Powers of Attorney and Representation in German Real Estate Transactions
Buying or selling real estate in Germany—whether a plot of land, a house, an apartment, or a heritable building right—requires the involvement of a notary. But what happens if you cannot attend the notary appointment yourself, especially if you are located abroad?
The Ideal Scenario: All Parties Present
Ideally, all sellers and buyers are present at the notarization appointment. The contract is read out and signed, concluding the transaction without issues. However, life’s circumstances, such as illness, long distances, or scheduling conflicts, may prevent one or more parties from attending.
Initial Steps: Postponing the Appointment
If someone cannot attend, the first course of action is usually to postpone the appointment. Notarization serves to inform the parties of the legal implications of their actions, explain risks and procedures, and agree on details. Without personal attendance, this critical function cannot be fully realized. The notary, especially when a consumer is involved, should strive to ensure that all legal declarations are made personally by the contracting parties.
Alternatives to Personal Attendance
If personal attendance is impossible, the contract can still be concluded effectively, provided another person—preferably someone the consumer trusts—acts on behalf of the absent party. This requires a declaration from the absent party accepting the actions of their representative.
Power of Attorney vs. Subsequent Approval
If the declaration is made before the contract is concluded, it is a power of attorney. The absent party instructs a representative to act on their behalf at the notarization meeting. This can also be a general power of attorney given to a spouse or close relative. The contract is concluded with immediate effect for and against the represented party when the representative acts.
If the declaration is made after the notarization appointment, the representative initially acts without power of attorney. The absent party can later approve their actions, making the initially ineffective contract effective.
German Legal Requirements
The German Civil Code (BGB) states that legal transactions on behalf of a represented party are effective even if the power of attorney or subsequent approval was issued without a notary’s involvement (section 167 (2) BGB). However, the Land Register Office requires that these declarations be evidenced by public or publicly notarized deeds (sections 30 and 29 of the Land Register Code – GBO). Therefore, the power of attorney or approval must be notarized for the land register entry, which is essential for ownership transfer.
Choosing the Right Method
The choice between power of attorney and subsequent approval depends on the interests involved:
- Power of Attorney: This allows someone to act in advance on behalf of the represented party. While the representative has legal authority, their actions may not always align with the principal’s wishes. The principal may have to accept the outcome and could potentially take legal action against the representative.
- Subsequent Approval: This method allows the absent party to review the contract leisurely and decide whether to approve it. The contract is not effective until the approval is granted, which provides more control to the absent party. However, this delay can be problematic if the contract needs to take effect immediately.
Practical Considerations
- Power of Attorney Document: The notary will scrutinize the power of attorney document for common errors. The document must be either notarized (signed and notarized) or negotiated (read out and signed by the notary and represented person). The representative must present the original or a notarial copy of the power of attorney at the appointment.
- Subsequent Approval Process: The notary who notarized the contract usually prepares the approval declaration. The absent party must then sign this declaration in front of a notary of their choice. The contract becomes effective upon receipt of the signature-certified approval.
Conclusion
Powers of attorney and subsequent approvals involve intricate legal and procedural steps, especially within the German legal system. Therefore, it is often more efficient to arrange a notarization date when all parties can be present. This minimizes the risk of complications and ensures a smoother transaction process.
At SPIEKER & JAEGER, our experienced notaries are ready to assist you with any aspect of buying or selling real estate in Germany. Whether you need to set up a power of attorney, approve a transaction, or simply need guidance through the process, we are here to help ensure your real estate transactions are handled smoothly and in full compliance with German law.