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Real estate law in Austria in general is a complex field of law. The acquisition, ownership, use and development of real estate in Austria are governed by federal law and federal jurisdiction. Depending on the type of contract, the Austrian Civil Code (CC, Allgemeines Bürgerliches Gesetzbuch), the Austrian Tenancy Act (TA, Mietrechtsgesetz) or the Austrian Flat Freehold Code (FFC, Wohnungseigentumsgesetz) are applicable.
Ownership
There are legal restrictions on the acquisition of real estate in Austria for foreigners in respect of agricultural land. Since Austria is a member of the EEA and the EU, citizens of the Member States of these organizations are treated equally to Austrian citizens. All 9 Austrian provinces have enacted regulations under which the acquisition of real property is bonded to special requirements and subject to approval by the Land Transfer Authorities (Grundverkehrsbehörden). These regulations vary from province to province.
Real Estate Rights
There are various rights over land under Austrian real estate law. Apart from ownership, the main rights are real servitudes/personal servitudes, mortgages, the right of pre-emption of the property and the ownership of buildings erected on land owned by another person. There is also the prohibition of subtracting from & realization of the property.
A registered real servitude (e.g. right to drive over real estate) is connected to the property itself. The beneficiary of such a right is always the owner of the real property for which the servitude is registered. Personal servitudes (e.g. the right of enjoyment of fruits and benefits, right of abode) are linked to the person as beneficiary. These rights are terminated (unless otherwise agreed) with the death of the beneficiary.
Registered rights also bind the successors of a real estate property; whereas unregistered are purely contractual as the rights only exist between the parties.
System of Registration
All private as well as state-owned land in Austria has to be registered. All rights over land are required to be registered in order to be effective. In general, it is possible to create these rights through contractual agreements only (e.g. to save on the registration fee of 1% of the purchase price), but the enforceability of these rights is dependent on their registration. Therefore, registration of these rights is not compulsory but necessary in order to obtain and constitute full legal protection.
In Austria, there is no state guarantee of title. Generally a bona fide 3rd party can rely on the correctness and the completeness of the recording in the land title register.
No right over land as such is compulsorily registrable. But in order to implement and enforce claims based on these rights against third parties, a registration of these rights is inevitable.
It is common to register a real estate pledge only, if the loan payments are not served or if there is a danger that other creditors might request a judicial mortgage. The later registration then maintains its rank with respect to other creditors.
Pursuant to the Civil Code, 2 requirements for the acquisition of real estate property are necessary, namely the creation of a title (e.g. purchase contract or donation) and the registration of this acquisition of property in the land title register (Grundbuch). Upon registration of the deed, the ownership of real estate is transferred to the buyer.
In general, Austrian real estate law is governed by the principle that earlier rights defeat later rights. Therefore, prior registered rights have priority over subsequent registered rights and registered rights prevail over unregistered rights. Each submission to the land registry receives an individual successive number which corresponds to its rank.
In a real estate transaction, a time gap between closing and signing might occur (due to finance issues, closing conditions, the repayment of earlier mortgages etc). Meanwhile, in order to secure the buyer's position, the seller may request a court-issued order of precedence (Rangordung) for acquisition. Such an order of precedence is registered and may only be granted for a maximum duration of 1 year. Within this 1 year, the buyer may request the registration of his right in the earlier rank of the order of precedence, superseding registrations of a later rank.
Upon registration of a mortgage, the owner may request an order of precedence which follows principles similar to those explained above. Such an order of precedence for a mortgage triggers a fee of 0.6% of the maximum value of the mortgage.
The Registry / Registries
Rights in connection with real estate (e.g. ownership and mortgages) are recorded in the land title register which is operated by the District Courts (Bezirksgerichte). The rules and requirements for registration are the same throughout Austria; there is only one real estate registry.
The land title register is open to the public and everybody has the right to access the register. The information on real estate ownership can also be accessed from the electronic register. Registered users of this service (mostly lawyers and notary publics) are able to request and obtain online excerpts of the land title register.
The District Courts are only obliged to verify the requirements for registration as such (the title and the drawn up deeds here over and other required documents). In the course of registration, the courts are not obliged and moreover not even authorized to scrutinize the substantive correctness of the presented deeds. Since the registration procedure is very formal and only executes applications of the parties, mistakes that would cause liability on the part of the responsible courts are very rare. However, if such a mistake should cause any damage to a party, the initiation of special proceedings against the responsible district is possible, together with a special action for cancellation of the registration.
As the presentation of the deeds and documents is necessary for registration, the buyer can generally obtain all information he typically needs regarding encumbrances and other rights affecting real estate. The buyer is additionally recommended to turn to other various (governmental) authorities for full due diligence and to visit the spot.
Selling and purchasing agents (or realtors)
On the seller's side, the agent's responsibility is to put together all information necessary for the description of the property and the calculation of the purchase price and to address the potential group of buyers. On the buyer's side, the agent helps to find corresponding properties on the market and to asses whether an offer is reasonable. An agent might also be involved by both parties as an independent agent or mediator in order to facilitate the negotiations to close the transaction.
Lawyers
Acting for a party, a lawyer will draft and negotiate the sale and transfer agreement and advice with regard to potential risks (e.g. superseding tenant rights, third party rights, public restraints and obligations, environmental and tax matters etc). As the buyer only acquires title by registration, an escrow procedure will be followed in order to secure the buyer against the bankruptcy of the seller after the payment of the purchase price and before registration. As a trustee, the lawyer will be mandated by both the seller and the buyer, with the obligation to collect the purchase price, proceed with the registration and release the purchase price to the seller upon registration.
Notaries
For registration purposes, the seller must sign the transfer agreement in front of the notary public.
Surveyors
Surveyors may be retained to provide a survey of the property for the exact determination of the size of the property. The surveyor may also correct the borders of the property defined by the registry, which might not always correspond to the actual borders.
GOWEALTHY.COM © 2008
For comments: editor@gowealthy.com
Source: www.iclg.co.uk
