Purchase Agreement: Buying a Condominium / Apartment or Single Family Home / House in Austria – With the Assistance of Law Experts Attorneys: Attorney Dr Wiesflecker & Attorney Gamsjäger
Purchase Agreement: When is a Condominium or Home Purchase Agreement Rendered Legally Binding? Registration in the Register of Deeds – Get Advice from Your Nationwide Austrian Attorneys
The acquisition of real estate, such as a condominium, a land parcel or a house is contingent upon the making of what we call a “consensus agreement” in Austria. It represents an agreement made between the contracting parties for goods and a price (consensus). Thus, a sale agreement is concluded when there is an agreement as to the object and the price of the sale. By entering into a purchase agreement, the seller undertakes to transfer the property to the buyer and to give the buyer title to the property. In exchange, the buyer undertakes to pay the agreed upon purchase price.
Consequently, the execution of a real estate purchase agreement (condominium, land parcel or house) complies with these general rules and is simply based on an agreement on an object and its price.
The abovementioned purchase agreement for a condominium or house as a legal transaction that involves joint covenants and the payment of a price constitutes what is called a title, based on which the property is acquired by way of conveyance (modus) in the register of deeds (§§ 425 et seq. ABGB [Austrian Real Estate Transfer Act]).
Hence, parties to such transactions must keep in mind that in order to acquire title to for instance a condominium of a single family home the mandatory modus is to have the title rights registered in the land register or register of deeds books.
In particular the statutory provisions pursuant to §§ 31 et seq. Grundbuchsgesetz (GBG; Austrian Register of Deeds Act) must be complied with in conjunction with such transactions. Hence, the attorney retained to handle the execution of the purchase agreement must have pertinent experience so that he or she can meet the frequently extremely stringent requirements and subsequently file for the register of deeds request, which must be submitted and the deeds the former is based upon. In the event of errors in the application or the deeds it is based upon, a purchase agreement that as already been signed cannot readily be executed in the register of deeds.
Direct Purchase of a Condominium / Apartment from the Builder, Establishing Home Ownership Based on the Condominium Act / Austrian Home Ownership Act – Purchase of a Condominium in Austria
To become a homeowner of a specific property, a certain condominium or e.g. also a garage or parking space for a car who is registered in the register of deeds, it is principally mandatory to enter into two contacts: On the one hand a purchase agreement for the parts of the real estate with which home ownership in a certain property is to be affiliated and, on the other hand, a written condominium contract that establishes home ownership.
If a buyer purchases, for instance, a new condominium directly from the builder, he or she frequently will not acquire a condominium that has already been registered in the register of deeds, but so-called co-ownership titles for a property that are not supposed to be linked to ownership title to a specific residential unit until later.
In cases where a usage value has not yet been determined for the property on hand, the purchased intangible co-ownership titles are estimated share values, which are required to establish ownership title to the respective residence.
An assessment called “usage value appraisal” issued by an expert that determines the usage value of the respective residential property is part of the home ownership establishment process. Subsequently, the actual home ownership is established on the basis of a residential property ownership agreement.
Property to be Purchased and Purchase Price – Purchasing a Condominium or House in Austria
The purchase price the contracting parties agree upon must be a monetary value. Hence, it must be possible to determine the purchase price accordingly.
It must also be possible to identify or at least define the real property as the property to be purchased based on its size and location. This mandate arises from the previously mentioned fundamental considerations that a purchase agreement is not made until an agreement on the purchase price and the property to be purchased has been made.
Escrow Arrangements Related to the Finalization of the Purchase Contract / Sales Contract by Your Attorney – Buying a Condominium or House in Austria
As far as the handling of most purchase contracts / sale contracts is concerned, the buyer is required to first meet payment obligations in most cases. This means that the buyer must transfer either the full purchase price or at least portions of the purchase price on a date by which the property to be purchased may not even be completely built and the buyer’s ownership title to the specific unit has not yet been registered in the register of deeds. Depositing the purchase price with an escrow agent combined with the escrow agent’s obligation not to disburse the purchase price to the seller until the agreed upon escrow terms have been met, provides optimum protection to the buyer.
Hence, the purpose of what we call escrow arrangements is to ensure that neither one of the contracting parties is placed at a disadvantage in the fulfillment of the purchase agreement or even defrauded.
The escrow arrangement, i.e. the payment or deposit of the purchase price for the property to be purchased is usually based on a pertinent escrow commission. The contracted escrow agent is a member of the Association of Escrow Agents of the relevant bar association. In these cases, an agreement is made that ensures that the escrow arrangements are made in compliance with the escrow statute of the bar association. In such arrangements, the escrow statute is an integral component of the escrow agreement.
The escrow agentt is entrusted with the management of the purchase price deposited in the respective escrow account until the buyer has acquired cash lien free title to the property to be purchased. Initially, the escrow agent must disburse any potential payments to lien creditors required to render the property free of cash liens to the lien creditors from the amount in escrow. He or she also must frequently pay to the competent internal revenue service office the Austrian real estate capital gains tax (Immo-ESt). Once these payments have been made and the ownership title has been registered and the cash lien indemnification is complete, the escrow must disburse the remaining balance of the purchase price to the seller.
Warranty, Property Deficiencies, Statute of Limitations – Buying a Condominium or House in Austria
Once the purchase agreement has been executed and the property has been transferred, it is quite common for property deficiencies to arise, which frequently lead to litigation before a court of law. If real property is linked to material or legal deficiencies, the general warranty provisions of Austrian General Civil Law (Allgemeines Bürgerliches Gesetzbuch, ABGB) apply. Principally, these provisions are dispositive, which means that the contracting parties have the option to agree upon terms that deviate from the law.
The statute of limitations for material deficiencies is three years as of the physical transfer date of the real property or three years as of the time the deficiencies are identifiable (knowledge of damages and party responsible for the damages).
Land Transfer in Austria – Land Transfer Agency Permit
Principally, the transfer of real estate in Austria is governed by what we call the Land Transfer Act. The Land Transfer Act determines the parties permitted to acquire real estate/land and the acquisition of such real property is frequently also subject to a permit issued by the land transfer agency or a respective notification. In Austria, land transfer is governed by nine different state laws, which partially impose extremely divergent provisions.
Consequently, under certain conditions, a permit issued by the land transfer agency is absolutely mandatory for the acquisition of real estate. In these cases, the land transfer agency makes its decision as to whether to issue a permit upon presentation of a signed notarized purchase agreement.
Taxes and Fees Affiliated with the Acquisition of Land, a Condominium or House – Get Advice from Your Nationwide Austrian Attorneys
The making of a purchase agreement or the processing of a real estate transaction will result in the accrual of related costs. The key taxes and fees comprise:
- Real estate acquisition tax / transfer tax 3,5%,
- Registration fees / Land Registry 1,1%,
- Real estate capital gains tax,
- Value added (sales) tax (VAT).
Please keep in mind that taxes to be paid are principally accrued as a result of the materialization of the purchase process. The parties that owe taxes are principally all entities involved in the purchase process.
Law Practice Based Recommendations: Correct Compilation of a Purchase Agreement for a Condominium, House or Land Parcel – Your Nationwide Legal Counsel for Austria: Law Experts Attorneys
As a general rule, a purchase agreement is bindingly made if an agreement on the goods and their price has been reached. In this context, be aware of the fact that this purchase contract is frequently already made once a purchase offer has been signed. The offer to purchase already governs the fundamental provisions of the purchase agreement. As a rule, it is binding at this point. Hence, when the buyer is ready to compile an offer, an attorney he or she trusts should be involved to prevent future disputes resulting from the former. Given that many individuals purchase their own condominium or house only once in their lives, the handling of such “once in a lifetime decisions” requires special prudence and experience.
Prior to executing a Purchase Contract / Sale Contract, please make sure that in particular the following issues have been resolved:
- What type of real estate are you buying? Land with/without buildings on it, a single-family home, an operations property, a rental property land parcel, residential property? Are you also purchasing fixtures and furnishings in the property and how should it be appraised?
- Who owns the property and do you have the consent of all owners? Is the property subject to sales restrictions?
- What type of zoning applies according to the zoning plan plan? What does the register of deeds say? Do you need a construction permit/usage permit?
- Does the property have the required infrastructure: Roadways, water and sewage connections, electrical, phone lines.
- Are there any other parties who have rights that could restrict your legal position: Residency rights, tenancy rights, other usage rights and easement attachments, easement rights, liens, residential usage rights or usufruct rights.
- What types of public law based encumbrances is the property subject to? (Protected Historic Monuments, Protected Zone, etc.)
Provisions and contents the Purchase Contract / Sale Contract should cover:
- Contracting parties’ data, dates of birth and correct addresses.
- Purchase price and property to be purchased: Is the property to be purchased defined and has the register of deeds status been clarified? What about the situation not documented in books?
- If applicable, details about existing accessories, furniture and fixtures.
- What is the mode of payment and is the property subject to any encumbrances/liens: Cash payment, installments or annuities for life, terms, conditions, financing, assumption of debt and liability, assumption of third party rights, safeguarding of property value, liens (attachment rights, bank guarantees, guarantees).
- When will the property be transferred and when do the rights and obligations transfer to the buyer.
- What safeguards are in place to protect the buyer: Escrow agent, ranking registration, indemnification against encumbrances, etc.
- Is the sale subject to special permits? Examples: Land transfer permit, agricultural agency issued permits, etc.
- Is the property subject to resale rights / priority purchase rights, sale and encumbrance bans, usufruct rights, etc.
- Is a warranty being provided?
- Does the property have any deficiencies? If applicable, deficiencies should be concretely specified in the purchase agreement to prevent future disputes.
- Have agreements been made on costs and taxes?
- Which court has jurisdiction in the event of litigation and what is the applicable governing law?
- Does the purchase agreement contain a registration clause?
- Notarized or court certified execution (signing) by all parties.
Our Autonomy guarantees that you will enjoy the Best Outcome - Searching & buying your Property in Austria with your One-Stop-Shop-Law-Firm
Austrian attorneys are mandated by law to represent only one party to avert conflicts of interest. Moreover, any lawyer who is a registered member of the Austrian Bar Association, is subject to very strict professional and ethical standards as well as regulations.
Unlike a real estate broker, seller of real estate or transaction funding bank, we, in our role as attorneys solely represent your interests and entirely in compliance with your wishes. As a result, you can rest assured that your interests and wishes will always be our top priority.
Throughout many years of practicing law, we have learned that driven by unilateral interests, purchase contracts or offers are frequently made in too much of a rush, which results in deficient agreements or uncertainties as far as the content is concerned. Given that the purchase offer is already legally binding once it has been signed by all parties, this often means that important modifications or provisions for the final purchase agreement (e.g. warranty exclusions, easements) can no longer be successfully negotiated or agreed upon.
Consequently, the timely involvement of our expert law firm guarantees that all necessary investigations will be performed on your behalf in the interest of a successful conclusion and that all prerequisites are in place before the purchase agreement is executed. Retaining an attorney you trust in the early stages can avert disputes, problems and frequently significant financial losses.
The One-Stop-Shop for all Your Legal Needs in Real Estate and Property Matters - Your Real Estate Law Professionals Law Experts Attorneys
Thanks to the fact that Dr Wiesflecker worked for renowned business law firms that did business around the globe and his domestic and international contract law as well as civil law expertise, Dr Hannes Wiesflecker boasts the specialized knowledge and years of experience required to successfully close real estate transactions.
As far as the assessment of construction law, land and urban zoning or questions of using properties as vacation homes is concerned Law Experts Attorneys’s Mag. Stefan Gamsjäger is an expert with a proven track record in these disciplines. Mag. Gamsjäger has more than 10 years of experience as an administrative legal expert and deputy Zoning Agency Director in a Tyrolean municipality. Hence, besides having passed the Administrative Services Exam conducted by User Group A, he also has the respective expertise in this field.
Law Experts Attorneys is a law firm with international experience that maintains offices in Innsbruck (main office), Telfs and Vienna (branch offices). Our partner network will assist you find and proceed on the optimum path to successfully implement your project.
A brief overview of our law firm’s services:
- Implementation of the listed verifications and investigations combined with the complete and independent dedication of our support to your project in keeping with the principle One-Stop-Shop (Everything from a single source).
- Review and assessment of all types of contracts.
- Compilation and implementation of purchase agreements, gifting contracts, exchange agreements, hand-over contracts or condominium ownership contracts.
- Assumption of trusteeships / escrow managers and in-house calculation and payment of taxes.
- Compilation of expert legal evaluations on land and urban zoning or vacation homes.
- Claiming of rights based on contracts or defense against claims that do not have merit.
- Out-of-court and in-court representation before courts and government agencies.
We will be pleased to assist you with comprehensive and competent advice!