pre-emption rights from the local authority or - in the case of a condominium - the consent of the condominium administrator if necessary. The contract usually stipulates that the purchase price is only due when all these conditions are met so that the buyer does not have to make an unsecured advance payment. The notary monitors the fulfillment of the due date requirements and informs the parties as soon as payment may be made. If this is the case, the buyer usually pays the purchase price directly into the account of the seller or the seller's creditor bank (so-called direct payment). After the seller has confirmed receipt of the payment, the notary arranges for the transfer of ownership to the buyer in the land register. The final registration of the new owner by the land registry may take a few weeks, but the buyer is already fully secured with the prior conveyance and priority notice.

Conveyance and priority notice of conveyance

Conveyance refers to the formal agreement between the seller and buyer on the transfer of ownership of the property. According to Section 925 BGB, the conveyance must be declared before the notary in the simultaneous presence of both parties. In practice, it is usually recorded in the notarized purchase contract itself. Without conveyance and subsequent entry in the land register, an effective transfer of ownership is not legally possible - the mere signing of the purchase contract is therefore not sufficient. Important: After signing the contract, the seller is initially still registered as the owner in the land register. Although the buyer has acquired the right to transfer ownership, the seller could theoretically still dispose of the property (e.g. resell it or encumber it with new mortgages) until the transfer of ownership is completed. This is precisely where the next safeguard comes in:

Notice of conveyance: In order to protect the buyer's acquired right of transfer, a priority notice of conveyance is entered in the land register in favor of the buyer. This priority notice acts like a block on the land register: the seller may no longer make any entries that have not been approved by the buyer. In particular, a resale of the property to third parties or the entry of further encumbrances without the consent of the buyer is excluded. The priority notice of conveyance therefore secures the buyer's priority right to the property. Even if the seller gets into financial difficulties (e.g. takes on new debts, becomes insolvent or tries to sell to someone else), the buyer's claim remains protected thanks to the priority notice. The priority notice is typically applied for by the notary immediately after the purchase agreement and recorded in section II of the land register. It is only temporary: as soon as the buyer is entered in the land register as the new owner, the priority notice is deleted. Until then, however, it is an essential safeguard for the buyer when purchasing a property.

Risks when buying real estate and notarial protection

Buying a property involves various risks - but the notarized contract is designed to offer both parties the greatest possible security. Important risks and the associated safeguards are:

Avoid unsecured advance paymentsNo party should have to perform without receiving certain consideration. For this reason, the purchase agreement is usually structured in two stages: The buyer only pays the purchase price once his claim has been secured by the priority notice of conveyance in the land register and all other conditions have been met. Conversely, the seller will only transfer ownership (through the land register transfer) after the purchase price has been paid in full. This prevents the buyer from losing money or the seller from transferring his property without payment.
Encumbrances and defects of title: Legal defects such as encumbrances in the land register (e.g. land charges, mortgages, easements) or existing tenancies can reduce the value of a property. The notary inspects the land register and makes all entries in the contract. The seller usually undertakes to remove financial encumbrances before handover - for example by paying part of the purchase price directly to his bank to redeem them. If, in exceptional cases, the buyer is to assume an encumbrance (e.g. a registered easement or land charge), this is expressly agreed in the contract. This ensures that the buyer either acquires unencumbered ownership or is fully aware of any known encumbrances.
Structural damage and material defects: Used properties are usually bought as seen. In almost all notarized contracts for existing properties, the seller's liability for material defects is therefore contractually excluded. This means that the buyer cannot usually hold the seller liable for defects discovered in the building at a later date, unless the seller has fraudulently concealed a defect. The notary ensures that this exclusion of liability is formulated in a legally secure manner. For buyers, this means A thorough inspection and, if necessary, an expert opinion before purchase are important, as the buyer bears the risk of hidden defects after the contract has been concluded. In the case of new builds from developers, however, the warranty cannot be excluded - more on this below.
Regulatory and approval risks: The notary obtains the necessary official declarations to make the contract legally effective. For example, in many cases the local authority must first waive its statutory right of first refusal before the purchase can be completed. The notary therefore applies for a waiver of pre-emption rights from the local authority and waits for this. Similarly, in the case of a condominium, the consent of the condominium administrator is often required, which the notary obtains. This prevents the purchase from failing due to such official obstacles.
Financing risk of the buyer: Many buyers rely on a bank loan to pay the purchase price. As the bank usually requires a land charge as security, the purchase contract usually contains a power of attorney to encumber. This clause allows the buyer to register a land charge on the purchased property before the transfer of ownership. This allows the loan to be paid out and the purchase price to be paid on time. Of course, the power of attorney to encumber is subject to conditions in order to protect the seller: For example, the land charge may only be created in favor of the buyer's financing bank and only in the amount of the purchase price, and the bank must disburse the loan amount directly to the seller. In this way, the buyer receives his financing without the seller taking any risk.
Transfer of possession and risk: The contract specifies exactly when the buyer may use the property and has to bear any encumbrances. As a rule, ownership, benefits, burdens and risks are transferred to the buyer when the purchase price is paid. This means that the benefits and risks (e.g. the risk of damage to the building) remain with the seller until payment has been made and are borne by the buyer from the time of payment. This regulation ensures that the buyer only assumes responsibility for the property from the point in time at which he has also provided the main service. The actual handover of the property (handing over the keys) is usually also scheduled for the payment date so that the buyer and seller have a clear relationship.

Typical case constellations when buying real estate

In addition to the general principles, there are some typical constellations in which special aspects must be taken into account. Here are three examples:

Purchase of land with existing encumbrances

Especially when buying land or houses, it is common for land charges or other rights to be entered in the land register (e.g. easements such as rights of way, residential rights). In such cases, a reputable purchase agreement contains detailed provisions on this. It is often agreed that the notary will use part of the purchase price directly to redeem existing land charges - specifically, the buyer pays this partial amount to the seller's bank, which in return approves the deletion of the land charge. In this way, the buyer acquires the property unencumbered (apart from the expressly assumed rights). If certain easements remain (e.g. a right of way for neighbors), the buyer is informed of this in the contract and declares his acceptance. The same applies to any tenancies: If the property is rented out, the buyer assumes the position of landlord upon transfer of ownership; this is also recorded in the contract. These measures prevent the buyer from being hit by unexpected burdens or obligations at a later date.

Acquisition by spouse

Married couples often purchase a property together - whether as their own home or as an investment. When spouses purchase a property, the main question is the Co-ownership shareNormally, both spouses are entered in the land register as owners in equal shares (50 % / 50 %). When preparing the contract, the notary will ask in what proportion the spouses wish to buy. Deviations from the half share are possible and should be determined according to the actual contributions or wishes of the spouses. It is important that both spouses are listed as buyers in the contract and sign the purchase contract jointly - this means that they are also jointly liable for the obligations arising from the contract, in particular the payment of the purchase price.

Particular attention must be paid to the matrimonial property regime if one of the spouses is from abroad or a foreign matrimonial property regime has been agreed. In such cases, the notary will check which law applies to ensure that the property acquisition is handled correctly. As a rule, however, the joint acquisition of real estate does not have any disadvantageous consequences for spouses; in fact, it is often perceived as fair, as both partners have an equal share in the property. Nevertheless, it can make sense to discuss any differences in the assets contributed in advance and, if necessary, to settle them contractually (e.g. in a marriage contract or an agreement under the law of obligations) - the notary can also offer advice on this.

Purchase from the developer

When buying from the developer If the buyer acquires a plot of land from the developer inclusive of a building yet to be constructed (house or apartment). Such a developer purchase contract is subject to special legal requirements to protect the buyer. Most important special feature: The purchase price is not paid in one lump sum, but in installments according to the progress of construction. The property developer may therefore only demand payment once certain construction phases have been completed - the German Real Estate Agent and Property Developer Ordinance (MaBV) stipulates exactly which installments are due in which construction phase. This prevents the buyer from paying the full price in advance without any consideration. The final installment is usually only due on completion and handover, and Owner As a rule, the buyer only actually becomes the owner once the entire purchase price has been paid and the property has been completed. Until then, a priority notice of conveyance secures his claim in the land register.

In addition, the Warranty for construction defects cannot be excluded in the case of a developer contract - by law, there is a five-year warranty period from acceptance of the building. The notarized contract contains a construction and service description as an annex, in which all equipment details are specified. The property developer must rectify any construction defects that occur as part of the warranty. This is another reason why it is important that all construction services and fittings are precisely described in the contract.

For further protection of the buyer, additional Collateral be agreed. Bank guarantees from the property developer are common, for example. Completion guarantee (also known as a performance bond) ensures that the construction project is completed even if the developer encounters payment difficulties; a Withdrawal or repayment guarantee secures the reimbursement of payments already made if the contract has to be rescinded (e.g. in the event of the developer's insolvency). Although such guarantees are associated with additional costs, they offer the buyer more security.

Finally, care must be taken in property development transactions to ensure that no immediate contractual constructions be chosen. Sometimes attempts are made to artificially separate the purchase contract (for the land) and the construction contract (for the construction work) in order to circumvent the strict developer regulations. This is strongly discouraged: as soon as the purchase of the land is dependent on the building obligation, both contracts must be notarized together, otherwise the purchase contract is invalid. Buyers should therefore always insist on a single notarized property development contract that covers both the land and the construction work. In this way, all rights and obligations are regulated transparently and the path to your new home is legally secure.

Conclusion

A real estate purchase needs to be well prepared. Thanks to notarization and contract drafting, legal pitfalls are largely defused - from the priority notice of conveyance and balanced payment terms to the safeguarding of special scenarios. For buyers and sellers, the notary thus guarantees that the real estate purchase is handled safely and fairly. Once all aspects have been taken into account, nothing stands in the way of a dream home (or a worthwhile investment).

Why is a notary required when buying real estate and what tasks does he or she perform?

The notary is required by law and acts as a neutral legal advisor for both parties. He drafts the purchase contract, clarifies legal risks, explains the content of the contract during notarization and then handles the entire legal process - from the priority notice of conveyance to the transfer of ownership in the land register. In this way, he ensures legal certainty and protects both buyer and seller.

What do conveyance and priority notice of conveyance mean - and why are they important?

What are the typical risks when buying real estate - and how does a notarized contract protect against them?

The notary counters risks such as unsecured advance payments, hidden encumbrances, construction defects or missing approvals with contractual provisions: e.g. the purchase price is only due when ownership is secured by the priority notice, encumbrances are deleted or deliberately assumed, and in the case of developer contracts, payment in installments after construction progress protects against losses. In this way, the property purchase is legally clean and secure.