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Country - Austria
Sale and Purchase
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A. ACQUISITION OF REAL ESTATE
Applicable legislation
The basic rules for sales and purchases are to be found in the Austrian Civil Code. There are many other laws which are or may, however, be applicable to specific transactions.
Is the purchase of real estate assets by foreign investors subject to restrictions?
Restrictions generally apply to agricultural land and forests. Other restrictions exist for non-EU investors, who must obtain approval from the relevant real estate transfer authority (Grundverkehrskommission). Each province of Austria has its own real estate transfer restrictions. EU investors may need to apply for confirmation that no approval is necessary (this confirmation is also issued by the Grundverkehrskommission). Prior to approval or confirmation any purchase contract is invalid.
Do different legal regimes apply to the transfer of title to different kinds of real estate (commercial, residential, manufacturing)?
No.
Do mandatory pre-emption rights apply to the sale of real estate assets?
Generally not.
Is expropriation (compulsory purchase) possible?
If so, under what conditions?
Expropriation is possible if the property is needed for the construction of lines for Austrian Railways, for highways or for the laying of utility mains.
Is real estate registered?
If so, is this official information made available to the public?
Yes, all plots of land are registered with the Austrian land registry which provides official information and is accessible to registered users via the internet (subject to payment of a fee).
Is transfer of title recorded?
Can other related deeds (for example, preliminary sale agreements) be recorded?
The only way to demonstrate ownership of real estate ("title") is by registration with the land registry. In addition to registration of title, easements, mortgages, claims, leases, pre-emption rights and orders of priority for a future sale or mortgage may be registered.
Do buyers usually carry out due diligence?
If so, what due diligence is typically conducted and what is its timing (i.e. before or after contract execution)? Is there any protection for the buyer during the due diligence period (for example, an exclusive right to negotiate or buy)?
Yes. Depending on the kind of deal structure, legal due diligence normally covers: title; encumbrances; easements; planning and environmental matters; leases; tax (including stamp duty); insurance; service agreements; corporate matters; and employment issues.
Due diligence is conducted prior to entering into a purchase agreement and the findings are normally included in the agreement.
It is quite usual (but there is no obligation) for the seller to grant an exclusivity period to the buyer.
Is title insurance available?
Yes, but title insurance is generally unnecessary in Austria since the land registry is very reliable.
How are deals typically structured?
Deals can take the form of share deals or asset deals: most commonly the latter, for fiscal reasons - the depreciation of a building will directly reduce taxable income.
B. STRUCTURE OF THE CONTRACT
Are there formal requirements regarding the content and structure of the sale and purchase contract?
In order to register at the land registry, the sale and purchase contract must be in writing, with signatures certified by a notary. The agreement must contain a precise description of the real estate, a provision regarding the purchase price and the irrevocable declaration of the seller that he agrees to the registration of the buyer's title (Aufsandungserklärung).
What is a typical contract like?
A typical contract will include the following:
- identity of the parties;
- a description of the real estate, including all encumbrances, easements, leases etc affecting the property;
- details of the purchase price and the method of payment (normally involving an escrow account with the lawyer drafting the contract or a notary acting as escrow agent);
- an irrevocable declaration by the seller that he agrees to the buyer's registration of title (Aufsandungserklärung);
- transfer and effective date;
- seller's representations and warranties;
- liability and indemnities;
- buyer's representations and warranties;
- conditions precedent;
- closing;
- costs.
Are special consents required for certain transactions (for example, consent by a spouse)?
Generally special consents are not required by law, but they may be required as a result of contractual obligations.
What seller's warranties are provided under statute (for example, the state of the building, asbestos etc)?
Can they be excluded or varied by contractual agreement? Is there a deadline for claims to be made?
Although not expressly provided for by statute, the seller must guarantee the quality of the title transfer to the buyer. The deadline for claims is 30 years.
Other representations (such as the state of the building, electricity and water supplies, levels of contamination, or the view from the rooftop) are subject to a three-year warranty period.
In the case of compensation for damages, the three-year period starts as soon as the damage, and its causes, have been identified.
What are the buyer's remedies against misrepresentation by the seller?
In the case of misrepresentation by the seller a number of remedies are available, including:
- annulment of the agreement;
- a reduction of the purchase price;
- a claim for damages.
Are there any interests in real estate other than exclusive ownership?
If so, what are they?
Real estate interests other than exclusive ownership include:
- leases;
- easements for utility mains;
- mining interests;
- the construction of Superädifikate (buildings which are constructed on land owned by third parties);
- the right to erect a building on land owned by a third party, and for which an entry in the land registry has been granted (Baurecht).
C. PUBLIC LAW ASPECTS RELATED TO THE ACQUISITION OF REAL ESTATE
What are the most important areas of public law for an investor to consider when purchasing real estate?
- planning and zoning;
- environmental law;
- protection of Ancient Monuments;
- construction issues;
- tax.
Is the buyer of a real estate asset responsible for soil pollution or contamination of the building even if it is not caused by him?
Yes, the registered owner of the real estate is responsible for contamination where it is not possible to identify the polluter.
How can a buyer ascertain the possible uses of an area under the applicable zoning or planning laws?
Can uses be changed?
Zoning plans are available to the public at the real estate department of the local authority. Anyone may obtain a copy.
Uses may be changed within the scope of the relevant zoning plan. Zoning plans can be amended by law but not on the application of a property owner.
Is it possible to enter into specific development agreements with relevant public authorities in order to facilitate a project?
Can public authorities make a charge for this?
Yes, development agreements can be made along the lines of PPP models. Public authorities are entitled to charge only on the basis of mutual agreement.
D. TAXES RELATED TO ACQUISITION OF REAL ESTATE
Are there transfer taxes or sales taxes?
Asset deal
A 3.5% real estate transfer tax and a 1% registration fee are due, calculated on the basis of the purchase price.
Share deal
If all the shares are transferred to a buyer, real estate transfer tax at 3.5% is due, calculated on the basis of three times the assessed value of the property (as assessed by the tax authorities).
What are the normal transaction costs?
Transaction costs are normally 8% of the purchase price but are less than that in the case of larger transactions.
How are transaction costs shared by the buyer and seller?
Costs are subject to negotiation and agreement between the buyer and seller. Normally the buyer pays the transaction costs.
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