Purchase of owner-occupied condominium - financing process

Good day everyone,

I am new to the forum and have already read through numerous posts, but have not yet found answers to my questions, hence this new post. If there is already a similar post, please feel free to let me know.

As a starting point: I (late 40s) have received an offer from my current landlord to purchase the apartment I am currently living in from him. The apartment is located in the Frankfurt (Main) area, is about 55m2 in size, and is supposed to cost 255K EUR including a garage space and a parking space. The building was built in 2004. There are 8 parties, mostly already owner-occupied by the owners themselves.

I will probably do the financing through Hüttig & Rompf. A preliminary discussion has already taken place and also a positive statement from the advisor that everything should work out with the financing based on the data provided. The plan is to contribute 30K EUR to the financing (meaning the financing would amount to 225K EUR) and to cover the incidental costs (property transfer tax and notary) from own funds.

Since I am an absolute beginner in this area, could you please help me with the procedure of the whole process? The sale of the apartment is supposed to take place on 1.12.2021.

1) My landlord wants to send me the documents concerning the house and the apartment in the next few days, as well as a draft of the notary contract. I will then send these documents to the advisor. How long will obtaining a financing confirmation take approximately (preliminary check has already taken place as mentioned), or in other words: does it make sense to send the advisor ahead now or is it still too early considering the sale should only take place on 1.12.?

2) The financing should be in place by the time of signing the notary contract. What exactly does this mean, i.e. which documents do I need from the bank for this?

3) How exactly do the payments proceed then? Does the notary contact the bank after the notary contract has been signed or do I do that? How is my own contribution to the financing handled? I assume the notary will name an account to which I have to transfer the money? Approximately how long after the notary contract will this be?

4) When will the remaining invoices approximately come, i.e. the invoice for the notary fees and the tax assessment for the property transfer tax? Do these only come with/after the entry of the transfer of ownership in the land register? I am asking because a large part of my own funds is still invested at the moment, and I would therefore like to know whether these two items will be due this year or only at the beginning of next year? Can this be estimated? Of course, no one can say exactly since it depends on the notary and the tax office, but what are your experiences regarding this?

5) Are there any other useful tips or hints for the purchase of a condo that you would like to share based on your own experiences?

Thank you very much in advance!! Tinterho

Take care of scheduling a notary appointment in time.

How long is it expected to take to obtain a financing confirmation (the preliminary check has already been done, as mentioned), or in other words: does it make sense to send the advisor out now already or is it still too early considering that the sale is only scheduled for 1/12?

If you have decided to purchase the apartment, as it seems, then you should apply for financing quite promptly. Processing the documents can take several weeks.

2) The financing should already be in place for signing the notary contract. What exactly does that mean, i.e. which documents do I need from the bank for that?

If the financing is settled by then, you have the advantage that during the notarization of the purchase contract you can also arrange the mortgage registration with your financing bank at the same time, so you save yourself at least a second appointment (only in terms of time, not financially).

3) How exactly do the payments proceed? Does the notary contact the bank after the notary contract has been signed or do I do that? How is my own contribution to the financing handled? I assume the notary will give me an account to which I have to transfer the money? Approximately how long after the notary contract will that be?

The due date for the purchase price is fixed as a date in the purchase contract. As soon as the conditions for the payment of the property at the specified date are met, you will receive the notice of due payment for the purchase amount from the notary.

We then forwarded the notice to the bank. The bank transferred part of the amount to the bank account specified in the purchase contract of the financing bank because the seller still had a mortgage registered there, and paid the remaining part of the loan directly to the seller. The "rest," which we had initially indicated as equity towards the purchase price, we then had to transfer directly to the seller.

4) When will approximately the remaining invoices arrive, in other words the invoice for the notary fees and the tax assessment for the real estate transfer tax? Do these only arrive with / after the registration of the ownership transfer in the land register?

As far as I remember, the very first thing to come is the notification from the tax office regarding the real estate transfer tax, and this is also due promptly.

I also think that the invoice from the notary for the conveyance and mortgage registrations came relatively promptly, at least before the registrations were completed. Only the invoice from the land registry office came once the entire procedure was finished.

5) Are there any other useful tips or advice for purchasing a condominium that you would like to share based on your own experiences?

I would have the minutes of the homeowners’ association meeting given to me and check whether there is any planned investment in the building in the near future that would have to be covered by a special assessment.

Make sure to arrange a notary appointment in time.

That is handled by the seller. Since he has also sold the other apartments in the building, he has a notary he works with for the sales. But thanks for the hint!

If you have decided to buy the apartment, as it seems, then you should apply for the financing fairly soon. The processing of the documents can take several weeks.

All right, then I will initiate it promptly.

If the financing is in place by then, you have the advantage that at the notarization of the purchase contract you can also handle the registration of the land charge for your financing bank, so you at least save yourself a second appointment (only in terms of time, not financially).

True, that is a good tip. I will have to clarify with the notary that we do that in the same appointment.

The purchase contract records the due date of the purchase price as a deadline. As soon as the conditions for payment of the property at the specified time are met, you will receive a payment notice for the purchase amount from the notary.

We then forwarded the notice to the bank. The bank then transferred part of the amount to the bank account of the financing bank listed in the purchase contract, because the seller still had a land charge on it, and the remaining part of the loan directly to the seller. The "rest," which we initially specified as equity toward the purchase price, we had to transfer directly to the seller.

I see. Then I will check what is stated there when I receive the draft of the notary contract.

As far as I remember, the very first thing that comes is the notice from the tax office, i.e. for the real estate transfer tax, which is also due promptly.

I also think that the invoice from the notary for the conveyancing and land charge registrations came relatively promptly, at least before the registrations were completed. Only the invoice from the land registry office came when the entire process was completed.

Ok, then I will plan accordingly.

I would have the minutes of the condominium owners’ meeting provided and check whether any investment in the building is planned in the near future that has to be paid with a special assessment.

Good tip!!

Great, many thanks! That helps me a lot.

Best regards,
Tinterho

That is handled by the seller. Since he also sold the other apartments in the building, he has a notary he works with on the sales. But thanks for the tip!

What is the amount of the maintenance reserve fund? Or if the property previously belonged to an owner occupant: Is there even a maintenance reserve fund?

Do you know the reasons for the sale of several apartments in the property? FFM; built in 2004; 55m² all sounds like an attractive investment property at first. You should at least ask that question.

The tax base and thus the real estate transfer tax can be reduced by a few hundred euros by specifying the amount of the maintenance reserve fund and other movable equipment of the condo (e.g. taking over a kitchen).

Remember that the notary requires proof of payment of the real estate transfer tax from you.