Germany is known for its legal certainty and transparency in real estate transactions, making it a highly attractive destination for international property investors and expatriates. Whether you’re relocating for work, acquiring residential property, or selling a real estate asset, understanding real estate law in Germany is essential for protecting your interests and complying with local regulations.
This guide offers a comprehensive overview of German real estate law from the perspective of foreign nationals. It covers everything from property acquisition and sale, ownership rights, and land registry procedures, to tax obligations, financing, and legal safeguards. Whether you’re buying a home or investing in commercial property, this article equips you with the knowledge needed to navigate the German legal landscape confidently.
Content
- 1. Legal Foundations of Real Estate Law in Germany
- 2. Can Foreigners Own Property in Germany?
- 3. How to Acquire Property in Germany: Step-by-Step
- 4. Selling Property in Germany
- 5. Types of Property Ownership
- 6. Legal Due Diligence
- 7. Real Estate Financing for Foreign Buyers
- 8. Taxes and Transaction Costs
- 9. Inheritance and Gifting of Property
- 10. Landlord-Tenant Law and Letting Property
- 11. Dispute Resolution and Legal Enforcement
- Conclusion
1. Legal Foundations of Real Estate Law in Germany
Real estate transactions are governed by a range of statutory sources, including:
- German Civil Code (BGB – Bürgerliches Gesetzbuch)
- Land Register Code (Grundbuchordnung – GBO)
- Building Code (BauGB – Baugesetzbuch)
- Real Estate Transfer Tax Act (GrEStG – Grunderwerbsteuergesetz)
- Money Laundering Act (GwG – Geldwäschegesetz)
A hallmark of the German system is the Grundbuch (land register), a public and authoritative register that records property rights. Legal ownership of real estate in Germany is only transferred when the buyer is entered into the land register—not upon contract signing.
2. Can Foreigners Own Property in Germany?
Yes. Germany does not restrict real estate ownership based on nationality or residency status. Foreign nationals may:
- Purchase residential or commercial property
- Hold full legal ownership individually or jointly
- Inherit property without restriction
However, non-EU investors must comply with anti-money laundering regulations and may face additional scrutiny, especially when financing through international accounts or entities.
3. How to Acquire Property in Germany: Step-by-Step
1. Find and Negotiate
Once the buyer and seller agree on price and terms—either directly or through a real estate agent (Immobilienmakler)—a draft purchase contract is prepared.
2. Hire a Notary (Notar)
German law requires all real estate purchase agreements to be notarised. The notary is a neutral party who:
- Drafts and explains the contract
- Ensures legal validity
- Registers the change of ownership
3. Sign the Purchase Agreement (Kaufvertrag)
Key contract elements include:
- Purchase price
- Payment deadlines
- Rights of use or tenancy
- Warranties or limitations thereof
- Penalty clauses
Once notarised, the contract becomes binding.
4. Financing and Payment
Buyers must arrange financing before signing. German banks often finance up to 70–80% of the value for EU residents. Non-EU citizens may face stricter requirements.
5. Entry into the Land Register (Grundbuch)
Ownership is legally transferred only when the buyer is entered into the Grundbuch. This typically takes 6–12 weeks and involves:
- Clearance of encumbrances
- Payment of real estate transfer tax (3.5–6.5%)
- Approval by authorities if needed
4. Selling Property in Germany
Selling real estate in Germany involves many of the same legal elements:
- Preparation of property documents
- Appointment of a notary
- Drafting of the notarised sale agreement
- Settlement of taxes and mortgages
Capital gains may be taxable if the property was held for fewer than 10 years (exceptions apply to owner-occupied property).
5. Types of Property Ownership
Under German real estate law, the following ownership forms exist:
1. Full Ownership (Alleineigentum)
The individual holds exclusive ownership rights.
2. Joint Ownership (Miteigentum)
Two or more parties share ownership proportionally.
3. Condominium Ownership (Wohnungseigentum)
Ownership of an individual apartment plus shared ownership of common areas.
Each structure has implications for taxation, liability, and transferability.
6. Legal Due Diligence
Before acquisition, a legal review of the following is essential:
- Land register excerpt (Grundbuchauszug)
- Building permits and zoning restrictions
- Existing leases or tenancy rights
- Utility easements, rights of way, or mortgages
- Energy performance certificate (Energieausweis)
Due diligence is especially important in older properties, multi-family units, or properties with commercial tenants.
7. Real Estate Financing for Foreign Buyers
Foreign nationals can obtain mortgages from German banks if:
- They have legal residence in the EU or a strong credit profile
- They provide sufficient equity (typically 20–30%)
- They present valid income documentation
Loan terms vary, but fixed interest rates and long-term security are standard features in Germany.
8. Taxes and Transaction Costs
Buyers and sellers should be aware of the following costs:
| Cost Item | Typical Rate |
|---|---|
| Real estate transfer tax | 3.5% to 6.5% (state-based) |
| Notary and land registry fees | 1.5% to 2% |
| Real estate agent commission | 3.57% (shared in most states) |
| Legal/tax advisory fees | Varies |
Ongoing property taxes (Grundsteuer) also apply and are assessed annually by municipalities.
9. Inheritance and Gifting of Property
Real estate may be passed on through inheritance or gifted during a person’s lifetime. Important considerations include:
- German inheritance tax (Erbschaftsteuer) rates
- Forced heirship laws (Pflichtteil) for direct relatives
- Legal registration of title change in the Grundbuch
- Estate planning via will or notarial testament
Foreign nationals should also consider the applicability of their home country’s inheritance rules and any tax treaties with Germany.
10. Landlord-Tenant Law and Letting Property
Owning a property for investment purposes means complying with German tenancy law, which is very tenant-friendly.
Key points:
- Lease agreements must comply with Mietrecht (rental law)
- Rent increases are limited and regulated
- Tenants enjoy long-term security of tenure
- Evictions require court approval
Foreign landlords should work with a property manager or attorney to ensure compliance with rental regulations.
11. Dispute Resolution and Legal Enforcement
Disputes in real estate transactions may arise from:
- Defects in the property
- Breach of contract
- Boundary conflicts
- Landlord-tenant disagreements
Legal remedies include:
- Civil litigation
- Notarial enforcement clauses (vollstreckbare Urkunde)
- Injunctions in urgent cases
Germany offers strong judicial protection and enforceable rights through its ordinary courts (Zivilgerichte).
Conclusion
Germany’s real estate sector offers international buyers and expats a stable, legally secure investment environment. However, the system is complex, formal, and highly regulated. A solid understanding of real estate law, combined with professional legal and financial advice, is essential to avoid pitfalls and maximize your investment.
Whether you’re seeking to acquire property in Germany, manage real estate assets, or sell residential or commercial property, working with a notary, legal advisor, and tax consultant ensures full compliance and peace of mind.
