Real estate glossary – A-Z of technical terms
Additional purchase costs (Erwerbsnebenkosten)
In addition to the purchase price, further costs are incurred. In specific, these are the notary/court and land register fees, the land transfer tax, and the estate agent's fees. These fees are usually calculated as a percentage of the purchase price (equivalent value) of the property, and can vary between the federal states. In Berlin, the land transfer tax in 2015 was 6% of the purchase price, the notary and land register fees are about 1.5 – max. 2% of the purchase price. You are usually safe if you calculate a maximum of 15% of the purchase price.
Authority to issue charges (Belastungsvollmacht)
The vast majority of real estate buyers finance their new home through a bank. After conclusion of the purchase contract, the bank only pays out the purchase price if it has an assurance. In section 3 of the property, a land charge is entered for the bank. At this point in time, the buyer is not yet owner. The seller must therefore authorise the buyer or notary and the bank to charge the object of purchase before the transfer of ownership.
Bidding process (Bieterverfahren)
Usually, one displays an asking price when selling a property. This is usually not the case when there is a bidding process. Here, various parties interesting in buying can make bids. A minimum bid is then often set.
Brokerage fee (Maklercourtage)
The buyer or the seller/landlord has to pay an agency commission for the service of the real estate agent. This is dependent on a successful assignment and is only due upon conclusion of a rental or purchase contract.
Broker's fee for the buyer (Käufercourtage)
This is where the buyer pays the commission directly to the real estate agent after conclusion of the contract. The broker's fee is usually calculated as a percentage of the purchase price. The amount varies from state to state.
Cadastral map/Field map (Flurkarte)
The term cadastral map or field map is used to mean the cadastral continuation of the properties. They record property boundaries and any buildings located on the property. You can apply for a current cadastral map in the relevant land registry office.
Clearance certificate (Unbedenklichkeitsbescheinigung)
This certificate is issued by the tax office after the purchaser has paid the land transfer tax due. After this, nothing stands in the way of a transfer of ownership in the land register. However, the term clearance certificate is not only used in relation to tax.
Commercial property trading (Gewerblicher Grundstückshandel)
This is when an owner sells more than 3 properties within 5 years. This affects one's tax liability.
Common property (Gemeinschaftseigentum)
Common property is understood to mean those parts of the building which belong jointly to all the home owners in the building, and for whose upkeep all owners are responsible. Examples include: the facade, load-bearing exterior/interior walls, roof, utility lines, central heating, exterior windows and balconies. You can find out in the declaration of division (the set of rules for a community of owners) what exactly constitutes common property in each housing complex. There are occasional differences between the residential buildings.
This is used to mean the instruction to the land registry office to transfer the ownership of the property in section 1 of the land register. Many different conditions must be met for ownership to be transferred. Among other things, the notary must have confirmation from the seller that the purchase price has been paid.
Declaration of division (Teilungserklärung)
The declaration of division is the set of rules and foundation of any homeowners' association. It is here stipulated, for example, which parts of the building are common property and which are estate in severalty. By and large, the declaration of division governs the relationship between the owners; it is the code book for the community of owners.
Declaration or certificate of separateness (Abgeschlossenheitserklärung/Abgeschlossenheitsbescheinigung)
An owner who wants to divide his previous rental house into freehold apartments has to prove to the building authorities that the individual apartments are separate in order for the division into freehold apartments to be able to go ahead. The declaration or certificate of separateness forms the basis for the later declaration of division.
Deletion approval (Löschungsbewilligung)
The buyer of a property does not want to take over any old credit burdens of his/her predecessor. The seller has to sell his property free of encumbrances. After conclusion of the purchase contract, the notary usually demands a deletion approval in respect of the registered land charge with the registered bank. The deletion can then take place, at the land registry. The bank issues the deletion approval if the loan amount still outstanding, including any early payment fees incurred, is completely repaid.
Development plan (Bebauungsplan)
The municipality can stipulate development plans for specific areas. Anyone who buys a property in such an area must adhere to certain guidelines from the development plan. The restrictions vary from plan to plan.
Early repayment penalty (Vorfälligkeitsentschädigung)
Almost all banks in Germany charge compensation for the interest lost in relation to the remaining term of the loan if the loan is repaid prematurely, for example when selling.
There are various kinds of easement that can encumber a property. For example, cables may run over the property, which in turn serve another property. These usually concern cabling and piping rights. Rights of way are another kind of easement. These are usually relevant when there are properties that have been divided up that are built up into the second storey. The front property is restricted/burdened in its use, in that the usually 3-metre-wide path that provides access to the rear property must be kept clear. However, there are still many different forms of registered easement. These can be found in the 2nd section of the abstract of title.
Enclosed space (Umbauter Raum)
This is the spatial capacity of a property, the volume. The term is now somewhat outdated and today, this is referred to as cubature or as gross building volume. Nevertheless, we still do often see the term enclosed space today, especially in the area of real estate valuation. The number is given in cubic meters.
These are restrictions based on building law. For example, if a water pipe runs over a property that supplies a neighbouring property, this part of the property can naturally not be built on. An entry is made in the directory of land charges to this effect. The same applies, for example, to developments close to the boundary.
Energy certificate (Energieausweis)
When selling or renting a property, the owner must provide the prospective buyer or tenant with an energy certificate for the building. This provides information about the energy status of the house.
Equity capital (Eigenkapital)
The majority of banks require a certain share of own funds to support the desired financing of the property. Usually one must have at least the additional purchase costs. -> see additional purchase costs
Estate in severalty and share of estate in severalty (Sondereigentum/Sondereigentumsanteil)
On this, see also the key term, share of co-ownership. Estate in severalty is the ownership of rooms used for residential purposes. This is thus about the apartment in and of itself, about the space between the ceilings and the walls. Estate in severalty includes for example: interior doors, fitted kitchen, radiators, flooring and wallpaper, but also non-load-bearing interior walls. Modifications require no consent of the other owners in the residential area. For example, if you remove a non-load-bearing wall, no approval is required.
Exclusive commission / exclusive contract (Alleinauftrag)
If you want to sell your property, you should hire a single estate agency exclusively to sell it. It can often be observed that several estate agencies advertise one and the same property at different dates and for different terms. This has a negative effect on the sale and the integrity of the offer. Assign one competent estate agent who then works in the background, internally, with several colleagues. Outwardly (in advertising), only one estate agent should act.
Expert valuation committee (Gutachterausschuss)
Once a year, the Expert Committee for Land Values meets and uses actual sales to calculate the local land value per m² of plot. Its members are predominantly made up of experts, surveyors, valuers and estate agents.
Floor plan (Grundriss)
The floor plan of a property provides information about the layout and size of the rooms. In the original floor plans, you can also see the location of any existing chimney draughts. You can also distinguish between load-bearing walls and non-load-bearing walls. Our tip: Often, the existing floor plans are not an accurate reflection of actual circumstances. Check the measurements and layout for correctness.
Freedom of encumbrance (Lastenfreiheit)
Freedom of encumbrance means that the land register is handed over free of encumbrances in sections 2 and 3 of the land register. Further details can be found under land register/abstract of title. The most important thing is the freedom of encumbrance in section 3. This is where land charges or mortgages payable of the previous owner are entered, which you as buyer do not want to take over. In the 2nd section (encumbrances and restrictions), certain entries are taken over as not bearing any negative effect on value, see e.g. easement, while others must or should be deleted, e.g. rights of abode/usufructs.
Freehold flat (Eigentumswohnung)
It is not possible in every case to buy an apartment. It is imperative that the multiple dwelling building in which the apartment is located has been divided into freehold flats. Several steps are necessary for this. See certificate of separateness and declaration of division. Owning a freehold flat entails the following, essential differences from living in a rented apartment:
1. In addition to the normal operating costs that you pay as a renter, there are additional costs. For example, you have to bear the building management costs, the costs of ongoing repairs and maintenance, and have to make contributions to maintenance reserves. The aggregate of the so-called "apportionable service charges" (these are the costs that a tenant would also bear) and of the "non-apportionable service charges" is called the home allowance or common charge.
2. You must or should attend the property owners' meetings. You may be represented in absentia by the administrator or another co-owner and authorise this person to vote for you.
3. If repairs or maintenance works are due to the common property and the costs for these are not covered by the existing reserve, there may be a special charge. Owners must then make a separate one-time payment. The amount is usually calculated based on the size of one's apartment or on one's so-called co-ownership share.
Free of commission (Provisionsfrei)
If real-estate advertisements are marked as free of commission, this is usually still done with an indication of who the property is commission-free for. Example: free of commission for the buyer. In such cases, no separate fee will be charged to the mediating broker upon conclusion of the purchase agreement. The seller here bears the commission, or this is collected with the purchase price.
Handover certificate (Übergabeprotokoll)
When handing over a property to the buyer or tenant, it is advisable to keep a record. The essential contents should be: names of the parties (transferrer/receiver) with address, meter readings for the water, electricity and heating as well as the number of keys handed over.
Home allowance bill (Wohngeldabrechnung)
The home allowance bill is basically similar to the operating costs bill that a tenant receives. Here, all running costs that are to be counted towards the management of the property are itemised. However, compared to the operating costs bill, the housing allowance bill includes other cost items that are always paid by the owner and may not be passed on to the tenant. In essence, these are: routine maintenance works, management costs and payments made into the maintenance reserves.
Home staging is a term used to mean "beautifying" or preparing a property for sale. For example, a vacant property will be populated with furniture and plants to facilitate sale of the property.
Immobilien Verband Deutschland is the largest real estate association in Germany. Its members are, for example, building managers and estate agents. Its members are regularly trained and receive substantial professional knowledge.
Land charge (Grundschuld)
The land charge is entered in section 3 of the land register. This is the assurance for the financing bank. If the purchaser/debtor fails to pay the due loan instalments, the bank can use this entry to help bring about a foreclosure.
Land register and abstract of title (Grundbuch/Grundbuchauszug)
The land register contains the records/history of the property. You find old purchase contracts and building permits, for example. The land register is located in the relevant land registry office. The abstract of title is an essential summary. It contains information on the location and economic use of the property, information on the owner, information on encumbrances and restrictions, as well as information on registered land charges and mortgages that encumber the property. The abstract of title then summarises the essential and most important background of the property.
Land tax (Grundsteuer)
The land tax is usually charged quarterly. Every property owner pays ongoing tax on the ownership of his/her property.
Land transfer tax (Grunderwerbssteuer)
Any purchase of a property is subject to tax. The amount of tax varies from state to state. In Berlin, it was 6% of the purchase price in 2015.
Land value (Bodenrichtwert)
Once a year, the Expert Committee for Land Values meets and uses actual sales to calculate the local land value per m² of plot. The expert committee receives a copy of the purchase contracts for the calendar year. Only pure land purchase contracts are evaluated for determining the land value. Developed plots are not considered.
The term "leasehold" is understood as the right to erect a building on a third-party's plot for a specific length of time in return for payment of a fee. It is mostly land owned by the state and the church that is dealt with here. A leasehold can be requested in the form of a flat or a house. By law, a building permanently connected to the plot is automatically an integral part of the plot and thus owned by the plot owner. The only possibility for making a separation in such cases is by going down the path of a leasehold.
Levy of execution (Zwangsvollstreckung/Zwangsvollstreckungsunterwerfung)
When a property is purchased, the debtor generally always makes him/herself subject towards the financing bank to levy of execution against his/her entire assets. If the debtor fails to pay the repayments and interest due, the bank can immediately and forcibly claim it from the entire assets. You find this wording in almost all purchase contracts which include a bank.
Living space calculation (Wohnflächenberechnung)
This is a calculation of the living space of a property. All rooms are listed with dimensions and identified separately. At the end, the total living space of the apartment is given.
Maintenance reserve (Instandhaltungsrücklage)
In homeowners' associations, each homeowner pays a certain amount of his home allowance into the association's maintenance reserve. This ensures that if a backlog of repairs are needed, the necessary funds are available to remedy the damage. For example, if the heating system has to be replaced.
Manager's approval (Verwalterzustimmung)
In many apartment buildings' homeowners' associations, the administrator has to approve the sale of the home after the contract has been signed. The purpose of this is to prevent the association from suffering any damage. However, this consent may only be withheld in specific cases (e.g., when the purchaser is undergoing bankruptcy proceedings, etc.).
Minutes of the owners' meeting
The owners' meeting (-> see Owners' meeting) has to record its proceedings and the decisions taken during each meeting.
Notarisation (Notarielle Beurkundung)
Any real estate sale/purchase contract in Germany must be certified by a notary.
Notary fees and land register costs (Notarkosten/Grundbuchkosten)
The notarisation/execution and settlement are subject to fixed fees for the notary. These are usually about 1-1.5% of the purchase price. Administrative costs are also incurred for the conveyance and changes to the land register. These usually amount to a maximum of 0.5% of the purchase price.
Notary's escrow account (Notaranderkonto)
Today, notaries are urged not to use escrow accounts due to reasons of costs. Payment of the purchase price in any case only takes place after all permits are in place. So the buyer does not take any risk in making a direct payment to the seller. The notary only has to use the notary's escrow account in certain cases, for example, for sales to large communities of heirs or for very quick handovers. If, for example, the handover of the property is to be completed one week after the purchase contract is concluded, not all payment prerequisites/authorisations/permits will be available at that point in time. The buyer then has the option of securely depositing the purchase price in the notary's escrow account. The notary only pays the purchase price out to the seller when all prerequisites and approvals are in place. A quick handover is thus guaranteed.
Operating costs (Betriebskosten)
Tenants and owners have to pay advance payments on operating costs such as heating and water. Operating costs are understood as the ongoing costs incurred in relation to the management of a property.
Owners' meeting (Eigentümerversammlung)
In homeowners' associations, the administrator must convene a regular meeting of owners at least once a year. Here, matters like the association's economic circumstances will be discussed. Furthermore, decisions are reached in relation to repairs, and the management in office is confirmed or newly elected. If there are matters that need to be discussed that cannot wait until the next ordinary homeowners' meeting, the administrator must convene an extraordinary meeting.
Partition plan (Aufteilungsplan)
The partition plan must be enclosed alongside the application for a certificate of separateness. It clearly shows the floor plans and sections of the house to be divided. Later, these plans will be annexed to the declaration of division
Priority notice of conveyance (Auflassungsvormerkung)
This is the buyer's assurance of entitlement to the property. After the contract has been signed, the notary must obtain permits and documents until it is time for the purchase price to be paid and for the property to be handed over. In the period between the conclusion of the purchase contract and the transfer of ownership in the land register, the so-called priority notice of conveyance is entered as a block in the land register. For example, it ensures that the seller cannot resell days later.
Property value (Grundstückswert)
The property value is made up of various components. On the one hand, the pure land value will be determined, and on the other hand, the buildings that are located on the property will be considered, as well as the state of development.
Rent control (Mietpreisbremse)
In 2015, the government introduced rent control in metropolitan areas. For new leases, rents are to be controlled and capped. They may not be more than 10% above the local comparative rent, which you can calculate using the rent index. The rent control does not at first apply to new builds and subsequent first lets, or to first lets after extensive modernisation. This is a completely new law, and we will have to wait and see what its impact is.
Right of first refusal (Vorkaufsrecht)
Rights of first refusal may be granted/agreed in various cases or exist by law. For example, the tenant has a legal right of first refusal if he/she was already tenant before the establishment of residential property ownership. In order to exercise the right of first refusal, there must be an underlying main contract (purchase contract) with a third party, which the party with first refusal may enter.
Right of special use (Sondernutzungsrecht)
Since with ownership of residential apartments, the property is designated as a large whole, no exclusive ownership of a specific area can be awarded. This is done through assigning a right of special use. This is a right for the exclusive, sole use of, for example, a garden area or a car parking space. This right can be sold independently of an apartment.
Right of way (Wegerecht)
This right can be entered in the land register in order to legally secure/guarantee access to another property.
Sales particulars (Exposé)
The sales particulars contain important data and information about the property. Good sales particulars also include photos and floor plans of the property.
Share of co-ownership (Miteigentumsanteil)
As a member of an apartment building's homeowner association, you own a certain share of the plot and building. This is usually specified in thousandths/ten-thousandths or hundred-thousandths. You will find your co-ownership share in the abstract of title or in the declaration of division.
Site occupancy index (SOI) (Grundflächenzahl/GRZ)
This states to what extent the plot in question may be built over with buildings. If the SOI for a 1,000 m² plot of land is 0.2, the plot can be built on to a maximum of 200 m².
Speculation tax (Spekulationssteuer)
A speculation tax must be paid by anyone who sells a property for a profit within 10 years of buying it. The tax is payable on the surplus proceeds. Exempt from payment of the speculation tax are sellers who have lived in the property for at least one year and were registered there. The tax is levied on the profit.
Terminating a lease due to own needs (Eigenbedarfskündigung)
The owner of a rented property has the possibility of terminating the lease for reasons of personal need. The personal need must be clearly justified. One reason is that one currently lives in a rented apartment and would like to use the newly acquired apartment to live in oneself. The same applies for close family members. Of course, the tenant enjoys a certain protection against dismissal. The notice period can be up to 9 months; this is based on the duration of the existing lease. A tenant who was a tenant already before the building was divided up into freehold flats enjoys special protection against dismissal. For he/she did not know at the time of moving in that the apartment could later be converted into a privately owned apartment. A special protection is thus in place. This protection against dismissal then usually lasts 10 years. This period starts after the first sale of the apartment and the owner's subsequent registration in the land register.
Transfer of ownership (Eigentumsübergang)
Only after conveyance to the buyer in the land register, in the first section, is ownership of the property then transferred to that person. This does not happen already at the point at which the purchase contract is concluded, or when the purchase price is payed. The notary has to obtain various permits. The buyer has in particular to pay the land transfer tax.
Usufruct and usufructuary right (Nießbrauch/Nießbrauchrecht)
This right can be established on entire properties or on parts, for example the shed. Most concern rights of abode. This used to be common back in the day. Parents would hand down an estate to their children and would register a right to a specific part of the property, the so-called life estate. A lifelong right of abode was then obtained.
The term viewing is used to mean an inspection of the property. Here, buyers or tenants can look at the desired property in detail. Our tips and recommendations: give yourself plenty of time for the inspection. What is essential is the condition of the basement and the roof. Do not let yourself be unsettled, agitated, or feel pressured by other potential buyers. There are some estate agency firms who hold mass viewings. The agent cannot then respond to all questions and requests. The first viewing should serve only as means of obtaining of a first impression. Always carry out at least a second viewing with a construction specialist.