A
Acceptance (of works) Construction
Formal declaration by the client that construction work was completed as agreed. Acceptance starts the warranty periods and reverses the burden of proof.
Agent Commission Purchase
The estate agent's fee on a successful brokerage. For residential purchases it has usually been split equally since 2020.
Ancillary Purchase Costs Purchase
Costs on top of the purchase price: transfer tax, notary, land register and any agent commission. Around 8–10 % in Saxony.
Annuity Financing
Constant annual payment of interest and principal on an annuity loan. Over time the interest share falls and the repayment share rises.
B
Building Encumbrance (Baulast) Law
Public-law obligation of a property owner towards the building authority to tolerate or refrain from something. Recorded in the building charges register, not the land register.
Building Permit Construction
Official permission to carry out a construction project according to the submitted plans, issued by the building authority.
C
Certificate of Self-Containment Law
Official certificate confirming that a flat is structurally separated from other units, a precondition for creating condominium ownership.
Commission-Free Purchase
An offer without agent commission for the prospect, e.g. in a direct sale by the owner or developer.
Commitment Interest Financing
Interest the bank charges on a committed but not yet drawn loan, typical for new builds with staggered disbursements.
Condominium Management Law
Professional administration of an owners' association's common property, from accounting to the owners' meeting.
Conveyance (Auflassung) Law
The notarised agreement between buyer and seller on the transfer of ownership of a property. Basis for the entry in the land register.
D
Declaration of Division Law
Document setting out how a building is divided into individual ownership (single flats) and common property. The basis of every condominium.
Depreciation (AfA) Tax
Tax write-off for wear and tear on let property, typically 2–3 % per year on the building value. Reduces taxable rental income.
Disagio (Discount) Financing
A deduction from the loan amount treated as prepaid interest. Lowers the running nominal rate; the amount paid out is less than the loan sum.
E
Early Repayment Penalty Financing
Compensation the bank charges when a property loan is repaid before the fixed-rate period ends, e.g. when the property is sold.
Easement Law
A land-register right in favour of a neighbouring plot, such as a right of way or utility line. It persists even when the owner changes.
Effective Interest Rate Financing
The annual total cost rate of a loan including ancillary costs. Makes loan offers comparable, unlike the pure nominal rate.
Encumbrance Law
A third-party right over a property entered in the land register, such as a mortgage, land charge, right of way or right of residence. Usually reduces value.
Energy Performance Certificate Energy
Mandatory document showing a building's energy quality (consumption- or demand-based). Must be presented when selling or letting.
Equity Financing
The buyer's own funds contributed to a financing. More equity lowers the bank's risk and usually the interest rate too.
Eviction Action Law
A landlord's court action to recover possession of the flat, e.g. after a valid termination for rent arrears.
F
Fixed-Interest Period Financing
The period for which a loan's nominal rate is fixed (often 10–15 years). A follow-up financing follows afterwards.
Foreclosure Auction Law
A court-ordered sale of a property to satisfy creditors, e.g. on the owner's default. Buying offers both opportunities and risks.
G
Gross Rent (Warmmiete) Renting
Net rent plus advance payments for operating and heating costs. The tenant's actual total monthly outlay.
Gross Yield Valuation
Annual net cold rent divided by the purchase price, as a percentage. A first rough measure of an investment property's return, before costs.
H
Handover Protocol Law
Written record of a property's condition at handover (meter readings, defects, keys). Protects buyer/tenant and seller/landlord alike.
Heritable Building Right Law
The right to own a building on someone else's land, against an annual ground rent, usually for 99 years. The land remains the grantor's property.
Housing Benefit (Wohngeld) Law
A state subsidy towards housing costs for low-income households (rent or ownership benefit). Not to be confused with the service charge.
I
Individual Ownership (Sondereigentum) Law
The part of a residential complex owned solely by an individual, typically the flat itself. The counterpart to common property.
K
KfW Funding Financing
Low-interest loans and grants from the KfW development bank for energy-efficient building, refurbishment and age-appropriate conversion.
L
Land Charge Financing
A land-register charge securing a loan. Unlike a mortgage, it is not tied to a specific claim, making it more flexible for banks.
Land Register Law
Official register of all land and the rights attached to it (ownership, mortgages, rights of way and residence). Kept by the local court.
Letter of Comfort Law
Rare in tenancy law; usually a third party's declaration to stand in for liabilities. Common as security in commercial leases.
Living Area Calculation Valuation
Determining the living area under the Living Area Ordinance (WoFlV) or DIN 277. It decides the rent, the price and the service charge statement.
Loan-to-Value (LTV) Financing
Ratio of the loan amount to the lending or market value. A low LTV usually means better interest rates.
M
Maintenance Expense Tax
Costs for repairs and upkeep that are immediately tax-deductible, unlike value-adding capital expenditure.
Maintenance Reserve Law
Savings reserve of the owners' association for future repairs to the common property. Its level is important to check before buying.
Market Value Valuation
The price achievable for a property in ordinary trade at the valuation date. Synonymous with the open-market value.
Mortgage Lending Value Valuation
The value a bank considers durably safe for a property. Usually below market value and determines the possible loan amount.
N
Net Rent (Kaltmiete) Renting
The rent for use of the flat only, excluding operating and heating costs. The basis for yield calculations and rent-index comparisons.
Notary Escrow Account Law
A notary's trust account used in special cases to handle the purchase price. Today usually replaced by direct payment after a due-date notice.
O
Open-Market Value (Verkehrswert) Valuation
The legally defined market value of a property at a given date, determined by the comparison, income or asset-value method.
Operating Costs Renting
The running costs of a property: water, heating, waste, property tax, insurance and administration. Apportionable under the Operating Costs Ordinance.
Owners' Association (WEG) Law
All owners of a residential complex. It decides jointly on the administration and maintenance of the common property.
P
Price-to-Rent Multiple Valuation
Ratio of purchase price to annual net cold rent. A lower multiple means a higher running yield; values below 20 are considered attractive.
Principal Repayment Financing
The repayment of the borrowed capital, separate from interest. A higher initial repayment rate markedly shortens the total term.
Priority Notice of Conveyance Law
Entry in the land register that secures the buyer between contract and final transfer of title. Prevents double sales or new encumbrances.
Property Developer Construction
Company that builds on its own land and sells the finished property. Buyers acquire the land share and the construction in a single contract.
Property Financing Financing
Umbrella term for financing the purchase, construction or modernisation of a property, usually via a mortgage-secured loan.
R
Real Estate Transfer Tax Tax
One-off tax on property purchases, 5.5 % of the price in Saxony. Part of the ancillary costs and a precondition for the land-register entry.
Refurbishment Construction
Comprehensive repair and modernisation of a property to restore or raise its fabric, energy efficiency and living standard.
Rent Deposit Insurance Insurance
An alternative to a cash deposit: the insurer guarantees towards the landlord while the tenant pays an annual premium instead of the full deposit.
Rent Index (Mietspiegel) Renting
An overview of customary local comparative rents in a municipality, compiled by the city and stakeholders. Key guidance for rent increases.
Right of First Refusal Law
The right to step into a negotiated purchase contract when a property is sold. May belong to private parties (tenants) or the municipality.
Right of Withdrawal Law
Consumers' right to revoke certain contracts (e.g. loan agreements) within 14 days without giving reasons.
S
Service Charge (Hausgeld) Law
Monthly payment by a condominium owner to the association for operating costs, administration and the maintenance reserve.
Site Development Construction
Connecting a plot to road, water, sewage, electricity and telecommunications. Development costs are usually borne by the owner.
Special Repayment Financing
A contractually agreed option to repay part of a loan ahead of schedule, shortening the term and saving interest.
Speculation Tax Tax
Income tax on the gain from selling a non-owner-occupied property within ten years of purchase.
Standard Land Value Valuation
Average, officially determined locational value of land per square metre, derived from actual sales. A reference for land prices.
U
Usable Floor Area Valuation
The area of a building serving a specific purpose (e.g. commercial, storage), distinct from living and circulation areas.
Usufruct Law
The right to use another's property comprehensively and draw its income without being the owner. Common in lifetime gifts.
V
Valuation Report Valuation
A surveyor's written determination of a property's market value, e.g. for inheritance, divorce or financing.
