Presentation on theme: "TRANSFER OF PROPERTY IN GERMANY"— Presentation transcript:
1 TRANSFER OF PROPERTY IN GERMANY What is transfer of property in general?General principles of german property lawTransfer of movables according to bgbtransfer of immovables according to bgb
2 Transfer of property consensual transaction obtaining an interest in property under a trust established for the benefitpassing from one person to another independently
3 German property law Bürgerliches Gesetzbuch (or BGB) The Property Law ("Sachenrecht"), sections , describing:possession,property,other rights persons have relating to property (movable property and real estate),how those rights can be transferred
4 General principles numerus clausus, absolute effect, publicity, specification,so-called Abstraktionsprinzip – principle of abstraction
5 Principle of abstraction DISTINCTIONcontract containing theobligation to transferthe propertythe transfer itself
6 German transfer system – tradition system Art. 929 BGB requires a transfer of possessionthe will of the transferor to make the acquirer possessorcorresponding will of the transferee to acquire possession from the transferorPossession in not only a fact but also a right legal actArt. 854 subs. 2 BGBIn practice - transfer of possession is seen as no more than a factual act
7 German transfer system – tradition system Valid transfer the transferor should be privileged to disposeNo longer is the person privileged if he is declared bankrupt (non-owner may, by law or by legal act, be given the privilege to dispose though)Valid transfer acquirer is in good faith, and all other requirements for third party protection are metThis ability to transfer - ‘the power to dispose’‘Identity of defect’ - between contract and conveyance
8 Transfer of movables Section 929 Agreement and delivery Section 930 Constructive delivery Section 931Assignment of claim for possessionSection 932Good faith acquisition from a person not entitled
9 Agreement and delivery The owner is required to deliver the thing to the acquirerThey both need to agree that the ownership is to be passedIf acquirer possesses the thing – the transfer is valid.
10 Constructive delivery delivery may be replaced by a legal relationshipagreed between the owner and the acquirerthe acquirer obtains indirect possession
11 Assignment of claim for possession delivery may be replaced by the owner assigning to the acquirer the claim to delivery of the thing.
12 Good faith acquisition from a person not entitled The acquirer becomes the owner even if the thing does not belong to the alienor, unless the acquirer is not in good faith at the time when under these provisions he would acquire ownershipThe acquirer is not in good faith if he is aware, or as a result of gross negligence he is not aware, that the thing does not belong to the alienor.
13 Transfer of immovables Sale of Real Estate among Private Persons (consumers)Procedure in generalReal Estate Sales ContractTransfer of Ownership and Payment
14 German immovables transfer – in general Two parts: a contract obligation to transfer ownership of the property (Kaufvertrag) and disposition activity (Auflassung)German principle of separationThe validity of disposition activities (transfer of property) is not dependent from a validity of transfer of ownership agreement"The contracting parties agree that the ownership of the property above is transferred to the buyer in its exclusive meaning."
15 Sale of real estate among private persons Procedure in general Main steps of a real estate sale– The parties ask a notary to draft the contract. The sales contract is concluded in an oral hearing at the notary’s office in the presence of both parties and laid down in a notarial document.– Notary applies for registration of a priority notice (Vormerkung) in the land register (Grundbuch).– Now, the buyer pays the purchase price to the seller.– After payment, the seller allows the buyer into possession and the notary has the transfer of ownership registered in the land register. The registration entails the transfer of the property.
16 Sale of real estate among private persons Time frameThe time necessary varies according to the time needed by the land register.– On average, the priority notice is registered within several days. Normally, the notary or the parties receive the information about the registration of the priority notice about two weeks after the demand.– The registration of the transfer itself might take longer, up to some weeks– However, some land registers have a serious backlog. There, even the priority notice might take some months, the registration of transfer half a year or even a year, in some cases even longer.
17 Sale of real estate among private persons Real Estate Sales ContractFormIn Germany, the real estate sales contract has to be concluded by notarial instrument; otherwise it is invalid (§ 311b BGB)– If the sales contract is formally invalid, the formal defect is cured, if the transfer of property has been declared and has been registered (§ 311b BGB). However, the registration does not cure any material defects of the sales contract. Also the transfer of property has to be declared to a notary (§ 925 BGB)– The declaration of transfer requires a German notary.– The transfer has to be declared with both parties present at the same time (§ 925 BGB). Offer and acceptance must not be notarized separately. However, the transfer is valid, even if the notarial instrument has not been validly notarized (§ 925 BGB).
18 Sale of real estate among private persons Transfer of Ownership and PaymentRequirements– valid obligation contract (causa) - no– payment of the purchase price - no– consent on the transfer of ownership (Auflassung) - yes– registration with the land register (Eintragung) – yesIn the German system, transfer of ownerhsip requires only a declaration of consent and the registration with the land register.
19 Sale of real estate among private persons Payment dueIt is impossible to make the transfer contingent on the payment of the purchase price . The transfer of property is split up in two steps:– First, the priority notice is registered - buyer is secured that nobody else can acquire property validly against him - buyer now may pay the purchase price to the seller.– After payment, the seller allows the buyer into possession and the notary has the transfer of ownership registered in the land register .– An escrow account is necessary to secure the seller, if the parties agree to transfer possession before payment is due. In Germany, no insurance is used for the risks of the payment.
20 Sale of real estate among private persons Ways of enforcing the paymentA notarial instrument is enforceable only if the debtor explicitly declares submission to direct enforcement in the contract. In almost all contracts on the sale of real estate, such submission is declared by the buyer.Transfer of possession to the buyerThe seller declares submission to direct enforceability concerning his duty to vacate the premises and to transfer possession to the buyer.
21 Heirs need to prove their title of succession Inheritanceno special rulesPrinciple of succession – the heirs become owners after the decedent’s deathHeirs need to prove their title of successionSection 943 – 945 bgb
22 Principle of succession Acquisition by prescription and succession in titleIf as a result of succession in title the thing enters the proprietary possession of a third party, the prescription period that has passed in the possession of the predecessor in title benefits the third party.Possessor of an inheritanceThe prescription period that has passed for the benefit of a possessor of an inheritance counts in favor of the heir.Extinction of third party rightsOn the acquisition of ownership by prescription, the third-party rights in the thing that arose before the acquisition of possession are reduced, unless the proprietary possessor is not in good faith with regard to these rights or he learns of their existence only later.