German Real Estate Terms You Need To Know

German Real Estate Terms You Need To Know

The language barrier in Germany is the number one reason why most overseas buyers do not proceed with the transaction. Knowing the collection of the most important German real estate vocabulary will help you overcome the language barrier. Here I have compiled a list of German real estate terms that will be of importance during the buying process.

A:

ANNUITÄT/ANNUITY

Total amount of all interest and redemption payments

for a loan within a year.

ANNUITÄTENDARLEHEN / ANNUITY LOANS

The borrower pays the lender an annual amount (annuity) up to the full repayment of the loan (usually in monthly installments, of course). This is made up of interest payments to the bank and repayments by the borrower. Over time, the portion of the interest payments decreases and the portion of the repayment increases (in the same installment), since the loan debt decreases with each payment and the interest on it decreases.

AUFLASSUNGSVORMERKUNG / PRIORITY NOTICE OF CONVEYANCE

Entry in the land register, which ensures the buyer's right to transfer of ownership until he is finally registered as the new owner. Entering the notice of conveyance in the land register ensures that the seller does not sell the property to several people at the same time. It is registered by a notary and only a notary can delete it.

AUSZAHLUNGSVORAUSSETZUNG / PAYOUT REQUIREMENT

Banks only pay out a loan if the payout requirements have been met and appropriate evidence has been presented. This includes fully signed loan agreements, entry of the mortgage liens at an agreed priority in the land register as well as other documents are required by the bank in each individual case.

B:

BAUBESCHREIBUNG/BUILDING DESCRIPTION

The building description and building plans determine the scope of

what the developer is obliged to deliver to the client. This information

therefore determines the obligation for the developer to perform and deliver on the information provided in the building description. At the same time, this means that both the building description and the building plan must be certified.

BELEIHUNGSGRENZE / LOAN TO VALUE

Specifies the amount of a loan request which a bank is willing to finance.

The lending limit depends on the property to be financed and the creditworthiness of the borrower.

BEREITSTELLUNGSZINSEN / COMMITMENT INTEREST

Interest charged by the bank in the event that the loan is not paid (accessed) (on time). Since the bank "reserves" the funds and may have to pay interest to the provider (e.g. Bundesbank or Pfandbrief buyer) itself, interest is due here even without disbursement of the loan. As a rule, commitment interest accrues three months after signing the loan contract and amounts to approx. 0.25 percent of the loan per month. You can also negotiate a period of up to six months, but only before signing the loan agreement.

BESCHRÄNKTE PERSÖNLICHE DIENSTBARKEIT/ RESTRICTED PERSONAL ENCUMBERANCE

("A piece of land does a service for another")

The limited personal easement is the authority of a specific person or institution, to use the  property.

BEURKUNDUNG/NOTARIZATION

Contract drawn up by a notary. The contract is dated to the

parties involved and read by the notary and signed by both parties in presence of the notary. In Germany the Notarization is required by law in order to transact in real estate. Buyers and sellers can ask questions while the contract is being read. The costs of the notarization are based on the purchase price of the property, not on the expended Time. In contrast to the lawyer, the notary is obliged not to take sides and must advise both sides neutrally.

BODENRICHTWERT/LAND VALUE

IThe land value serves as the basis to levy taxes on the capital

value of land. Can be viewed and requested at every municipality (= guideline, orientation value).

BONITÄT/CREDITWORTHINESS

A measure of the creditworthiness of a borrower. Every bank checks the customer's creditworthiness in accordance with legal regulations whether to grant a loan or not. In other words, it checks how much wealth he has and whether he is able to pay the ongoing borrowing costs after deducting the amounts required for a decent lifestyle from his regularly generated income.

BÜRGSCHAFT/GUARANTEE

By means of a guarantee contract, the surety assures to the lender to

guarantee that the borrower will meet its obligations. This gives the lender

more security, because if the borrower cannot meet the loan payments, the

lender/bank can fall back on the surety.

E:

EFFEKTIVZINS/EFFECTIVE INTEREST

The effective interest of a loan takes into account all pricing components, such as processing fees. However, appraisal fees, commitment interest and account management fees are NOT included in the calculation with. The effective interest rate gives you a benchmark to compare other loan proposals. Even without fees, the effective interest rate is always higher than the nominal interest rate, since interest in Germany is "annually in arrears".

EIGENTÜMERVERSAMMLUNG/ LANDLORD COMMITEE

The WEG administrator of an apartment building is required to hold an owner’s meeting at least once a year. Here the WEG administrator reports on the past year, proposes a business plan about renovations etc. The owners usually have voting rights according to their share in proportion to the total building (more apartments =more voting rights).

ENERGIE AUSWEISS/ENERGY CERTIFICATE

The energy certificate is a document that provides information on the energy balance of a property. If you want to rent, sell or lease a property, you as the owner are obliged to provide a current energy certificate.

F:

FLURKARTE/OWNERSHIP BOUNDARIES

Official plan from which the property boundaries can be seen.

G:

GRUNDBUCH/ LAND REGISTER

A register kept at the district court, in which the property, the ownership structure and the encumbrances are entered (e.g. land charge security for the bank, rights of passage for neighbors, etc.). If there is a legitimate interest a buyer can access the land register.

GRUNDBUCHAMT/LAND REGISTER AUTHORITY

Place within the district court where the land registers are kept.

All important information about a property (more precisely about the property) are collected.

GRUNDBUCHAUSZUG/LAND REGISTER EXCERPT

land register excerpt or land register sheet is divided as follows:

Inventory: Contains the information from the cadastre (list of properties), how the property is used and where it is located.

ABTEILUNG I/ REGISTER I

Contains information about the owner and the legal basis for the registration of the owner.

ABTEILUNG II/ REGISTER II

Contains non financial encumberances of the Property,e.g. Right of way, so if someone to reach the neighboring property over have to drive or walk the property.

ABTEILUNG III/ REGISTER III

Contains all financial encumberances such as Motrgage liens, easements and tax liens

GRUNDSCHULD/ LAND CHARGE

Security that a bank puts on real estate to ensure that loans made are secured by the property. Most of the time, the bank also demands to a land charge a personal guarantee. When a borrower fails to meet his payment obligation and the bank sees no other way, the bank is entitled to auction the property through the land charge

GRUNDSCHULDBESTELLUNG/ LAND CHARGE NOTICE

In a notarial deed, the property owner gave his consent to encumber his property with a land charge, combined with the request to include this in to enter the land register.

H:

HAUSGELD/ PROPERTY FEE

A monthly fee that each individual owner have to pay to the WEG administrator. The property fee contains costs to maintain the building of the property, which the owner can partially pass on to his tenant. The cost of administration, repairs and the maintenance reserve are not transferrable to the tenant.

I:

INSTANDSHALTUNGSRÜCKLAGE/ MAINTENANCE RESERVE

The maintenance reserve is decided by the WEG administrator through the vote of each land owner. The reserve is used to carry out (age-related) renovations and thus the value and to preserve the substance of the property. The maintenance reserve cannot be passed on to the tenant and can activated for tax purposes if spent on repairs etc

K:

KALT MIETE/ COLD RENT

In German language usage, cold rent refers to the part of the rent that only covers the use of the room.

KATASTERAMT/ LAND TITLE OFFICE

Also known as the land surveying office. The Land registry offices measure land and keep directories with the "technical" Data on the properties of a municipality. The Land registry offices draw up extracts from the real estate register and official site plan

KAUFNEBENKOSTEN/ TRANSACTION COSTS

Additional costs  when purchasing a property such as: real estate transfer tax, notary fees for Purchase and settlement, notary fees for the land charges and registration costs with the land registry. If a broker was involved, the brokerage fee is added.

KAUFVERTRAG/ PURCHASE AGREEMENT

A binding agreement between two or more persons that is enforceable by law.

KOSTENVERTEILUNGSSCHLÜSSEL/ ALLOCATION KEY

An allocation key specifies in your contract how the total operating costs are allocated in proportion to the total building and your apartment in sqm. However some cost are typically allocated by entities, ie. waste disposal cost,

KATASTERAMT/ LAND TITLE OFFICE

Also known as the land surveying office. The Land registry offices measure land and keep directories with the "technical" Data on the properties of a municipality. The Land registry offices draw up extracts from the real estate register and official site plans.

M:

MIETPREISBREMSE/RENT CEICLING

The rent ceiling became effective on June 1st, 2015 decided by the

German government. The regulation governs the rent in tight housing markets. The rent that a landlord is allowed to charge depends on the local comparative rent plus ten percent. Each federal state in Germany can implement these rules for 5 years.

MIETSPIEGEL/RENTAL LEVEL

Overview of the rental level in a city. Based on apartment size, location,

amenities etc. shows which rents are common. As a landlord you have an overview of he amount of  rent one can ask for his apartment

MIETVERWALTER/LEASE MANAGER

The lease manager takes care of the managment of the apartment. To make it simple  everything related to the apartment and tenant will be taken care by the lease  manager. In many casess the property management company offers an additional service package to manage the apartment as well.

N:

NEBENKOSTENVORAUSZAHLUNG/UTILITY BILL PAID IN ADVANCE

In addition to the cold rent paid by the tenant, the tenant pays in advance for utilities, i.e. a fixed amount for utilities such as water, heating,.

NOTARIELLE BEGLAUBIGUNG/NOTARISED VERIFICATION

Here the notary only certifies the signature of the signatory on a document without going into the content. It only confirms the authenticity of the signature

S:

SCHUFA

The Schufa receives information on the assessment of the creditworthiness of the borrower. It makes the information available to the banks on request, taking into account the strict data protection regulations.

SPEKULATIONSFRIST/HOLDING PERIOD

The profit from the sale of an investment property is subject to income tax,

if the property is sold  within ten years. Thus, the holding period for real estate is generally ten years. to make tax free capital gains.

STAFFEL-MIETVERTRAG/STEP UP RENTAL AGREEMENT

The step up rental agreement determines at the beginning of the contract the extent by how much the rent will increase at pre determined time periods.

W:

WEG-VERWALTER/ PROPERTY MANAGER

The maintenance reserve is decided by the WEG administrator through the vote of each land owner. The reserve is used to carry out (age-related) renovations and thus the value and to preserve the substance of the property. The maintenance reserve cannot be passed on to the tenant and can activated for tax purposes if spent on repairs etc

WOHNFLÄCHE/ TOTAL SIZE

The total size of the rooms that can be counted (as living space) Not included are floor space of the cellar, attic or rooms that do not meet the requirements of the building regulations.

WOHNUNGSÜBERGABEPROTOKOLL/APARTMENT HANDOVER PROTOCOL

An apartment handover protocol documents the condition of the apartment when it was handed over or accepted (returned).

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