Transfer of ownership when purchasing real estate: When does the house or apartment truly belong to you?

Signed the purchase agreement—and now the property is yours? ✍️
When buying real estate in Germany, this is usually not the case immediately. The transfer of ownership only takes place once you are registered as the owner in the land register. In this article, you will learn when the transfer of ownership is legally effective, how the transfer of ownership works, and why the handover of the keys does not automatically mean that the property already belongs to you.

What does "transfer of ownership" mean?
Transfer of ownership refers to the point in time at which ownership of a property is legally transferred from the seller to the buyer. The decisive factor is not moving in or handing over the keys, but rather the entry in the land register. The land register is an official register that documents who owns a property and what rights or encumbrances are registered.

Legal vs. economic: two different points in time ⚖️📅
👉 Legal transfer of ownership: You are only the owner once the transfer of ownership has been entered in the land register. Transfer of ownership means that your name is entered as the new owner.
👉 Economic transfer of ownership (transfer of possession): You will often receive the keys beforehand and be allowed to move in. Transfer of possession means that you can use the property and, from this point on, usually also bear the running costs, such as property tax.

💡Important: It is therefore possible that you are already the owner, but not yet the legal owner.

How does the transfer of ownership work when buying a house? 🧾➡️🏠
First, the notary draws up a draft purchase agreement and sends it to the buyer and seller for review. This is followed by the notarization appointment. Notarization is a notarial procedure in which the contract is read aloud, explained, and then signed by both parties.

The notary then arranges for the transfer of ownership to be noted in the land register. This is a security entry that protects the buyer's claim and prevents the property from being sold to third parties or additionally encumbered.

The buyer is then requested to pay the purchase price. In addition, real estate transfer tax is payable. Real estate transfer tax is a tax on the purchase of real estate and is paid to the tax office.

The notary also requires a clearance certificate for the transfer of ownership. This certificate confirms that the real estate transfer tax has been paid in full. Only when all requirements have been met does the notary arrange for the transfer in the land register. The legal transfer of ownership is completed with the entry in the land register.

📌Note: The signature on the purchase agreement is mandatory, but does not yet lead to the acquisition of ownership. The seller remains the owner until the purchase price has been paid and the entry has been made in the land register.

10-step process:

1. The notary draws up the draft purchase agreement.

2. The buyer and seller receive the draft.

3. Both parties review the contract.

4. Notarization appointment with the notary.

5. Signing of the purchase agreement in the presence of the notary.

6. Entry of the priority notice of conveyance in Section II of the land register.

7. Request for payment to the buyer.

8. Payment of the purchase price and settlement of the real estate transfer tax.

9. Application for transfer of ownership in the land register once all documents are available.

10. Handover of the house and land to the buyer. 🔑🏠

Purchase price payment: directly or via a notary's escrow account?
As a rule, the purchase price is paid directly to the seller, often by the buyer or the financing bank. A notary's escrow account is a trust account held by the notary, through which the purchase price is only processed in exceptional cases. This is only permissible if there is a legitimate security interest, for example, if there are several financing banks or if the property is under receivership. Receivership means that the property is being administered by court order, usually in connection with outstanding claims or enforcement measures.

In practice, direct payment to the seller is the norm.

⏳ How long does the transfer of ownership take?
In order for the notary to initiate the transfer of ownership, the following conditions must be met: 
✅ The full purchase price has been paid.
✅ The real estate transfer tax has been paid.
✅ The tax office has issued the clearance certificate.

As soon as the notary has all the documents, they apply for the land registry entry. The land registry office then processes the transaction. How long this takes depends, among other things, on the processing time at the notary's office, the tax office, and the responsible land registry office.

🔑❗️The handover of the keys is not the same as the transfer of ownership. As a rule, only possession is transferred, not ownership.

The most important information at a glance📌
👉 Ownership of the property only arises upon entry in the land register.
👉Signing the purchase agreement enables the priority notice of conveyance and secures the buyer's claim.
👉 After payment of the purchase price, tax payment, and clearance certificate, the notary arranges for the transfer of ownership.
👉 A notary escrow account is only used in exceptional cases.

If you have any further questions, please do not hesitate to contact us. We look forward to hearing from you!