Real estate transactions
The notary’s role
The notary holds a public office and, thus, is obliged to be neutral towards and independent from the parties seeking counsel and notarisation. He therefore does not unilaterally represent the interests of only one party, but provides impartial advice to all contracting parties. Thanks to their outstanding qualifications, notaries guarantee that all parties to the agreement are duly counselled and, thus, that they are able to sign a balanced and fair contract. This procedure is designed to raise awareness among the parties for potential legal risks of the transaction and aims to prevent future lawsuits by means of drawing clear and unambiguous contractual clauses. Furthermore, the notary is responsible for the swift and secure execution of the legal transaction. The notary’s participation plays an even greater role when it comes to the notarisation of contracts between consumers and entrepreneurs as he makes sure that the inexperienced parties to the contract are not taken advantage of or exposed to unilateral risks.
The key issues of the upcoming transaction are usually discussed between the parties in advance: How high is the purchase price, when will the property be ready for occupancy, what condition is it in, will movable property be included in the sale, etc.? The contracting parties will then contact a notary of their choice with a request to prepare the purchase contract. The notary, firstly, clarifies the facts of the case before, secondly, checking whether and how the desired agreements can be legally implemented. For example, the notary uses the file from the land register in order to obtain information on the ownership, the existing encumbrances on the object of purchase and any obstacles to the implementation of the contract. In addition, if necessary, he will point out various possibilities for structuring the contract and will highlight possible risks to the parties involved.
The focus lies on the secure exchange of performance and counter-performance, i.e. the seller shall not lose their ownership until they have received the purchase price and, reversely, the buyer shall not hand over their money until it is certain that they will become the owner of the property. The economic evaluation of a contract, in particular the appropriateness of the purchase price, however, is beyond the notary's responsibilities. In principle, the notary also does not advise the parties in tax matters. If the parties to the contract wish to obtain clarification in this regard, it is recommended that they consult a tax advisor or the tax office before notarisation.
Finally, the notary transposes the individual ideas of buyer and seller into a tailor-made draft compliant with the legal requirements. The notary will make this draft available to the parties involved in good time before notarisation, at least two weeks in the case of a contract between a consumer and an entrepreneur. This gives both parties to the contract the opportunity to check the contract in advance. In the event of any queries, the notary will be available to address the questions.
During the process of notarisation, the notary reads out the complete contract word for word, explains its contents and points out the legal consequences of the transaction. The buyer and seller have the opportunity to address open points during the notarisation. Once all questions have been answered and final requests for changes have been incorporated into the text, the parties to the contract and the notary sign the deed. If needed, the land charge in order to secure funding from a bank can be notarised immediately after the purchase contract, provided that all the relevant data have been communicated to the notary in advance.
Once the purchase contract has been signed, the notary will take care of the swift execution of the purchase contract within a few weeks after notarisation. In the meantime, the parties to the contract can focus on other important issues such as relocation, planning the furnishings, etc. The notary will obtain the necessary permits and other declarations from the authorities required for the execution, deal with correspondence with the courts and the land registry and notify the tax office. In addition, the notary is responsible for the complicated handling of the transaction with the banks involved, especially in the processes of redemption and securing the funding. He secures the buyer against the loss of their rights from the purchase contract by entering a priority notice of conveyance in the land register and arranges for the registration of his land charge to secure the loan.
Once it is certain that there are no more obstacles to the acquisition of ownership, he informs the buyer that the purchase price can now be paid without concern. After payment of the purchase price has been confirmed by the seller, the notary applies for the transfer of ownership at the land registry and supervises its execution. Finally, he informs the buyer that they have now finally become the new rightful owner of the property.
Notaries charge fees for their services according to a statutory fee system, which is exclusively based on the business value of the matter. Notarisation of identical contracts therefore triggers identical fees for all notaries. The notary will be happy to inform you about the expected costs of a real estate purchase contract.