IAG Real Property Group Questionnaire AUSTRIA:
Q1. What type of ownership can I have? (e.g. of land and buildings, apartments. Whether the land and buildings on the land have to be owned by the same party. Is title freehold or leasehold?)- Freehold ownership (“Eigentum”): The owner of the land is by law the owner of the building
- In general land and buildings on the land are always owned by the same party. The exceptions are:
-Buildings erected on land owned by another person (“Superädifikat“): the building is erected temporarily on the land owned by another person usually under a lease.If the lease is terminated, the building has to be removed or ownership transferred to the landlord.
- Ownership of residential apartments; shares in specific property (e.g. apartment, office or parking space) can be co-owned and the owner of these co-owned shares has the sole right to use that property.
Q2. What structures are commonly used to buy or invest in real property? (e.g. property companies, partnerships, real estate property companies, private individuals)
Private individuals usually buy real property in their own name. Several individuals can buy as proportional owners in common or in fractional shares,
All legal forms of companies can own real property. There is no commonly used structure. Where a company owns real property, its shares may be transferred according to the laws applicable for that company.
Q3. How can I finance the purchase? (i.e. What are the most common forms of security granted over real property to raise finance?)
The mortgage (Hypothek) is the most common form of security granted to raise finance.
Q4. Are there any restrictions on foreign ownership or occupation of real property or on foreign guarantees or security ?
Depending in which Province of Austria the property is situated, the sale and transfer of real property ownership, including leases, are subject to approval under the rules of the Land Transfer Act of the specific Province.
-agricultural and forestry real property: in principle the approval of the Land Transfer Authority (“Grundverkehrsbehörde”) is needed to transfer ownership;
-building land: in principle no prior approval is needed, if the buyer is a citizen of Austria or the European Union. However every Province’s Land Transfer Act contains different restrictions (e.g. the Land Transfer Act of the TyrolProvincestipulates that every purchase of real property has to be notified to the competent Land Transfer Authority and can made conditional on the buyer having his principal residence at the property).
-Some Land Transfer Acts stipulate that no title of ownership can be registered in the Land Register without the prior approval of the competent Land Transfer Authority.
Q5. What costs are normally paid by the buyer and by the seller?
The costs of the purchase agreement are usually payable by the buyer. The costs are negotiable among lawyer and client (costs vary between 1% to 1.5% of the purchase price).
The seller usually pays the costs of notarisation.A standard rate is stipulated by law. Based on the purchase price the minimum payable is € 21.00 up to a maximum of € 134.90 for one signature. Further signatures are charged at half of the fee. Costs of notarisation can be negotiated with notary. Stamp duty of €13.00 is payable by the contract parties (usually paid by the buyer).
Q6. What taxes are payable on the sale and purchase of real property and by whom? What are the rates? (e.g. VAT , stamp duty, transfer tax, real estate tax?)
Land Transfer Tax (Grunderwerbssteuer, GrESt) is payable at the standard rate of 3.5%; Where the buyer and seller are closely related (e.g. parents and children, husband and wife (even where divorced) there is a preferential rate of 2%. The tax is calculated on the payments made by the buyer (e.g. purchase price and any other obligations such as acceptance of mortgage); Where there is no such payment, the tax is calculated on the value of the real property.
Fees for registration in the Land Register
-for filing the application €38,00
-for registering buyer’s title: 1,1 % of the taxable base of GrESt.
No VAT is charged for the transfer of real property; However the parties can choose the subject the transaction to VAT.
Speculation tax is payable by the seller and depends on the seller’s income tax rate.The taxable basis for speculation tax is the difference betweenthe costs of acquisition, plus expenses attributable to the property (e.g. renovation) on the one hand and sales price on the other hand;
No speculation tax is payable after ten years or after two years is if the property served as the seller’s principal residence.
Q7. What are the main stages and documents in the sale and purchase of real property? (e.g. Are there pre contractual negotiations, heads of agreement, non binding letters of intent, term sheets, memorandum of understanding, sale contract completion/transfer? Answer in short bullet points)
-check of the Land Register (who is the owner, what are the encumbrances?)
-check planning and building permission, existence of residual wastes, defects of the building, tenancy agreements
-draft purchase agreement (attorneys may be involved)
-negotiation of the purchase agreement (attorneys may be involved)
-notarization of the purchase agreement (notarization is compulsory)
-registration of apriority notice of conveyance (Ranganmerkung) in the Land Register
-payment of the purchase price (directly to the vendor or to a attorney trust account). The payment date is stipulated in the contract, and the right of possession passes to the buyer commercially but not legally
-payment of the tax on acquisition of real estate by the buyer and obtaining all outstanding conditions, approvals and declarations
-registration of the transfer of property into the Land Register (which can take several months)
Q8. When are the parties legally bound?
When the purchase agreement has been concluded. Although the agreement can be concluded orally, a written purchase agreement, signed by the parties and notarized, is required in order to register the buyer’s title in the Land Register (Modus).
Q9. When is title to the property transferred? What are the formal legal requirements? (e.g. in writing and signed by the parties? Notarised?
Title passes when the buyer is registered as owner on the Land Register.
Registration requires:
-a notarized purchase agreement
-seller’s declaration stipulating the transfer of ownership (Aufsandung) which may be included in the purchase agreement or declared in a separate deed.
-a clearance certificate of payment of the tax on acquisition of real property issued by the tax authorities
-in certain cases official authorizations from public authorities (eg. Land Transfer Act)
The registration of the transfer of ownership in the Land Register takes place several months after signature of the purchase agreement. Meanwhile in order to protect the buyer’s rights, a priority notice of conveyance may be entered in the Land Register. However, all benefits, burdens and risk are transferred to the buyeron the date specified by the buyer and seller.
Q10. Does the seller have any statutory or other liability to the buyer after the sale of the property?
The seller is liable if he transfers the real property with legal or material defects. A material defect occurs when the property is not suitable for the agreed or customary use. A legal defect occurs when third parties can assert any rights, other than those included in the purchase agreement, against the buyer.
The seller of a building less than 10 years old has to provide an Energy Performance Certificate (for Buildings) (Energieausweis) to the buyer. If the seller fails to provide this, the building’s average energy efficiency is calculated based on the building’s age. If the building fails to achieve this the buyer can claim damages against the seller.
Private sellers usually exclude liability for material defects in a sale of used buildings and are only liable if they have hidden known defects or have given guarantees to the buyer.
Such liability cannot be completely excluded in purchase agreements between professional sellers and private individuals.
14.02.2011
Franz Mittendorfer