What you should bear in mind when buying a let property
For instance, existing tenancies are often addressed insufficiently. This is not without risk for buyers because, according to a provision in the German Civil Code, they enter into the rental agreement. The rental agreement is continued with the buyer as the new owner. It is therefore important for the buyer to know about existing tenancies and potential conflicts with the tenants. In order to avoid disputes ranging up to claims for damages between sellers and buyers, the handling of tenancies must therefore always be governed in the notarized purchase agreement. Liability issues can often arise when ownership changes - notably in connection with the deposit paid by the tenant.
By contrast, if the buyer and seller are in agreement that the property must be transferred without a tenancy, the purchase contract should include an agreement that vacation of the property by the tenant is a prerequisite for payment of the purchase price. However, sellers should also not in turn commit themselves to evict the tenant overly quickly, but rather only when the effective termination of the rental agreement is legally possible and the timely vacation of the property by the tenant is ensured.
Particular care is required if a rental contract is terminated on the grounds of own needs. Once a purchase agreement has been signed, the seller no longer has a right to terminated the rental agreement on the grounds of own needs because any own needs are null and void as a result. Conversely, buyers do not yet enter into the rental agreement with the signing of the purchase agreement. This only happens once the ownership is transferred in the land registry. Only then (potentially some weeks or months later) can buyers then legally terminate the rental contract on the grounds of own needs. The termination can be subject to blocking periods of three years, and in extreme cases of even ten years.
In the case of let apartments, there is another peculiarity: If an apartment was first let and then only established as a condominium afterwards, the tenant can be entitled to a right of first refusal. The notary public will then recommend an agreement in the contract which states that the buyer only has to pay the purchase price once it is ensured that the tenant will not exercise his/her right of first refusal.
Dr. Herbert Buschkühle is an attorney-at-law/tax advisor/notary public/ specialist attorney for tax law/ specialist attorney for inheritance law at PKF WMS Dr. Buschkühle PartG mbB Rechtsanwälte Steuerberater, a co-operation partner of PKF WMS Bruns-Coppenrath & Partner mbB Wirtschaftsprüfungsgesellschaft Steuerberater Rechtsanwälte (member company of the PKF network).