Transfer of apartment ownership
March 4, 2010 | 25,00 EUR | answered by Steffan Schwerin
Dear Sir or Madam,
In September of last year, "I" bought a condominium in Berlin. As a self-employed tour guide with an average income of 2000 euros per month, I am not eligible for credit. A loyal gentleman - friend and admirer alike - offered to act as a loan applicant for me. Currently, there are three loans in his name - one for 30,000 euros (with a term of 3 years) and two for 70,000 euros each (with terms of 5 and 10 years). I am officially only a tenant of the apartment and pay 190 euros in utilities and 700 euros in rent per month. The rent payment goes towards repaying the loans. A special repayment is possible once a year, and I also cover this amount of 8,500 euros.
Supposedly, I am listed as the owner of the apartment in the land register. However, I have requested some form of written security as I have already invested around 20,000 euros in renovations. Additionally, my "business partner" is getting divorced soon, and his soon-to-be ex-wife is not very friendly towards him. In other words, there is currently a battle over real estate and other assets of value. I do not want to be in the unpleasant situation of losing the shares I have paid for in the apartment or having to give up the apartment itself if something unforeseen were to happen to the gentleman.
In addition to acting as a loan applicant, the aforementioned gentleman has gifted me 70,000 euros and provided another 70,000 euros as an interest-free loan. He wishes to have this amount repaid within the next 20 to 30 years, either for his own use or to pass on the claim to his three daughters. (The gift amount can be disregarded as it comes from unofficial sources and was also accepted as an unofficial payment during the purchase of the apartment. The loan amount will be largely declared by the gentleman for tax purposes, as he enjoys certain benefits and allowances for renovation work on "his" apartment.)
Now, we both face the dilemma of wanting something in writing to secure our agreement but not wanting to compromise ourselves with the state and tax authorities. After the divorce, the gentleman will have relatively little of his pension and income from existing property ownership left. The option of a lease-purchase is not feasible, nor is inheritance in the event of death, as I would likely not be able to afford the inheritance tax. Additionally, a will can be amended at any time.
Now, my questions: What should a contract look like that secures both of us? Me for the 20,000 euros already paid as my own contribution, as well as the accumulating repayment installments, and him for the incurred costs of renovation and refurbishment, i.e., the aforementioned 70,000 euros interest-free loan? (I have taken out a life insurance policy for the benefit of my son.
Dear Questioner,
I will answer the questions you have asked taking into account the circumstances described and your input as follows:
Question 1: What should a contract look like that protects both of us?
This is not a simple matter. A comprehensive contract would need to be drawn up. However, if you are already registered as the owner, there may not be an issue of securing the condo for your friend before a legal battle.
Question 2: For the 20,000 € already paid as your own contribution, as well as the accumulating repayment installments, and for the costs invested in renovation and reconstruction by him, totaling the aforementioned interest-free loan of 70,000 €? (I have taken out a life insurance policy for the benefit of my son. In the event of my death, he should have the right of first refusal.)
It needs to be clarified that you are indeed the owner. Regarding the payments, they must be interpreted as loans. Then the repayment must be regulated. If there are any claims from your friend on the apartment, it must be arranged that your son has a right of first refusal.
Question 3: Is it possible to officially transfer the apartment to me after paying half of the loan amount? In 2012, the first loan will be repaid and thanks to a building society loan in 2014, the second loan will also be repaid. There will be a remaining debt of approximately 50,000 € to the bank. At that point, I would like to refinance and take over the whole matter myself.
If the apartment does not belong to you yet, it can be arranged that the apartment will be transferred to you at the desired time and you will be registered in the land register. However, first it must be clarified whether you or your friend are still listed as the owner.
Question 4: Would you be willing to take on the drafting of such a contract and if so, at what cost?
I would be happy to draft such a contract. However, there are high costs associated with this. The costs typically depend on the financial value behind the matter. Given the amounts mentioned, the condo is likely worth around 170,000 €, plus the 20,000 € for the renovation, totaling 190,000 € for cost calculation purposes. Therefore, according to the Lawyers' Remuneration Act, the legal fees would be around 2,800 € gross.
However, it may be possible to use a lower initial value, reducing the costs to around 1,000 €. Below this amount, it is not possible to proceed.
I must finally point out that this platform cannot replace detailed and personal legal advice. The aim is solely to provide an initial rough assessment of your legal problem based on the information you have provided to a lawyer. The legal advice I provide is based solely on the information you have provided. By adding or omitting relevant information in the context of describing your situation, a completely different legal assessment may result.
I hope I have been able to give you an initial overview and that my explanations have been helpful. Please feel free to contact me through the follow-up option on this platform.
Furthermore, I am of course available for representation. I would credit the initial consultation fee you have paid in full.
A greater distance between lawyer and client is generally not a problem. With the help of modern communication tools such as email, mail, fax, and telephone, representation is also possible.
Best regards,
Steffan Schwerin
Lawyer
Law Firm Steffan Schwerin
Golmsdorfer Straße 11
07749 Jena
Tel.: 03641 801257
Fax: 032121128582
Email: raschwerin@raschwerin.de
Website: www.raschwerin.de
