Handle property purchase through a notary escrow account?

A friendly hello to everyone.

A private investor has purchased an undeveloped building plot & intends to have it developed soon. Building ground investigations have already been conducted. The development plan is in place & all other official permits have also been obtained.

There are 6 plots of land, and we have fallen in love with one of them.
Since we were the first & have been interested in this plot for a long time, the seller is talking to us first.

As mentioned above, it is currently still undeveloped.
Now our idea is to acquire the said plot & initially only pay the amount for undeveloped land and pay all other amounts depending on the development status.

The seller would like to have part of the money now so as not to have to finance the entire development.

Would the notary escrow account be suitable for this, or are there other options?

We would prefer to buy the developed plot first, but the demand for plots is enormous & our fear is that someone else will buy undeveloped first.

We will make an appointment with the notary next week & will explain the situation there.

Many thanks & best regards.

The seller would like to have part of the money now, so as not to have to fully finance the development costs.

Would the escrow account at the notary be suitable for this, or are there other options?

Good evening.

Wanting money, having a legal claim to money, and actually having money in the account are three different things :)

The seller’s (S.) wish is understandable – but dangerous for you.

With the notary escrow account, the notary holds third-party money; it is only parked there (and for this reason, it doesn’t help the seller at all at first, since he cannot access it until the release has been granted). The money on the escrow account is contractually secured in the internal relationship to you by a trust agreement; it may only be used for the intended purpose. A feature of every trust relationship is that (theoretically) the legal ability of the notary goes beyond his legal authorization. Notaries are only human and have also run off with other people’s money before (which is not (!) the usual case).

The escrow account only protects the seller from the liquidity risk on your part; the money is there, but he cannot access it. The escrow account also offers some protection in the event of the seller’s insolvency; however, the insolvency administrator of the seller could still include it in the insolvency estate – but then has to fulfill the contract. And: There is a withdrawal fee for the escrow account.

If the notary himself falls under insolvency proceedings, you are at least protected by Section 47 of the Insolvency Code, since it is third-party money (not owned by the seller) and therefore the right of separation (exclusion from the insolvency estate of the notary) can be asserted.

Alternative: Possibly a priority notice of conveyance; with that, you already have one foot in the land register door, but you are not actually inside yet.

Under no circumstances transfer anything unsecured into the blue in advance!

In short: An advisory appointment with the notary is definitely the right step. The advising notary might then no longer be allowed to notarize due to a conflict of interest, which should therefore be clarified in advance.

Soil investigations have already been carried out.

Not your question, but a note: You can refer to the soil report for the general area when buying, but when the time comes, you should have a separate individual report made for your house/your plot.

It was similar for us

The notarized contract was for a fully developed plot of land with payment in 3 installments depending on the development status.
The notarized contract precisely defined when each installment was due (e.g., 1st installment after 14 days, 2nd installment upon construction site connection of all utilities up to the endpoint on the property, etc.).

Hello Otus11- Thank you very much for your response.

I also understand the approach of the V.
But as you said, it also entails risks for us.
My concerns are simply that if the undeveloped amount (approx. €35,000) is paid by us, he might then file for personal bankruptcy for various reasons & the money is lost for the time being....

The second scenario would be that the V still has to sell 2-3 plots in order to then (liquidity) have the building plots developed - in other words, we are dependent.

On Friday morning we have an appointment at the notary.

I have now come to the point where I say the V should develop first & then he gets the money.
Even at the risk that the plot is sold to someone else.

Hello Yvonne.

Thanks to you as well :).

For the entire construction site (6 plots), 6 drillings were carried out, the first drilling was done on our preferred plot, but I still don't know if the drilling was done exactly at the spot where the house is supposed to stand later.

All 6 drillings have the same characteristics, which is not wrong at first and almost excludes big surprises. But the unexpected often comes after all :D