Donation Agreements

Hotline: +43–1‑512 28 65–88
 kaufvertrag@nhp.at

..
Gen­er­al | Dona­tion Pro­cessing | Real Estate Trans­fer Tax | Regis­tra­tion Fee | Pro­hib­it on Sale and Encum­brance | Ease­ments | Land Trans­fer | Con­domin­i­um Own­er­ship | Costs | FAQ

Donation Agreements

In real estate trans­ac­tions, it is essen­tial to pro­ceed with prop­er cau­tion. Stat­utory pro­vi­sions may cause unpleas­ant sur­prises, how­ever high the level of trust between the con­trac­tu­al parties may be. From the very begin­ning, a Civil Law Not­ary estab­lishes and provides leg­al clar­ity to all parties involved in order to elim­in­ate any poten­tial surprises.

Set­ting up escrow agree­ments and act­ing as escrow agent is an every­day task for a Civil Law Not­ary. This includes safe­guard­ing the pur­chase price and mak­ing pay­ment the moment the pur­chaser is securely registered in the Land Register thus ensur­ing that both parties to an agree­ment ful­fil their respect­ive obligations.

For gen­er­a­tions, Civil Law Not­ar­ies have been the first port of call for people seek­ing advice in real estate mat­ters. A Civil Law Not­ary provides com­pet­ent advice and ser­vices, includ­ing inter alia:

• Inspec­tion and regis­tra­tions in the Land Register
• Draw­ing up agreements
• Cer­ti­fic­a­tion of the sign­ing of the contract
• Fidu­ciary admin­is­tra­tion of the pur­chase price and addi­tion­ally provid­ing inform­a­tion on the expec­ted costs, as well as regis­tra­tion and dele­tion of liens

Gen­er­al | Dona­tion Pro­cessing | Real Estate Trans­fer Tax | Regis­tra­tion Fee | Pro­hib­it on Sale and Encum­brance | Ease­ments | Land Trans­fer | Con­domin­i­um Own­er­ship | Costs | FAQ
.

Processing of a donation agreement

A dona­tion agree­ment is pro­cessed sim­il­arly to the pro­cessing of a pur­chase agree­ment, but in the absence of cash flow, a fidu­ciary admin­is­tra­tion is nor­mally not required.

The essen­tial details are dis­cussed dur­ing an appoint­ment in which the not­ary advises the parties on the most adequate form of the agree­ment. Fre­quently, the dona­tion agree­ment con­tains con­sid­er­a­tion or secur­it­ies in favour of the donor, such as a lifelong right to use an apart­ment free of charge, usu­fruct, or a pro­hib­i­tion on sale and encum­brance. These must be taken into account when the prop­erty rights of the don­ee are registered. In that case, the don­ee does not acquire unen­cumbered own­er­ship of the property.
Addi­tion­ally, the parties are informed on the tax con­sequences regard­ing real estate trans­fer tax, prop­erty right regis­tra­tion fee, real estate income tax (usu­ally not incurred), tax implic­a­tions of pen­sions, etc. Con­sequences arising from inher­it­ance law, such as the recog­ni­tion of the dona­tion to the inher­it­ance or legit­im­ate por­tion of the don­ees, are also dis­cussed. A draft of the dona­tion agree­ment is drawn up and cir­cu­lated to the parties.

After con­sulta­tion with the parties for the pur­pose of answer­ing remain­ing ques­tions and dis­cuss­ing amend­ment requests, a date on the ulti­mate sign­ing is agreed. On this singing date, the agree­ment is read out and all details are dis­cussed once more togeth­er with the parties. Since dona­tion agree­ments without actu­al trans­fer (which is usu­ally the case) have to be drawn up in form of a Not­ari­al Deed, all con­tract­ing parties must be present at the same time.

In the course of self-assess­ment, the not­ary cal­cu­lates real estate trans­fer tax and prop­erty rights regis­tra­tion fee and trans­fers these fees to the rel­ev­ant tax author­ity in due time.
After that, the neces­sary entries for the exe­cu­tion of the dona­tion agree­ment (prop­erty right of the don­ee, any retained rights for the donor) are made in the Land Register. After suc­cess­ful entry with the Land Register, all parties are informed on the status of the Land Register.

Gen­er­al | Dona­tion Pro­cessing | Real Estate Trans­fer Tax | Regis­tra­tion Fee | Pro­hib­it on Sale and Encum­brance | Ease­ments | Land Trans­fer | Con­domin­i­um Own­er­ship | Costs | FAQ
.

Real Estate Transfer Tax (Grunderwerbsteuer, GrESt)

Both the pur­chase and the dona­tion of real estate, or the acquis­i­tion of real estate on death are sub­ject to real estate trans­fer tax, which gen­er­ally amounts to 3.5 % of the assess­ment base (=pur­chase price). In case of a dona­tion of real estate, an acquis­i­tion (also pur­chase) by a per­son to the bene­fi­ciary fam­ily (Sec­tion 26a of the Act on Court Fees) or in case of an acquis­i­tion on death the gradu­ated tar­iff pur­su­ant to Sec­tion 7 of the Real Estate Trans­fer Tax Act applies.

Accord­ingly, the real estate trans­fer tax amounts to:

• 0.5 % of the assess­ment base for the first € 250,000
• 2 % of the assess­ment base for the fol­low­ing € 150,000
• 3.5 % of the assess­ment base for any­thing extend­ing beyond

A property’s value is determ­ined in three dif­fer­ent ways, chosen at the party’s discretion:

1. flat-rate mod­el
2. real estate price index of Stat­istik Austria
3.  expert opinion

Regard­ing the flat-rate value mod­el, the prop­erty value con­sist­ing of the land value and the build­ing value is determ­ined by means of leg­ally stip­u­lated factors (floor area, land value, gross­ing-up factor, usable area/gross floor area, con­struc­tion cost factor and deduc­tions for age and type of building).
On the grounds of an expert opin­ion, it is pos­sible to prove a lower gen­er­al value of the prop­erty, which can sub­sequently be used as a base for assessment.
The real estate trans­fer tax is gen­er­ally owed jointly by the per­sons involved in the acquis­i­tion pro­cess. In the case of a pur­chase con­tract, there­fore, both the pur­chaser and the seller are tax debt­ors. Regard­ing dona­tions, the donor and the don­ee of the dona­tion are tax debt­ors jointly. With the pur­chase con­tract it is reg­u­larly agreed that the pur­chaser has to pay the real estate trans­fer tax. In order to secure the pay­ment of this tax by the pur­chaser, the lat­ter must depos­it it with the notary’s escrow account.
When a pur­chase or dona­tion agree­ment is pro­cessed by a not­ary, the real estate trans­fer tax is trans­ferred to the notary’s tax escrow account, from where it is trans­ferred to the rel­ev­ant tax author­ity in due time.The not­ary is entitled to self-assess the real estate trans­fer tax. By sub­mit­ting the declar­a­tion of self-assess­ment to the respons­ible tax author­ity, the said author­ity is informed about the acquis­i­tion pro­cess. The self-assess­ment done by the not­ary replaces the noti­fic­a­tion of the acquis­i­tion pro­cess, which forms the basis on which the tax author­ity would first impose the real estate trans­fer tax, and thus con­trib­utes to a swift set­tle­ment of the real estate transaction.

Gen­er­al | Dona­tion Pro­cessing | Real Estate Trans­fer Tax | Regis­tra­tion Fee | Pro­hib­it on Sale and Encum­brance | Ease­ments | Land Trans­fer | Con­domin­i­um Own­er­ship | Costs | FAQ
.

Registration Fee

Apart from the real estate trans­fer tax, which is pay­able to the respons­ible tax author­ity, a so-called regis­tra­tion fee is pay­able on regis­tra­tion of the prop­erty right in the Land Register. This is a court fee to be paid to the com­pet­ent land registry court. The fee amounts to 1.1% of the value of the right to be registered (e.g. pur­chase price).
Accord­ing to Sec­tion 26a of the Act on Court Fees, how­ever, there are, pref­er­en­tial acquis­i­tion trans­ac­tions for which the regis­tra­tion fee is only 1.1% of the tripled unit value, but amount to a max­im­um of 30% of the right to be registered. This includes leg­al trans­ac­tions in the exten­ded fam­ily circle (e.g. the trans­fer of a prop­erty to the spouse, sib­lings, nieces and neph­ews or to the part­ner, if the part­ners have or did have a joint res­id­ence) as well as cer­tain trans­ac­tions under com­pany law (e.g. the trans­fer of a prop­erty due to a merger).

Gen­er­al | Dona­tion Pro­cessing | Real Estate Trans­fer Tax | Regis­tra­tion Fee | Pro­hib­it on Sale and Encum­brance | Ease­ments | Land Trans­fer | Con­domin­i­um Own­er­ship | Costs | FAQ
.

Prohibit on Sale and Encumbrance

The pro­hib­i­tion on sale and encum­brance is a leg­al insti­tu­tion for the pur­poses of a lock-up on properties.
Such a pro­hib­i­tion has the effect that the per­son sub­ject to the pro­hib­i­tion can­not sell (pur­chase, exchange, dona­tion, sale on death and con­tri­bu­tion in kind to a com­pany) or encum­ber (e.g. through a lien or usu­fruct) the prop­erty without the con­sent of the bene­fi­ciary. How­ever, in order not to impair the mar­ket­ab­il­ity of real estate too much, the law provides for the fol­low­ing restric­tion: It can only be invoked against a third party with abso­lute (in rem) effect if it is recor­ded in the Land Register. A pro­hib­i­tion on sale and encum­brance in accord­ance with § 364c ABGB (Aus­tri­an Civil Code) can only be registered if it is agreed between spouses, registered part­ners, par­ents and their chil­dren (includ­ing adop­tees, foster chil­dren and stepchil­dren). A pro­hib­i­tion on sale and encum­brance there­fore only has a real effect if it is registered in the Land Register. In absence of such a regis­tra­tion, an agreed pro­hib­i­tion on sale and encum­brance shall only have man­dat­ory effect.

This means that in the event of a breach of the agreed pro­hib­i­tion, the pro­hib­ited party can­not pre­vent the sale or encum­brance of the land, but can only assert claims for dam­ages against the oblig­ated party. Pro­hib­i­tions of sale and encum­brance are also quite com­mon for con­domin­i­ums and oth­er co-own­er­ship com­munit­ies. The indi­vidu­al min­im­um shares or co-own­er­ship shares may also be pro­hib­ited indi­vidu­ally. It is par­tic­u­larly import­ant to note that the divi­sion of the entire prop­erty remains pos­sible, unless all shares have the same pro­hib­i­tion bene­fi­ciary. In addi­tion, the pro­hib­i­tion in prin­ciple applies only to the encumbered part.

Also between con­domin­i­um part­ners (see Con­domin­i­um for per­sons who jointly own a min­im­um share), a pro­hib­i­tion on sale and encum­brance and can be mutu­ally registered, provided that the part­ners are part of the imme­di­ate fam­ily accord­ing to Sec­tion 364c of the Aus­tri­an Civil Code.

Since, how­ever, a min­im­um share can only be sold or encumbered by con­sent of the oth­er party, such a pro­hib­i­tion also has the effect of an implied waiver of the civil divi­sion of the share. This waiver can only be revoked due to import­ant reas­ons (e.g. a divorce). How­ever, a divorce does not auto­mat­ic­ally lead to a dis­sol­u­tion of the waiver. Fur­ther­more, an implied waiver of divi­sion is gen­er­ally only assumed in the case of a recip­roc­al pro­hib­i­tion on sale and encum­brance. Regard­ing con­domin­i­um, how­ever, the regis­tra­tion can only be made mutually.

In order to register the pro­hib­i­tion with the Land Register, an effect­ive agree­ment between the parties is gen­er­ally required. This may con­sist of an ancil­lary agree­ment (e.g. to the pur­chase con­tract) as well as an inde­pend­ent agree­ment or a test­a­ment­ary dis­pos­i­tion. If the require­ments of Sec­tion 364c of the Aus­tri­an Civil Code are met, it can be entered in the encum­brance sheet of the Land Register. In any case, the not­ar­ised form (cer­ti­fic­a­tions of sig­na­tures, see also cer­ti­fic­a­tions) must be abided by. Once the pro­hib­i­tion on sale and encum­brance has been registered with the Land Register, it not only pre­vents the encum­brance (e.g. through a right of lien or usu­fruct) and sale (pur­chase, exchange, dona­tion, sale in the event of death and con­tri­bu­tion in kind to a com­pany) of the prop­erty, but also pre­vents exec­ut­ive access thereto. This means that the prop­erty can­not be seized in the course of an exe­cu­tion due to a claim by a third party. In addi­tion, in the event of insolv­ency, the prop­erty can­not, in prin­ciple, be used con­trary to the prohibition.

All described pro­ced­ures remain pos­sible, provided that the bene­fi­ciary of the pro­hib­i­tion agrees. This con­sent of the bene­fi­ciary must be doc­u­mented in order to be able to make effect­ive dispositions.

The pro­hib­i­tion is a highly per­son­al mat­ter and there­fore in prin­ciple only binds the bene­fi­ciary and the oblig­or. Accord­ingly, it can neither be inher­ited nor trans­ferred by either party. It also expires if the prop­erty is sold effect­ively (e.g. by con­sent). It there­fore only binds the first own­er. It is also pos­sible to include either only a pro­hib­i­tion on encum­brance or only a pro­hib­i­tion on sale.

Gen­er­al | Dona­tion Pro­cessing | Real Estate Trans­fer Tax | Regis­tra­tion Fee | Pro­hib­it on Sale and Encum­brance | Ease­ments | Land Trans­fer | Con­domin­i­um Own­er­ship | Costs | FAQ
.

Easements: usufruct and right of residence

Ease­ments (or ser­vitudes) rep­res­ent a group of lim­ited, abso­lute rights (rights in rem). In con­trast to a man­dat­ory leg­al pos­i­tion, as is the case, for example, with rent and lease, the per­son entitled to ease­ment is entitled to an abso­lute right (enforce­able against every­one). The par­tic­u­lar con­tent of the law can take on very dif­fer­ent forms. The encumbered party, how­ever, is in any case obliged to either tol­er­ate or refrain from a cer­tain con­duct. If an act­ive “doing” is required, one speaks of a land charge.

A ser­vitude may be acquired in dif­fer­ent ways. In the most fre­quent case, an agree­ment, the so-called Ser­vituts­bestel­lungs­ver­trag, is con­cluded. How­ever, ease­ment may also be based on a test­a­ment­ary dis­pos­i­tion or the law. Ser­vitudes that exist on the basis of admin­is­trat­ive reg­u­la­tions for the pub­lic good are called leg­al servitudes.

Ease­ments to real estate do not take effect until they have been entered in the Land Register. Without regis­tra­tion, an ease­ment only binds the con­trac­tu­al part­ner, but not third parties. For regis­tra­tion, the agree­ment must be sub­mit­ted to the Land Register in cer­ti­fied form (cer­ti­fied sig­na­tures, see Cer­ti­fic­a­tions) includ­ing the declar­a­tion of con­vey­ance. Sub­sequently, the ease­ment is recor­ded in the encum­brance sheet of the serving prop­erty and is made vis­ible on the A2 sheet of the rul­ing prop­erty in case of an easement.

As already men­tioned, vari­ous rights in rem can be sub­sumed under a servitude:
On the one hand, there are ease­ments in which the bene­fi­ciary is a cer­tain per­son, on the oth­er hand there are ease­ments in which a cer­tain “serving” prop­erty is sub­ject to a “rul­ing” prop­erty due to an easement.
With­in the per­son­nel ease­ments it is dis­tin­guished between the right of use (use of an object without infringe­ment of the sub­stance), usu­fruct and the right of residence.
Basic ease­ments are e.g. water pipe rights and rights of pas­ture or tres­pass rights.

The most import­ant ease­ments are described in more detail below:

With­in the frame­work of usu­fruct, the usu­fruct­or is entitled to use the object without restric­tion, just like the own­er, and to col­lect the pro­ceeds (“fruits”) from it. The fruits can be both civil fruits (e.g. rent) and nat­ur­al fruits. He is also entitled to admin­is­ter the object. The own­er may only inter­fere with this right by selling or encum­ber­ing the object. Oth­er­wise, for example, only the bene­fi­ciary may con­clude rent­al or lease agree­ments on the object as long as his right exists.

A right of res­id­ence is gen­er­ally under­stood as the right in rem (abso­lute right) to use hab­it­able parts of a house. How­ever, unlike con­domin­i­um (also see Con­domin­i­um), it does not con­sti­tute a “full right” because it is lim­ited by the own­er­ship of the object. Con­versely, how­ever, the prop­erty is also encumbered by the right of res­id­ence. Depend­ing on wheth­er the right of res­id­ence is only inten­ded to serve per­son­al needs or wheth­er it can also be used to gen­er­ate income without restric­tions, it is either a sub­set of the right of use (right of use for res­id­en­tial prop­erty) or of usu­fruct (usu­fruct on res­id­en­tial prop­erty). Object of the right can be either all or only indi­vidu­al hab­it­able rooms of a build­ing (plus court­yard or garden if applicable).

Ser­vitudes are gen­er­ally not trans­fer­able without the con­sent of the obligor.
In addi­tion to the gen­er­al reas­ons for ter­min­a­tion (such as expiry of time, waiver, etc.), ser­vitudes shall also cease by ter­min­a­tion for good cause, futil­ity, destruc­tion of the dom­in­at­ing or serving object and, in prin­ciple, by lim­it­a­tion. The lim­it­a­tion peri­od depends on the fact that the ease­ment is not exer­cised for thirty years (for nat­ur­al per­sons) or forty years (for leg­al persons).
In addi­tion, a Freiheit­sersitzung (a par­tic­u­lar case of lim­it­a­tion of an exist­ing ease­ment) may be executed in which the oblig­or res­ists the exer­cise of ease­ment for three years and the bene­fi­ciary does not oppose it. Per­son­al ease­ments, such as the right of res­id­ence, also expire upon the death of the bene­fi­ciary (in the case of leg­al per­sons, upon their expiration).
Depend­ing on the reas­on for which the ser­vitude expires, the dele­tion in the Land Register may be neces­sary for the ter­min­a­tion to take effect.
If a ser­vitude is not registered with the Land Register in respect of immov­able prop­erty, but is nev­er­the­less recog­nis­able with a cer­tain amount of atten­tion and is not agreed as a mere man­dat­ory right, then accord­ing to the case law it has abso­lute effect against any pur­chaser of the prop­erty even without registration.

Gen­er­al | Dona­tion Pro­cessing | Real Estate Trans­fer Tax | Regis­tra­tion Fee | Pro­hib­it on Sale and Encum­brance | Ease­ments | Land Trans­fer | Con­domin­i­um Own­er­ship | Costs | FAQ
.

Land Transfer / Land acquisition by foreign nationals

In case the main­ten­ance of agri­cul­tur­al land in Aus­tria is endangered by a real estate trans­ac­tion (a so-called “green land acquis­i­tion”) or if a for­eign nation­al wishes to acquire prop­erty in Aus­tria (“land acquis­i­tion by for­eign nation­als”), a per­mit to guar­an­tee the valid­ity of the leg­al trans­ac­tion may be required in order to pro­cess the transaction.
Since the Land Trans­fer Act in legis­la­tion and enforce­ment falls with­in the com­pet­ence of the fed­er­al provinces, the forms in this field of law may differ.

Land acquis­i­tion by for­eign­ers – using Vienna as an example:
The term for­eign­er refers to nat­ur­al per­sons who do not hold Aus­tri­an cit­izen­ship as well as leg­al per­sons hav­ing their cor­por­ate seat abroad as well as leg­al per­sons hav­ing their cor­por­ate seat in Aus­tria but whose major­ity hold­ers are foreigners.

Exemp­ted from the oblig­a­tion to obtain a per­mit are:

• Spouses/registered part­ners act­ing jointly with one of them being an Aus­tri­an citizen
• In case of a cohab­it­ing con­domin­i­um part­ner­ship in accord­ance with Art­icle 13 of the Aus­tri­an Con­domin­i­um Act 2002, with one of the own­ing part­ners being an Aus­tri­an citizen
• EEA nation­als (nat­ur­al per­sons and leg­al per­sons) and Swiss nation­als (nat­ur­al persons)
• Leg­al trans­ac­tions on death

In addi­tion to that, Ira­ni­an cit­izens who are not gain­fully employed, Swiss leg­al per­sons, as well as employ­ers of par­tic­u­lar, favoured organ­iz­a­tions (such as UNO, OSCE, OFID) may apply for a so-called neg­at­ive cer­ti­fic­a­tion which cer­ti­fies that the leg­al trans­ac­tion is exempt from the oblig­a­tion to obtain a permit.

For­eign nation­als who wish to acquire prop­erty, a build­ing right or an ease­ment in Vienna need to obtain a per­mit to guar­an­tee the valid­ity of the leg­al trans­ac­tion. The applic­ant must provide proof that the leg­al trans­ac­tion is of a social or eco­nom­ic interest. Social interest means that the acquis­i­tion sat­is­fies the indi­vidu­al hous­ing needs of the applicant.
Eco­nom­ic interest means that the acquis­i­tion object is used for the pur­pose of estab­lish­ing, expand­ing or main­tain­ing a business.

“Green land acquis­i­tion” using Lower Aus­tria as an example:
This includes the acquis­i­tion of prop­erty, the grant­ing of usu­fruct on an agri­cul­tur­al and forestry prop­erty or on an asso­ci­ated res­id­en­tial or farm build­ing and, in the case of areas exceed­ing 2 hec­tares, also their stock/other trans­fer as well as leasing.

No per­mit to guar­an­tee the valid­ity of the leg­al trans­ac­tion is required for:

• Prop­er­ties whose cadas­tral area does not exceed 3000 m² proven to the Land Registry court by an affi­davit or pub­lic document.
• Leg­al trans­ac­tions on death (in par­tic­u­lar last wills),
• Leg­al trans­ac­tions between spouses or rel­at­ives or in-laws in dir­ect line, between sib­lings or their spouses, and between uncles and aunts on the one hand and neph­ews and nieces and their spouses on the oth­er hand,
• Leg­al trans­ac­tions with­in two years fol­low­ing an abso­lute divorce, annul­ment or dis­sol­u­tion of the mar­riage for the pur­pose of divi­sion of the mat­ri­mo­ni­al prop­erty or sav­ings; the same applies in the event of annul­ment of the registered part­ner­ship between the then registered part­ners for the pur­pose of divi­sion of the eco­nom­ic prop­erty and savings,
• agri­cul­tur­al and forestry prop­er­ties required by the sov­er­eign admin­is­tra­tion, as pub­lic trans­port facil­it­ies or energy supply,
• Leg­al trans­ac­tions which exclus­ively include, the estab­lish­ment of walk­ing, driv­ing, deliv­ery and pip­ing rights, ease­ments on build­ings and rights of use reg­u­lated by agri­cul­tur­al authorities,
• Leg­al trans­ac­tions in which co-own­er­ship is res­cin­ded or the co-own­er­ship quota is amended while the co-own­er­ship remains valid

In indi­vidu­al cases it is advis­able to request an offi­cial decision accord­ing to which there are no agri­cul­tur­al and forestry areas.

Gen­er­al | Dona­tion Pro­cessing | Real Estate Trans­fer Tax | Regis­tra­tion Fee | Pro­hib­it on Sale and Encum­brance | Ease­ments | Land Trans­fer | Con­domin­i­um Own­er­ship | Costs | FAQ.

Condominium Ownerdship

Con­domin­i­um own­er­ship is the right in rem (abso­lute right) gran­ted to the co-own­er of a prop­erty to exclus­ively use a con­domin­i­um prop­erty (e.g. apart­ment, park­ing space, storage).

The Con­domin­i­um Act 2002 con­tains spe­cial pro­vi­sions in this respect. In Aus­tria, co-own­er­ship is gen­er­ally struc­tured accord­ing to the prin­ciple of quotas. This means that, in prin­ciple, every co-own­er only has an imma­ter­i­al share and no one owns a real part of the object. How­ever, if con­domin­i­um own­er­ship is jus­ti­fied, each con­domin­i­um own­er owns a share of the prop­erty with the right to exclus­ively use a con­domin­i­um part of property.
In prin­ciple, con­domin­i­um own­er­ship is based on a con­domin­i­um own­er­ship contract.
Therein, the rights and oblig­a­tions of the con­domin­i­um own­ers among them­selves, the dis­tri­bu­tion of the indi­vidu­al shares, the asso­ci­ated leg­al pos­i­tions (such as the alloc­a­tion of cel­lar com­part­ments or park­ing spaces) and the dis­tri­bu­tion of prop­erty-related costs between the con­domin­i­um own­ers, are reg­u­lated. As a rule, the con­domin­i­um own­er­ship con­tract is based on a util­ity value apprais­al to be drawn up by a civil engin­eer, which determ­ines the amount of the indi­vidu­al min­im­um shares of the con­domin­i­um prop­er­ties. In order for con­domin­i­um own­er­ship to become effect­ive, it must be registered in the own­er­ship sheet of the Land Register. In order to be registered in the Land Register, among oth­er things, the con­domin­i­um own­er­ship con­tract must be sub­mit­ted to the Land Register in the reques­ted form (cer­ti­fied sig­na­tures, see also Certifications).

The con­domin­i­um own­ers may only dis­pose of the prop­erty as a whole or make amend­ments (e.g. amend­ments in the con­domin­i­um own­er­ship agree­ment) togeth­er. Each con­domin­i­um own­er is only entitled to indi­vidu­ally dis­pose of his own min­im­um share, i.e. encum­ber or sell his own min­im­um share. In addi­tion, every con­domin­i­um own­er is entitled to use the com­mon parts of the prop­erty. For example, stair­cases, elev­at­ors, court­yards, but also com­mun­al gar­dens are con­sidered com­mon parts.
How­ever, agree­ments defin­ing the per­mit­ted use of these parts (user agree­ments) can also be drawn up.

It is also pos­sible for a min­im­um share to be acquired jointly by two nat­ur­al per­sons, thus estab­lish­ing a so-called own­er partnership.
This res­ults in co-own­er­ship accord­ing to ideal quotas (see above) of this min­im­um share. It should be noted, how­ever, that the part­ners’ shares in the min­im­um share can nev­er be encumbered dif­fer­ently or sold indi­vidu­ally. This cir­cum­stance res­ults in a restric­tion on the dis­pos­al of the share, which is sim­il­ar to a pro­hib­i­tion on sale and encum­brance (see Pro­hib­i­tion on sale and encumbrance).

With regard to the man­age­ment of the prop­erty, a dis­tinc­tion must be made between ordin­ary and extraordin­ary meas­ures. In prin­ciple, every con­domin­i­um own­er has the right to man­age the prop­erty. This means that meas­ures may gen­er­ally be taken to main­tain and improve the com­mon parts of the prop­erty. It should be noted, how­ever, that in the case of ordin­ary admin­is­trat­ive meas­ures the (simple) major­ity has to decide. Even in the case of excep­tion­al meas­ures, the simple major­ity decides. In that case, how­ever, any over­ruled con­domin­i­um own­er may request the annul­ment of the major­ity decision in court under cer­tain conditions.

Ordin­ary admin­is­trat­ive meas­ures include the prop­er main­ten­ance of the com­mon parts of the prop­erty (see above) or the adequate insur­ance of the prop­erty. Extraordin­ary meas­ures can include, for example, struc­tur­al changes that go bey­ond simple main­ten­ance (such as an enlarge­ment of the house). In prac­tice, an admin­is­trat­or is often appoin­ted to take admin­is­trat­ive action. This also requires a major­ity decision of the community.
If a con­domin­i­um own­er incurs expenses for the prop­erty (e.g. for improve­ments or main­ten­ance), these are gen­er­ally to be dis­trib­uted among all con­domin­i­um own­ers in pro­por­tion to their shares.

In case of cer­tain ser­i­ous reas­ons, an indi­vidu­al con­domin­i­um own­er may be excluded from the com­munity by a major­ity action. How­ever, this meas­ure is deemed as ultima ratio and is only per­miss­ible in the absence of any oth­er pos­sible solution.

In prin­ciple, con­domin­i­um own­er­ship is inher­it­able, unless it is merely based on a life­time. In this case, it shall cease upon the death of the per­son entitled. In a co-own­er part­ner­ship (see above), the decedent’s share is trans­ferred to the sur­viv­ing part­ner by law (Sec­tion 14 of Aus­tri­an Con­domin­i­um Act 2002) in return for a pay­ment to the estate.

Gen­er­al | Dona­tion Pro­cessing | Real Estate Trans­fer Tax | Regis­tra­tion Fee | Pro­hib­it on Sale and Encum­brance | Ease­ments | Land Trans­fer | Con­domin­i­um Own­er­ship | Costs | FAQ
.

Costs

Acquir­ing prop­erty always involves fin­an­cial efforts.
In addi­tion to the pur­chase price, fur­ther costs incur that have to borne by the pur­chaser, includ­ing land trans­fer tax and regis­tra­tion fees (for regis­ter­ing the prop­erty and a pos­sible lien).
As a rule, the seller is liable for the real estate income tax, which is deduc­ted dir­ectly from the pur­chase price if neces­sary, and under cer­tain cir­cum­stances for the costs of the release from encumbrances.
If, in addi­tion to that, an estate agent was involved in the trans­ac­tion, he is usu­ally entitled to a fee.
In the case of a prop­erty dona­tion, it should be noted that no real estate income tax is pay­able as a mat­ter of prin­ciple. Fur­ther­more, dif­fer­ent tax rates apply to the land trans­fer tax.

The not­ary is also entitled to a fee for draw­ing up the con­tract and for the fidu­ciary admin­is­tra­tion of the pur­chase agree­ment. The amount of this fee depends on the cir­cum­stances of the indi­vidu­al case and is usu­ally agreed in advance by the pur­chaser and the con­tract­or. The essen­tial para­met­ers for the determ­in­a­tion of the fee are: amount of the pur­chase price, require­ment for exemp­tion from encum­brances, debt fin­an­cing, per­mit to guar­an­tee the valid­ity of the leg­al trans­ac­tion, com­plex­ity of the indi­vidu­al case, etc.
In gen­er­al, the notary’s tar­iff is cal­cu­lated in accord­ance with the pro­vi­sions of the Act on Not­ari­al Tar­iffs, unless there is a sep­ar­ate agree­ment. How­ever, it is advis­able to agree on a lump sum, which is based on the pur­chase price of the prop­erty trans­ac­tion, in advance. In most cases a lump sum of 1.5% of the pur­chase price plus cash expenses, fees and VAT will be appro­pri­ate, but the spe­cif­ics of the indi­vidu­al case (in par­tic­u­lar the amount of the pur­chase price, the require­ment for exemp­tion from encum­brances, debt fin­an­cing, a per­mit to guar­an­tee the valid­ity of the leg­al trans­ac­tion etc.) must be taken into account accordingly.

Gen­er­al | Dona­tion Pro­cessing | Real Estate Trans­fer Tax | Regis­tra­tion Fee | Pro­hib­it on Sale and Encum­brance | Ease­ments | Land Trans­fer | Con­domin­i­um Own­er­ship | Costs | FAQ
.

FAQ

What does release from encum­brance mean?
Release from encum­brance means that the prop­erty or con­domin­i­um object that the pur­chaser intends to buy is encumbered in the Land Register, i.e. encum­brances are registered in the encum­brance sheet of the Land Register. That way, a loan that the seller has taken in the pro­cess of his acquis­i­tion, is secured by lien. Pro­hib­i­tions on sale and encum­brance and ease­ments may also be registered. As a rule, the pur­chaser acquires unen­cumbered prop­erty, that’s why the dele­tion of all encum­brances relat­ing to the seller has to be ensured. In his capa­city as escrow agent, the not­ary guar­an­tees that all encum­brances not to be assumed by the pur­chaser are deleted in the Land Register and that the pur­chase price is paid to the seller only after ful­fil­ment of these con­di­tions. The dele­tion of the encum­brances relat­ing to the seller is called release from encumbrance.

What is the pur­pose of a release from encumbrance?
In case of doubt (unless oth­er­wise agreed), a prop­erty or con­domin­i­um object must be trans­ferred free of encum­brances. The release from encum­brances is of utmost import­ance, as oth­er­wise the prop­erty (or con­domin­i­um object) acquired by the pur­chaser remains liable for the seller’s liab­il­it­ies or oblig­a­tions. For example, a bank that has secured its loan by lien in the Land Register can access the prop­erty or con­domin­i­um if the debt­or does not ful­fil the pay­ment oblig­a­tion under the loan agree­ment. It is the task of the not­ary in his capa­city as escrow agent to ensure that the pur­chaser is registered as the own­er with the Land Register free of encumbrances.

Who pays for the release from encumbrance?
The costs of the encum­brance release include the pre­par­a­tion and cer­ti­fic­a­tion of doc­u­ments required for the encum­brance release as well as the cor­res­pond­ing imple­ment­a­tion meas­ures in the Land Register. It may be agreed by the parties who shall bear the related costs. Typ­ic­ally, they are to be borne by the seller, since the neces­sity of the release from encum­brances was also caused by the seller. As a rule, the release from encum­brances of the object of pur­chase is effected at the same time as the regis­tra­tion of the right of own­er­ship, so that no addi­tion­al regis­ter­ing fees are due to the Land Register.
If the repay­ment of a loan relat­ing to the seller is neces­sary as a con­di­tion for the release from encum­brances, the open bal­ance from the trust depos­it (= pur­chase price) will be covered by the not­ary as escrow agent. After the regis­tra­tion of the own­er­ship right, the seller dir­ectly receives only the remain­ing amount (if neces­sary less real estate income tax) upon agreed encum­brance status. In any case, the not­ary in his capa­city as escrow agent ensures that the release from encum­brances from the escrow can be achieved so that the pur­chaser becomes the unen­cumbered own­er of the con­trac­tu­al object as agreed. The escrow agent will only dis­pose of the pur­chase price if the release from encum­brances can be guar­an­teed for the pur­chaser (see Pro­cessing of pur­chase agreements).

What doc­u­ments do I need to bring with me? Which doc­u­ments does the not­ary require for the regis­tra­tion with the Land Register?
The not­ary gen­er­ally draws up all the doc­u­ments required for a smooth pro­cessing. When sign­ing the con­tract, the con­tract­ing parties need to bring an offi­cial photo ID. The pur­chaser must also present an ori­gin­al proof of cit­izen­ship or a pass­port. Please make sure that the photo ID also states your aca­dem­ic degree, oth­er­wise the present­a­tion of the cor­res­pond­ing award cer­ti­fic­ate is also required.
In indi­vidu­al cases, it may be neces­sary to sub­mit fur­ther offi­cial doc­u­ments, for example if a pro­hib­i­tion on sale and encum­brance is to be recor­ded in the land register.

What does it mean if the not­ary acts as escrow agent?
In real estate trans­ac­tions, the not­ary usu­ally acts as escrow agent. The escrow agree­ment is usu­ally a so-called mul­ti­lat­er­al escrow, since the not­ary has to take the interests of dif­fer­ent parties into account.
On the one hand, the escrow agent ensures that the pur­chaser acquires unen­cumbered own­er­ship and that the seller receives the pur­chase price for the con­trac­tu­al object. On the oth­er hand, the escrow agent secures the bank fin­an­cing the pur­chase price by ensur­ing that the lien in favour of the cred­it insti­tu­tion is recor­ded in the Land Register at the desired rank. Only if the interests of all parties are taken into account is it pos­sible to pro­cess the prop­erty trans­ac­tion safely, quickly and smoothly. The not­ary guar­an­tees and is respons­ible for ensur­ing that the interests of each party are adhered to without risk.

Up to which amount is the not­ary insured?
Our notary’s office is insured against liab­il­ity with an amount of EUR 10 mil­lion per busi­ness transaction.

On aver­age, how long does it take to register the prop­erty right?
Real estate trans­ac­tions are handled swiftly in our notary’s office. The prop­erty right is registered by the com­pet­ent land register court upon applic­a­tion of the not­ary and is done in strict chro­no­lo­gic­al order accord­ing to the first come, first served-prin­ciple. The com­ple­tion time of the indi­vidu­al land registry courts is very dif­fer­ent. As a rule, regis­tra­tion can be expec­ted with­in a peri­od of 14 days. How­ever, the actu­al time of regis­tra­tion is not with­in the notary’s sphere of influence.

How many people can buy a con­domin­i­um together?
Con­domin­i­um can be acquired in prin­ciple only by one or two nat­ur­al per­sons togeth­er, or a leg­al entity. An acquis­i­tion by two nat­ur­al per­sons res­ults in co-own­er­ship. The con­domin­i­um part­ners each acquire half of the con­domin­i­um. These half shares can­not be fur­ther divided and may not be sub­ject to dif­fer­ent encum­brances (see also Pro­hib­i­tion on sale and encumbrance).

What is the notary’s fee for pro­cessing the pur­chase agreement?
The notary’s fee is cal­cu­lated in accord­ance with the pro­vi­sions of the Not­ari­al Tar­iff Act, unless oth­er­wise agreed. How­ever, lump sums are agreed in advance, which are based on the pur­chase price of the prop­erty trans­ac­tion. Often a lump sum of 1.5 % of the pur­chase price plus cash expenses, fees and VAT seems appro­pri­ate, but in indi­vidu­al cases a num­ber of factors have to be taken into account when agree­ing on a lump sum. In par­tic­u­lar, the fol­low­ing factors are decis­ive: Amount of the pur­chase price, require­ment for release from encum­brances, debt fin­an­cing, per­mit to guar­an­tee the valid­ity of the leg­al trans­ac­tion, etc. We advise on agree­ing on a set­tle­ment of costs with the not­ary in advance.