German Prime Retail

Part 8. The Notarial Closing: How German Property Changes Hands

Picture a typical closing: nine o'clock in the morning, a notary's office in Hanover. Seven people sit around a table — the notary, buyer and seller, their two lawyers, the broker and an interpreter — and listen as a €10 million contract is read aloud, clause by clause. No signatures are swapped by e-mail; no escrow agent holds the money. To investors from London, New York or Dubai the ritual can look antiquated. It is, in fact, the visible part of a conveyancing system designed so that neither side has to trust the other: a purchase concluded before a public officeholder, protected by the land register and completed only when the buyer is registered as owner.
Key takeaways
• A contract to buy German real estate is void unless notarised — side agreements included (§ 311b(1) BGB). The notary is an impartial public officeholder, not either party's lawyer.
• The price falls due only once the notary confirms that the buyer's position is secured — above all by a priority notice in the land register.
• Rent and running costs pass on the transfer date agreed in the contract, usually when the price is paid; the buyer becomes landlord only on registration.
• Payment must be made by bank transfer: since April 2023, cash, crypto-assets, gold, platinum and gemstones are prohibited as payment for German real estate and for shares in property-owning companies (§ 16a GwG).

The notary records the whole deal but negotiates none of it

The notary is an independent holder of a public office (§ 1 BNotO) and the impartial adviser of all parties, not the representative of one (§ 14(1) BNotO). He or she explains the legal effect of the contract and makes sure the parties' intentions are recorded unambiguously, but does not negotiate commercial terms, assess the price or the tax consequences, or advise one side against the other (§ 17(1) BeurkG). Each party therefore needs its own lawyer.
The parties' lawyers settle the text of the purchase agreement with the notary once due diligence is complete and the price is agreed. By market convention the buyer proposes the notary; the law contains no such rule. The buyer does, by statutory default, bear the notary's and land registry's fees (§ 448(2) BGB) — fees fixed by statute that cannot be negotiated (§ 125 GNotKG).
The notary circulates the draft in advance. In a contract between a business and a consumer — and a private individual investing their own wealth can count as one — this happens as a rule two weeks before signing, and any shorter period must be justified in the deed (§ 17(2a) BeurkG); between companies, the timing is a matter of agreement.
One rule regularly surprises investors from common-law markets: the notarial form covers the entire deal. Every agreement the parties regard as part of the purchase — a rent guarantee, a side letter on price, an arrangement on fixtures — belongs in the deed. An unrecorded side agreement can leave the whole contract void until the buyer is registered, and a price understated in the deed turns the recorded contract into a sham that is void as well (§§ 117, 125, 311b(1) BGB).

Without a reference deed, reading aloud adds hours to the closing

The deed must be read aloud in the notary's presence, approved and signed by the parties (§ 13 BeurkG). Documents attached to it are part of the deed and, in principle, must be read as well. For a new supermarket the annexes are substantial: the building permit, the lease, site plans and a building specification — in our experience 150 to 200 pages or more in all, against 30 to 35 for the contract itself.
The law provides three reliefs. Maps, drawings and plans are shown to the parties for inspection rather than read (§ 13(1) BeurkG). Inventories and similar lists of items, rights or legal relationships need not be read if the parties waive it; they are presented for inspection instead (§ 14 BeurkG). And the bulky annexes can be placed in a separate notarial deed executed beforehand — the reference deed (Bezugsurkunde).
The reference deed is read aloud once, often to members of the notary's staff acting under power of attorney. The purchase agreement then refers to it, and the parties may waive a second reading — but only if they declare that they know its content, and the notary should proceed only if the reference deed is available at the signing, at least as a certified copy (§ 13c BeurkG, formerly § 13a). That declaration is not a formality: read the reference deed before the day.
Our own experience shows what a missing reference deed costs. At one closing between a top-five German developer and clients of Gordon Real Estate Group, the notary, close to retirement, admitted at the signing table that he had forgotten to have the reference deed executed the day before. The room fell silent. After an hour and a half spent reading the purchase agreement, everyone present sat through a further four hours while the annex — above all the building specification — was read aloud, page by page. Short of postponing the closing, there was no way around it.

Signing binds the parties; registration transfers ownership

Signing creates the obligations; it does not yet transfer ownership. The usual sequence is as follows.
Exhibit 1. The buyer pays only once secured, and owns only once registered
Step
What happens
Legal basis
1. Signing
Purchase agreement and conveyance (Auflassung) declared before the notary
§§ 311b, 925 BGB
2. Priority notice
The notary applies for an Auflassungsvormerkung in the buyer's favour. Once it is registered, any later sale or charge by the seller is ineffective against the buyer
§ 883 BGB
3. Conditions
The notary obtains the municipality's confirmation that it has no statutory pre-emption right or will not exercise it — it has up to three months from notification to decide — plus releases of existing land charges and any other approvals
§§ 24–28 BauGB; contract
4. Due date
The notary confirms in writing that all conditions are met; the price falls due, typically within 10–14 days
Contract
5. Transfer date
On receipt of the price, possession, rent, risk and running costs pass to the buyer
§ 446 BGB and contract
6. Transfer tax
Once real estate transfer tax is paid, the tax office issues its clearance certificate
§ 22 GrEStG
7. Registration
Once the seller has confirmed receipt of the price, the notary files the conveyance; the buyer is entered as owner, becomes landlord by law and steps into the existing leases
§§ 873, 566, 578 BGB
Between steps 5 and 7 the parties agree that rent belongs to the buyer and that the seller passes on anything it receives. Tenants are informed by a joint notice from seller and buyer.

Compliance rules decide how the price is paid and who may buy

Since 1 April 2023 the price for German real estate — and for shares in companies owning German real estate — may not be paid in cash, crypto-assets, gold, platinum or gemstones (§ 16a GwG). The parties must prove the non-cash payment to the notary; without conclusive proof, the notary may file for the buyer's registration only after requesting it in vain and, where a suspicious-activity report is required, no sooner than five working days after making it. A notary escrow account may be used only where the parties have a legitimate need for security (§ 57(2) BeurkG), so direct payment against the notary's due-date confirmation is the norm.
Before signing, the notary, the broker and the banks each carry out their own anti-money-laundering checks and identify the parties and their beneficial owners (§§ 10, 11 GwG). A foreign company buying German real estate must first register its beneficial owners in the German Transparency Register, unless it has already filed them with a register in another EU member state; until it does, the notary must refuse to notarise the purchase (§§ 20(1), 10(9) GwG). Clients resident in jurisdictions on the EU list of high-risk third countries — which has included Russia since January 2026 — are subject to enhanced due diligence. Persons and entities listed under EU sanctions cannot acquire German property at all.

Each side is secured before it performs; title insurance is rarely used

Neither side has to perform on trust. German notaries have electronic access to the land register and see the registered owner, encumbrances and pending applications before the signing. The priority notice protects the buyer against a second sale, against new charges and against the seller's insolvency. The price is not paid until that protection is in place, and the seller is protected by the mirror image: the conveyance is filed only once the price has arrived (step 7).
Behind both stands the public faith of the land register — a buyer may rely on what it shows and acquires good title even if an entry later proves wrong, unless the buyer knew of the error or an objection had been registered (§ 892 BGB). That is why title insurance, standard in the United States, is rarely used in German asset deals.

Implications for investors

1. Put every agreement in the deed, and have your own lawyer check it. An unrecorded rent guarantee or side letter can leave the whole contract void until the buyer is registered, and the notary, as an impartial officeholder, negotiates for neither side.
2. Have the reference deed executed in advance, and read it before the closing. Waiving the second reading requires a declaration that you know its content; at one of our closings, a forgotten reference deed added four hours at the table.
3. Clear the Transparency Register before the notary appointment. A foreign buying company must register its beneficial owners first, unless it has already filed them with a register in another EU member state; until it does, the notary must refuse to notarise.
Before the notary appointment:
• final text approved by your own lawyer, and the reference deed executed in advance — with a copy you have read;
• passports and proof of authority — for companies, current register extracts, apostilled or legalised where required;
• if you will not attend in person: a power of attorney with your signature certified at a German consulate or by a local notary, with an apostille or legalisation as the country requires, because the land registry accepts proof of authority only in notarised or notarially certified form (§ 29 GBO); alternatively, a representative signs subject to your later ratification in the same form (§ 177 BGB);
• Transparency Register entry for a foreign buying company;
• source-of-funds documentation and, where relevant, financing confirmation;
• an interpreter if you do not speak German well enough: the deed must then be translated to you instead of being read, by the notary personally or by an interpreter, and on request a written translation is prepared and attached (§ 16 BeurkG).
Sources: BGB §§ 117, 125, 177, 311b, 446, 448, 566, 578, 873, 883, 892, 925; BeurkG §§ 9, 13, 13c, 14, 16, 17, 57; BNotO §§ 1, 14; GBO § 29; GNotKG § 125; InsO § 106; BauGB §§ 24-28; GrEStG § 22; GwG §§ 10, 11, 15, 16a, 20; Commission Delegated Regulation (EU) 2026/46; Council Regulation (EU) No 269/2014. Legal position as of October 2026.
Photo: Art Lasovsky / Unsplash
This article is general information on German law as of October 2026 and is not legal advice. Every transaction requires its own legal review.
2026-10-09 12:05