Understanding Berlin’s administrative divisions / Bezirke vs. Ortsteile vs. Viertel

Understanding Berlin’s administrative divisions / Bezirke vs. Ortsteile vs. Viertel

There is much confusion about Berlin’s administrative divisions. Not only foreign developers struggle with the differences of “Mitte-Mitte” and “Mitte” or “Biesdorf” as not being a “Bezirk” but an “Ortsteil” of “Marzahn-Hellersdorf” which again is often mistaken by the “Ortsteil Marzahn”. And what is the difference between a Bezirk an Ortsteil and a Viertel? 

It is easy though, Berlin has twelve administrative division, they are officially called “Bezirk” or “Bezirke” (plural), which is German for “borough”. They are the communal entities which hold specific legal rights. When for example applying for a building permit in one of these boroughs you will need to do this at the respective Bezirksamt. Each borough has it’s own Bezirksamt.

The Bezirke are the following:

Charlottenburg-Wilmersdorf
Friedrichshain-Kreuzberg
Lichtenberg
Marzahn-Hellersdorf
Mitte
Neukölln
Pankow
Reinickendorf
Spandau
Steglitz-Zehlendorf
Tempelhof-Schöneberg
Treptow-Köpenick

These Bezirke have localities which are called “Ortsteile” in German. There are 96 officially recognised localities. They do not have significant legal powers and are sometimes even subdivided into sub-zones, which you call “Viertel” or “Kiez” – but these terms are not official. Of course it is culturally and socially important to explain and to know that you live in e. g. the “Gräfe-Kiez” and this of course us important to identify attractive property, but if you apply for a building permit for the Gräfe-Kiez you will have to do that at the Bezirksamt Friedrichshain-Kreuzberg.

The following tablets will give you a useful overview over all localities of each boroughs:

Localities of Mitte
 (0101) Mitte
 (0102) Moabit
 (0103) Hansaviertel
 (0104) Tiergarten
 (0105) Wedding
 (0106) Gesundbrunnen
Localities of Friedrichshain-Kreuzberg
 (0201) Friedrichshain
 (0202) Kreuzberg
Localities of Pankow
 (0301) Prenzlauer Berg
 (0302) Weißensee
 (0303) Blankenburg
 (0304) Heinersdorf
 (0305) Karow
 (0306) Stadtrandsiedlung Malchow
 (0307) Pankow
 (0308) Blankenfelde
 (0309) Buch
 (0310) Französisch Buchholz
 (0311) Niederschönhausen
 (0312) Rosenthal
 (0313) Wilhelmsruh
Localities of Charlottenburg-Wilmersdorf
 (0401) Charlottenburg
 (0402) Wilmersdorf
 (0403) Schmargendorf
 (0404) Grunewald
 (0405) Westend
 (0406) Charlottenburg-Nord
 (0407) Halensee
Localities of Spandau
 (0501) Spandau
 (0502) Haselhorst
 (0503) Siemensstadt
 (0504) Staaken
 (0505) Gatow
 (0506) Kladow
 (0507) Hakenfelde
 (0508) Falkenhagener Feld
 (0509) Wilhelmstadt
Localities of Steglitz-Zehlendorf
 (0601) Steglitz
 (0602) Lichterfelde
 (0603) Lankwitz
 (0604) Zehlendorf
 (0605) Dahlem
 (0606) Nikolassee
 (0607) Wannsee
Localities of Tempelhof-Schöneberg
 (0701) Schöneberg
 (0702) Friedenau
 (0703) Tempelhof
 (0704) Mariendorf
 (0705) Marienfelde
 (0706) Lichtenrade
Localities of Neukölln 
 (0801) Neukölln
 (0802) Britz
 (0803) Buckow
 (0804) Rudow
 (0805) Gropiusstadt
Localities of Treptow-Köpenick
 (0901) Alt-Treptow
 (0902) Plänterwald
 (0903) Baumschulenweg
 (0904) Johannisthal
 (0905) Niederschöneweide
 (0906) Altglienicke
 (0907) Adlershof
 (0908) Bohnsdorf
 (0909) Oberschöneweide
 (0910) Köpenick
 (0911) Friedrichshagen
 (0912) Rahnsdorf
 (0913) Grünau
 (0914) Müggelheim
 (0915) Schmöckwitz
Localities of Marzahn-Hellersdorf
 (1001) Marzahn
 (1002) Biesdorf
 (1003) Kaulsdorf
 (1004) Mahlsdorf
 (1005) Hellersdorf
Localities of Lichtenberg
 (1101) Friedrichsfelde
 (1102) Karlshorst
 (1103) Lichtenberg
 (1104) Falkenberg
 (1106) Malchow
 (1107) Wartenberg
 (1109) Neu-Hohenschönhausen
 (1110) Alt-Hohenschönhausen
 (1111) Fennpfuhl
 (1112) Rummelsburg
Localities of Reinickendorf
 (1201) Reinickendorf
 (1202) Tegel
 (1203) Konradshöhe
 (1204) Heiligensee
 (1205) Frohnau
 (1206) Hermsdorf
 (1207) Waidmannslust
 (1208) Lübars
 (1209) Wittenau
 (1210) Märkisches Viertel
 (1211) Borsigwalde

Quelle: wikipedia.org / wikimedia

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If you have questions, please contact me:

Dr. Andreas Papp

andreas.papp@kapellmann.de

Rechtsanwalt (Bau- und Immobilienrecht)

Attorney at Law (Construction and Real Estate Law)

at Kapellmann und Partner Rechtsanwälte mbB 

Anm.: Dieser Blogeintrag gibt ausschließlich die persönliche Meinung des Autors wieder.

 

5 Legal Issues Foreign Developers Struggle with in German Real Estate Market

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When consulting foreign real estate developers on German real estate and construction law, a couple of legal issues are most likely to be subject of intense discussion. Many questions arise and the answers often activate disbelieving stares. I sometimes here from developers in the middle of a building process “we underestimated the strength of German consumer protection law”. Some of our clients would probably act differently, if only they had known beforehand.

Heres are the examples I am referring to:

  1. Formalistic Legal System
  2. Strong Consumer Protection Law
  3. Securities – “§ 648 a BGB”
  4. Validity/Invalidity of General Terms and Conditions
  5. Current Real Estate and Construction Market

Problem Number 1: Formalistic Legal System

Some may say “formalism” forms part of Germany’s culture, but regardless of whether this is true or not, you will at least find the German legal system in general to be more formalistic as opposed to other systems you are used to. German construction law is full of formalistic requirements which can only be met when technical and legal experts work closely together.

Here is an example, Sect. 6 VOB/B (General Conditions of Contract Relating to the Execution of Construction Work) states:

If the contractor considers that he is being hindered in the proper execution of the work, he shall inform the client of this in writing without delay. If he fails to make such notification, he shall only be entitled to Claim allowance for the hindrance of the work if its cause and effect were obvious to the client.

This provision is seemingly more in favour of the developer than of the contractor and many contractors activate an intense claim management system on the basis of this provision. The consequences are detrimental since any impediment can give rise to claims for extra costs and time extension. Professional companies will send you numerous written notices on any possible (or even hypothetical) impediment on your construction site: This procedure requires the developer to reject the notices in detail, which over stretches the capacities of real life. The solution here is a decent anti-claim management which requires permanent and quick professional help from technical and legal experts alongside the building process.

Keep in mind: This is just one (!) example.

Problem Number 2: Strength of German Consumer Protection Law

When developing residential buildings for consumers in Germany you will not be able to circumvent the MaBV (“Makler- und Bauträgerverordnung”), which translates as “Brokers’ and commercial developers’ ordinance”. This law governs the relationship between a developer and a buyer (which is a consumer).

To make it short and simple:

Unlike in many other jurisdictions, the first installment you can ask a buyer to pay is no more than 30% of the purchasing price. In addition, the precondition for the maturity of this claim is that excavation works have begun. It also requires that the contractual installment plan for the other installments fully complies with the law. If you made one mistake in the contract regarding the installments, the effect will be detrimental: the installment plan will be invalid and therefore unenforceable. The full purchasing price will only been due after the completion of all works and removal of all significant defects, here you will need legal experts that will create the contract for you.

Furthermore, the final installment is a never-ending story. Here, the consumer protection and the great number of technical norms work “against” the developer: Building a house in Germany without any defect is, factually, close to impossible. Even if you fully comply with all technical norms, if you are looking for it, you will find a norm that either does not reflect the current technical standards or is sufficiently unclear to at least argue about defects. And now the consumer protection law comes into play: The final installment (3.5%) is only due once all defects have been removed, regardless of their significance, moreover, if there are significant defects, another installment (5%) cannot be asked for. If that is not enough, let me tell you that the legal debate surrounding the final installments is disputed among German courts. Even Germany’s Federal Supreme Court of Justice (Bundesgerichtshof, in short: “BGH”) is vague in it’s statements regarding the MaBV here.

To sum up: Do not count on quick payment of at least 8.5% of the purchasing price in the end of your project.

The German consumer protection law is strong and Germany’s courts act mostly in favour of the consumers. This law is nearly insurmountable, but it is worth considering each individual project beforehand.

Problem Number 3: Securities – “§ 648 a BGB”

The variety of securities in a construction project in Germany is broad: A contractor will have to provide securities for:

  • the execution of works;
  • any advanced payment; and
  • maintenance.

There is one security, however, which is specifically perfidious for the developer: The so-called “648a-Security”, which refers to Sect. 648 a of the BGB. The BGB is the German Civil Code (“Bürgerliches Gesetzbuch”) which governs most of the private legal relationships. Section 648 a of the BGB deals with the security which a contractor the principal for. If you would like to have a look at the relevant parts for German Construction Law in the BGB in English, you can read it here in my blog.

To keep it short and simple: A contractor can at any point after signing the contract ask the principal / developer for a security, usually a bank guarantee, in the full amount of the remuneration owed by the principal for the entire project. There is nothing the principal can do about it. If not considered this beforehand, this provision can ruin the financial element of the project.

An immunity against this rule is nearly impossible, as most of the contractual terms which amend this provision will be invalid (also see problem no. 4). Some legal terms can modify the proceedings when asking for the security.

Problem Number 4: Validity/Invalidity of General Terms and Conditions

EU developers will be familiar with Laws governing General Terms and Conditions.

In Germany, this set of rule comes with a strong consumer protection, which courts also often transfer to B2B contracts. In short, any term which constitutes an unreasonable disadvantage for the contracting party and which has not deemed the contract invalid under German law. This means, the unfair term is unenforceable and instead a statutory rule will enter into force. Of course, the statutory provision is most likely to be a disadvantage for the developer.

So far, so good … An extensive jurisprudence on the unfair terms law has developed a idiosyncratic “regime” of standards which makes it hard to, first of all, oversee what is fair and what is not, and secondly to even declare some of the rules invalid and unenforceable which are in the officially provided General Conditions of Contract Relating the Execution of Construction work, the VOB/B. Again: A set of rules which is provided by an official institution and is meant to be the standard contract for construction projects contains invalid (!) clauses.

As a solution to this problem, you will need legal experts that know the relevant jurisprudence in depth and that will create you a contract which will comply with the law but will in your favour.

Problem Number 5: Current Real Estate and Construction Market

The final issue is less a legal one than an economical one: Especially when developing in Berlin, you will shortly notice that it is hard to find the proper plot of land and to find suitable and willing construction companies. The current real estate market is tight, the prices are still attractive, but every undeveloped plot of land comes with numerous competitors. Acting quick and being sociable is essential.

Secondly, construction companies order books are full, if not overbooked. You will find companies that will accept your conditions, but you will very likely have to argue about time and money at some point in the building process.

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If you have questions, please contact me:

Dr. Andreas Papp

andreas.papp@kapellmann.de

Rechtsanwalt (Bau- und Immobilienrecht)

Attorney at Law (Construction and Real Estate Law)

at Kapellmann und Partner Rechtsanwälte mbB

Anm.: Dieser Blogeintrag gibt ausschließlich die persönliche Meinung des Autors wieder.

Building Information Modeling (BIM) – Improvement, Disruption and Challenges to Markets

Building Information Modeling (BIM) – Improvement, Disruption and Challenges to Markets

Building Information Modeling (BIM) has been subject to intense discussions in recent days. Several software companies have released new intelligent solutions for planning and designing complex construction projects. The market for architects and engineers seems to be changing in near future. Is this simply the next step in technological progress or the first step in disruption of markets? Here are a couple of thoughts.  

In 2015, Alexander Dobrindt, the German Minister for Transport, announced milestones for the introduction of BIM for German road and rail projects from the end of 2020. Several other governments in the EU have called for BIM to be adopted on construction projects. BIM has simultaneously become the source of interest for the private sector. Software development companies are working high speed on not only replacing the CAD standard from the 80s but also on improving software-based project management for complex construction projects. In our daily consultancy practice, however, BIM has not taken up relevant space. This leaves enough time for a few thoughts on future aspects of BIM:

First of all, if in future BIM will allow for the principal to set up and change his/her own planning documents without the requirement of deeper architectural skills, simply because the software solution is good enough for calculating the feasibility of building projects, including complex aspects such a statics and if this software will be able to issue detailed service descriptions, then yes, a certain notion of disruption to the market of architects and engineers is undeniable.

Surely, someone will have to lay the software foundation at first hand and this will require in depth knowledge of all planning disciplines, but this will probably keep busy only a handful of participants. The majority of architects and engineers will, when push comes to shove, have to think through their business model. If, and as far as I can see this will still require a long time to come, BIM software replaces planning consultants and related actors on construction sites such as projects managers, BIM will be disruptive to the planning industry as Airbnb was disruptive to hotels and Spotify was to the music industry. On a related note, disruption is not a regional but a global issue. Software companies from any place on earth can flood regional markets with useful instruments which can have disruptive impact on regional markets. Regional protection measures such as restrictions on the authorization to present building documents to an authority (under German Law the so-called “Bauvorlageberechtigung”) which at the moment require specific qualifications are not as such unsurmountable obstacles – simply look, for example, at the success of Uber in many countries despite of regional restrictions on passenger transport. Insofar, I am certain, BIM will potentially be disruptive to a specific segment of markets.

Secondly, from a construction lawyer’s point of view, BIM will help to improve processes of coordination which have in the past always lead to significant amounts of claims for compensation and supplements. Whenever there is a dispute on the legal consequences of subsequent changes to the planning documents, BIM will help to clarify the scope and impact of the changes in question. It will probably automatically highlight the relevant to changes to each individual company, so that there will be no misunderstandings and communication gaps. Insofar it is a strong improvement especially when it comes to claim management for posterior claims due to changes. It is highly questionable as to whether this could eventually be unbeneficial to someone. The principal is under German law mostly in the better position when it comes to the question of claims for compensation and supplements since the contractor bears the full burden of presentation and proof. The principal will, however, have a sincere interest in quick clarification of the current construction costs. So far, BIM looks like a tool of accelerating building projects and surmounting unnecessary and expensive conflicts. Thus, it will be an improvement even if it is disruptive in a long-run.

Thirdly, new legal and liability challenges will arise. Among the implications on procurement law and legally defined services and pricing structures (e.g. German HOAI), the construction lawyers will have to re-consider the contractual structures. The legislator will have to adapt existing rules. Thinking outside the box will be essential for finding satisfying solutions:

  • The current contractual structure in construction law is dominated by bilateralism. BIM, however, will most likely require new structures, such as unilateral agreements since everyone will be working on the basis of the same virtual model. Other integrated forms of contract will become more important. This will not only raise new questions towards joint responsibility of the contracting parties, it will also change and accelerate the coordinating systems, which of course need to be laid down in the contracts.
  • If the software will provide for everyone to track all changes in the project and if the software will immediately highlight any changes made for each individual contracting party, the current contractual system regarding posterior claims for changes, supplements, impediments and what not, will have to be adapted. Forms of communication will have to be adapted, e.g. Sect. 4 of the VOB/B (Germany’s standardized construction terms) currently requests any construction impediments to be filed in writing. If, in future, the software will monopolize the coordination process, many formal rules such as the aforementioned will have to be re-drafted.
  • Data security will play an important role in software-based systems. Cloud solutions will intensify the questions towards data protection. Written agreements will have to refer to the acceptance of virtual data – this will be a specific challenge to the law.
  • New communication interfaces will have to be established between building companies and authorities as it is unlikely that a print-out of a BIM project will be acceptable by a building authority. This will require the public law to be adapted. Also, as it looks, there will be several BIM software tools and so far there is no standard interface. Who will decide on which to be the standardized system?
  • Since there will be new actors, important questions towards liability will have to be answered. The so-called BIM Manager is currently subject to debates. Whatever his scope of work may be, he will have to be liable for his actions. Allocation of claims for compensations will at the same time become complex in unilateral contracts. This will also require new insurance policies. Furthermore, the software developer himself could be subject to liability. Close legal examination is needed.

The list can be endless. So far, it is clear, preventative legal mechanisms and early adaption of legal structures will play a major role when it comes to working with BIM.

 

Dr. Andreas Papp
andreas.papp@kapellmann.de
Attorney at Law (Construction and Real Estate Law)
at Kapellmann und Partner Rechtsanwälte mbB

Ten Simple Answers to Basic Legal Questions for Investing into German Real Estate Market

Ten Simple Answers to Basic Legal Questions for Investing into German Real Estate Market

What I have learnt from my experience, it is not always easy for foreigners to understand the überdetailed German legal order. Simple answers to basic legal questions are, however, sometimes necessary long before an investment, a transaction or a development takes place. For this reason, I have put together a couple of common questions which arise in our daily consulting practise as well as their answers. I hope this will help to simplify your access to the German real estate market.

If you have further questions, feel free to message me and, if applicable, I will add your question to this list.

1. Are foreigners allowed to hold real property in Germany?

Yes. Unlike in some other jurisdictions (e.g. Russia, Indonesia), there are generally no restrictions under German Law which relate to the nationality or the citizenship of a real property holder. 

2. Do I have to live in Germany in order to be eligible for buying real property? 

No. 

3. What are the legal requirements for buying real property? 

For purchasing real property in Germany, you will have to conclude a notarised purchase agreement. This is required by Sect. 311 b of the German Civil Code (“BGB”). In order to fulfill this contract the competent authority will change the ownership in the land registry. When this is done, you are the property holder.  

4. What are the additional costs of purchasing real property? 

This essentially depends on where the property is located within Germany, since nearly all price-building factors vary from region to region. Usually, you will have to pay at least the notary fee, the commission for the agent and the property transfer tax (PTT). If you would like to purchase real property for example in Berlin, count as follows: 

  • circa 2 percent notary fees 
  • usually 7,14 percent commission
  • currently 6 percent PTT

The additonal costs in Berlin consequently add up to circa 15 percent of the purchasing price.  

nota bene: the PTT is with 3,5 percent the lowest in Bavaria (e.g. Munich) and Saxony (e.g. Dresden) and with 6,5 the highest in Brandenburg (e.g. Potsdam) and North Rhine-Westphalia (e.g. Düsseldorf, Cologne). 

5. What are the legal ways to lower the additional costs? 

The commission for the real estate agent can be subject of negotiations. This of course depends on several factors, such as the type of property, the region, your personal market volume and resale options. There are some legal loopholes which, however, depend on specific formal circumstances. 

The property transfer tax (PTT) can be avoided through share deals, if you purchase no more than 94,9 percent of a property company. It is common practise in Germany and our daily business. 

The notary fees are generally non negotiable. If you purchase through a share deal the questions as for the “whether” and the “how” of the notary fees depend on the legal nature of the company. There are many legal possiblities. 

6. How do I become the official owner of real property? 

The land registry is uniquely and exclusively authoritative for the ownership of real property in Germany, which is represented by the local court (Amtsgericht) of each region.

Even if the land registry contains wrong information, e.g. a wrong person, it is legally assumed under Sect. 891 of the German Civil Code (“BGB”) that he/she is the owner. The assumption can, however, be rebutted.

7. How do I figure out the name and contact details of current owners of real property? 

For accessing information of the land registry you need to substantiate your “legitimate interest” in the information under Sect. 12 of the Land Registry Law (“GBO”). The German High Court of Justice has ruled that “simple” interest in purchasing property or the interest to figure out the name and contact details of the current owner does not constitute a “legitimate interest”. This interest is given e.g. when the vendor has granted exclusivity. 

If not provided for by the real estate agent or research in public sources turns out to be fruitless, the current ownership can be indicated in the real estate cadaster which freely accessible without a “legitimate interest”. 

8. What are the legal requirements for leasing property? 

Unlike other jurisiditons, under German law tenancy contracts – apart from a few exceptions – do not need to be notarised or officially registered. 

Broadly speaking, German Tenancy Law is divided into two areas: Commercial and Residential Tenancy Law, to which different sets of rules apply:  

  • Commercial Tenancy Law: Contracts can be concluded for a duration for up to 30 years, however, very strict legal formalities apply and these contracts need to be individually drafted in detail. You are usually free to negotiate the rent, and rental increases are not as such limited by law. If you invest into a decent long running contract with detailed rent increasing mechanisms, your asset is secured. 
  • Residential Tenancy Law: Concluding contracts for a long period of time is usually not possible when you lease apartments. Rent and rental increases are subject to statutory law and are generally restricted in favour of the tenant. Terminating the contract by the landlord is tied to stringent rules and very difficult to enforce. 

9. What are the “new rules” on subletting and airbnbing?

Due to housing shortage some areas, such as Berlin, have recently introduced strict rules on short-term sublets (“Zweckentfremdungsverbot”). To sum up: Short-term subletting is generally only possible if you have a permission by the authority. There are some legal loopholes but note that the administrative fine can be up to EUR 50,000. 

10. Where do I get further market and legal information?

One of the leading journal for the German real estate market is the Immobilien Zeitung http://www.immobilien-zeitung.de/ (in German). 

Real estate relating judgements by the High Court of Justice (“Bundesgerichtshof”) are accessable over the Court’s website: http://www.bundesgerichtshof.de/EN/Home/home_node.html (in German). 

If you have any further questions, please do not hesitate to contact me.

German Construction Law

The BGB is the short for Bürgerliches Gesetzbuch, the German Civil Code. This set of rules governs most parts of private law in Germany. It also contains the basic rules on construction contracts and it is therefore the first book to look into when confronted with a legal questions. As the German Civil Code is not easy to find in English, I have created a page from which you can find the relevant extracts for constuction law: www.germanconstructionlaw.com/civil_code

This and the VOB/B which are standardised terms and conditions for construction contracts in Germany are the key set of rules for any construction project. I will post an English version of the VOB/B soon.