Selling apartment with tenant: What to consider

Selling a rented apartment is a complex undertaking. After all, many factors have to be taken into account, from finding a buyer to legal requirements. Above all, the tenants play an important role. The sale of an apartment does not necessarily mean that existing tenancies may be terminated. We will now take a closer look at what needs to be taken into account.

Termination protection: Purchase does not break rent

A sale of the apartment does not necessarily mean that the rent is broken. On the contrary, the existing lease agreements must be honored by both parties even after the apartment is sold. This is stipulated in the Civil Code. This means that the new owner must adopt the terms of the lease. The tenant continues to have the right to quiet and undisturbed possession of the apartment as long as he makes his rent payments and complies with the terms of the lease.

However, it is important that the landlord informs the tenant about the planned sale and gives him a reasonable period of time to inspect and prepare the apartment. The tenant should also be informed about the new owner and, if necessary, sign a new lease.

In summary:

• § 566 BGB: Purchase does not break rent
• Buyer takes over rental agreements
• Condition: Tenants continue to make rent payments
• Landlord must still announce sale

Right of first refusal for tenants

If it is not just a single apartment that is being sold, but a complete apartment building that is being divided into individual co-ownership shares, the tenant enjoys a right of first refusal. This is a protective mechanism designed to prevent him from having to move out of the apartment without warning after a successful sale. With the right of first refusal, the tenant can buy the apartment and now becomes part of the resulting condominium owners’ association.

The most important facts about the right of first refusal:

• When apartment building is divided into individual apartments
• Right of first refusal protects tenant from moving out
• Becomes a member of the homeowners association

You can find out here what other special features need to be taken into account in this case:

• Apartments for sale individually

The expensive alternative: a lease termination agreement

The tenancy cannot therefore be terminated unilaterally by the new owner without sufficient justification. However, the owner has the option of offering the tenants a lease termination agreement and granting them an attractive severance payment. In this contract, an eviction period for the rented apartment is agreed upon, which is independent of the legal regulation. This allows the tenancy to be terminated by mutual agreement.

Right of the landlord to inspect

Whether it’s a maisonette or a micro apartment – if you want to sell your apartment, you are legally allowed to hold viewing appointments. These are important to show and present the apartment to potential buyers. However, the landlord does not have unlimited rights to visit. He must respect the tenant’s privacy and may not conduct viewings too frequently or at unreasonable times.

For this reason, you should arrange any viewing appointments with your tenants in good time. In addition, you must state the purpose of the viewing so that the tenant can see the time and space involved. Although the landlord is generally entitled to a right of inspection prior to the sale of the rental property, the tenant does not have to allow an infinite number of inspections. According to current case law, inspections once a week are considered reasonable.

Right of inspection of the landlord declared:

• Conducting surveys allowed by law
• Agreement with tenant indispensable
• Once a week possible
• Naming the purpose of the visit

Owner-occupier: termination in the event of owner occupancy

If a landlord wants to sell his apartment, he may not simply terminate the tenant’s lease. However, there is one exception: If the landlord needs the apartment for himself or his family members and no other comparable apartment is available. In this case, the landlord can terminate the tenancy with a notice period.

It is important to emphasize that the landlord must make the own need credible. A blanket assertion that he needs the apartment for himself or his family members is not sufficient. The landlord must be able to prove that he actually needs the apartment, for example by explaining why he needs the apartment and that he has no other apartment available.

Under these conditions, a termination of own use is possible:

• Legitimate interest on the part of the lessor
• Self-interest for oneself or other family members
• Proof that the apartment is needed
• Compliance with the statutory periods of notice

Sell rented apartment: Procedure & Tips

Let’s say you’ve now decided not to move into the apartment personally, nor have you agreed to a lease termination agreement. Here are some important things to consider when selling a rented apartment:

Capital investors & investors as target group

If you decide to sell your rented apartment, you have to expect a lower demand. After all, most buyers are looking for an apartment for their own use. At the same time, the current low interest rates ensure that more and more people want to invest their money instead of hoarding it in the bank. Therefore, the purchase of rented apartments is the most interesting for capital investors.

Rented apartments can be a stable and long-term investment opportunity as they generate regular income while allowing for potential property value appreciation. Investors can benefit from ongoing rental income and thereby continue to build their wealth.

Tips for planning and procedure

Marketing a rented apartment can be complex. There are some important points to keep in mind. As mentioned above, you need to make sure that you are familiar with all the rights and obligations surrounding the sale. You are also obligated to inform the buyer of all important details about the rented apartment. This includes, for example, the current lease agreement, tenant status, rental condition, and any rent arrears. Since a rented apartment may be worth less than a vacant apartment, you should consider both the condition of the property and the amount of rent when setting the price.

The most important things summarized:

• Familiarize yourself with the rights & obligations
• Inform the tenant about the sale
• Clarify the tenancy to the buyer
• Set a realistic purchase price

Tip: Sell apartment with broker

One tip when selling a rented apartment is to hire an experienced real estate agent for this purpose. A good agent has the necessary know-how and experience to make the selling process go smoothly and achieve the best possible results for the seller. A realtor can help properly value the home, create the exposé, find prospective buyers, arrange viewings and negotiate the closing of the sale. In addition, he can assist in obtaining the necessary documents and legal issues. Thus, a real estate agent can be a valuable support in the sale of a rented apartment.

Conclusion: selling apartment with tenant

In summary, the sale of a rented apartment presents some special challenges. It is important to consider the rights and obligations of the landlord and tenant, to conduct viewings only by appointment, and to comply with the tenant’s protection against termination. When selling, all necessary documents should be complete and up to date to facilitate the sales process.

It is advisable to contact an experienced real estate agent for assistance in marketing the apartment and handling the sale. Through professional preparation and careful execution of the sales process, landlords can achieve a successful transaction and obtain a reasonable return on their investment.

That is why a private apartment sale is worth

Selling an apartment privately offers many advantages for the seller. By not using a real estate agent, one saves the agent’s commission, which can normally amount to a considerable sum. In addition, one retains control over the sales process and can decide for oneself how to present the apartment and what price strategy to pursue.

These advantages speak for a private apartment sale:

• No broker commission
• Control over the sales process
• Personal contact
• Flexibility
• More profit
• Faster processing

However, private sellers do not always bring the necessary expertise to successfuly complete an independent apartment sale without problems and time delays. However, lack of experience is by no means an obstacle. What you need to know about the process, costs, documents, etc., and more here.

Sell apartment privately: This is what you should consider

Selling an apartment privately can be a good option to save realtor costs and take the sale into your own hands. In this case, the owner takes over all tasks related to the sale, such as the preparation of advertisements, the organization of viewing appointments and negotiations, as well as the preparation and review of the necessary documents and records.

Determine real estate value

However, there are some things to consider when selling an apartment privately. One important thing is the apartment appraisal: the owner needs to know the current market value of the apartment to ensure that it is sold at a fair price. A professional real estate appraisal can help determine the exact value of the apartment.

Such a valuation of the object you can either do independently or put in professional hands.

Calculate costs in advance

If you decide to hire a professional appraiser to value your property, this is only a fraction of the costs you will incur. After all, taxes and fees are also incurred in the case of a private sale of an apartment.

Here are some of the most common costs you should consider:

• Costs for the energy certificate
• Fees for the extract from the land register
• Expert’s fee for the valuation
• Notary fees
• Taxes
• Marketing costs
• Renovation costs, if applicable

Prepare apartment for sale

It is also important to prepare the apartment for sale and keep it in good condition. Minor repairs and renovations can help increase the value of the apartment and raise the interest of potential buyers. An appealing presentation of the apartment, such as through professional photos and virtual tours, can also help the apartment sell faster and for a better price.

Whether it’s small repairs, renovation or modernization – to get the best possible out of your home, you should take enough time.

This leads us to the next point: creating an exposé.

Create a meaningful exposé

In order to appeal to potential buyers, it is important to create a convincing exposé. This is an important sales tool that presents the apartment in an appealing way and attracts potential buyers.

This is what you should consider when creating a synopsis:

• Use high quality photos
• Describe the apartment in detail
• List the most important features
• Use an appealing design

Assemble important documents

Finally, it is important to prepare and review the necessary documents to smoothly complete the sale. These include, for example, the purchase contract, the energy certificate and other relevant documents.

You should compile these documents in advance:

• Land register excerpt
• Energy certificate
• Parcel map and floor plan
• Building description
• Calculation of the living space
• Maintenance measures Installation
• Overview of the house payments
• Purchase contract

As mentioned earlier, there are also fees associated with a private residential sale. One of the most important costs: Tax. So let’s take a look at what taxes you can expect to pay as a private apartment seller.

Are taxes due on a private sale?

The answer: Yes, taxes may also be due on a private sale of an apartment. However, the type and amount of taxes depends on various factors, such as the value of the apartment, as well as the duration of ownership.

Speculation tax: sale within 10 years

Speculation tax is due if you resell your apartment within the speculation period of 10 years. So if you want to avoid speculation tax, you should make sure that there are at least ten years between the purchase of your apartment and the sale. Exception: You have occupied the apartment yourself and have not rented it out.

Three-object limit: commercial real estate trade

The so-called three-property limit must also be taken into account. If you sell 3 or more properties within 5 years, your apartment sale no longer counts as private asset management, but as commercial property trading, for which additional taxes are incurred.

Conclusion: Good preparation is half the battle

In summary, selling an apartment privately can be a good option to save a broker’s commission and take the sale into your own hands. However, it requires some work and knowledge to successfuly complete the sale. If you take enough time to prepare in advance, nothing will stand in the way of a successful apartment sale.

Property tax: what is it?

What is property tax (real estate): Simply explained?

Property tax is an annual tax levied on the ownership of land or real estate. It is used to finance public services such as road construction, fire departments, police and schools.

The amount of property tax is usually calculated on the basis of the estimated market value / Verkerhwert or the standard land value of the land. In some regions, the property tax may also be based on the size or condition of the building located on the property.

The property tax can vary depending on the state or municipality in the USA. In Germany, it varies from state to state.

As a rule, owners or beneficiaries must pay the property tax annually or quarterly.

Property tax comparison

Property taxes in the U.S. and Germany differ in several important respects:

1. Purpose of the tax
2. Calculation and basis
3. Tax rate and amount
4. Payment and deadlines

Purpose of the tax

Property tax in the USA is used to fund public services such as schools, roads and public safety. In Germany, the property tax is used to tax the ownership of a piece of land.

Calculation and basis

In the USA, property tax is calculated on the basis of the estimated market value of the land. In Germany, property tax is calculated on the basis of the value of the land, which is derived from the standard land value and the building expense.

Tax rate and amount

The tax rate for property tax in the USA varies from state to state and from municipality to municipality. In Germany, the tax rate for property tax is set by law and is generally between 300 and 600 percent of the standard land value.

Payment and deadlines

Property tax in the USA is due annually and must be paid by the owners. In Germany, property tax is generally due quarterly and can also be paid by the owners or by the beneficiaries of the property.

Overall, the differences between property taxes in the U.S. and Germany are significant, but they serve both countries to fund public services.

Facts at a glance: Tax table

Here again in direct comparison, the property tax in the U.S. and in Germany:

This table contains the main differences between the property tax!

The most important links: Property tax

Here are the most important links for Germany and the USA with a focus on the states of New York and California.

• Property tax (Germany)
• Property tax (New York)
• Property Tax (California)
• …
• Taxes USA (real estate purchase)