1. TRANSFER OF PROPERTY IN GERMANY
What is transfer of property in general?
General principles of german property law
Transfer of movables according to bgb
transfer of immovables according to bgb

2. Transfer of property consensual transaction
obtaining an interest in property under a trust established for the benefit
passing 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
DISTINCTION
contract containing the
obligation to transfer
the property
the transfer itself

6. German transfer system – tradition system
Art. 929 BGB requires a transfer of possession
the will of the transferor to make the acquirer possessor
corresponding will of the transferee to acquire possession from the transferor
Possession in not only a fact but also a right  legal act
Art. 854 subs. 2 BGB
In 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 dispose
No 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 met
This 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 931
Assignment of claim for possession
Section 932
Good faith acquisition from a person not entitled

9. Agreement and delivery
The owner is required to deliver the thing to the acquirer
They both need to agree that the ownership is to be passed
If acquirer possesses the thing – the transfer is valid.

10. Constructive delivery
delivery may be replaced by a legal relationship
agreed between the owner and the acquirer
the 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 ownership
The 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 general
Real Estate Sales Contract
Transfer 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 separation
The 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 frame
The 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 Contract
Form
In 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 Payment
Requirements
– 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) – yes
In 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 due
It 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 payment
A 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 buyer
The 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
Inheritance
no special rules
Principle of succession – the heirs become owners after the decedent’s death
Heirs need to prove their title of succession
Section 943 – 945 bgb

22. Principle of succession
Acquisition by prescription and succession in title
If 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 inheritance
The prescription period that has passed for the benefit of a possessor of an inheritance counts in favor of the heir.
Extinction of third party rights
On 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.

23. Bibliography (all checked 27/11-06/12)

24. THANKS FOR THE ATTENTION
Aleksandra Mierzejewska