Building Lease Agreement for Germany

Building Lease Agreement Template for Germany

A Building Lease Agreement under German law (Erbbaurechtsvertrag) is a specialized real estate contract that grants the right to build and maintain a building on someone else's land for an extended period, typically 99 years. This agreement, governed by the German Erbbaurechtsgesetz (ErbbauRG), creates a unique legal right that is both heritable and transferable. The document establishes the terms for ground rent, construction requirements, usage rights, maintenance obligations, and compensation provisions at the end of the lease term. It must be notarized and registered in the German land register (Grundbuch) to be legally valid.

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What is a Building Lease Agreement?

The Building Lease Agreement (Erbbaurechtsvertrag) is a crucial instrument in German real estate law that enables property development while keeping land ownership separate from building ownership. This type of agreement is particularly valuable when landowners (such as municipalities, churches, or private entities) wish to retain ownership while allowing long-term development of their land. The document creates a heritable building right (Erbbaurecht) that must be notarized and registered in the land register (Grundbuch). It typically spans 99 years and includes detailed provisions for ground rent, construction specifications, use restrictions, and eventual compensation. The agreement is governed by the German Erbbaurechtsgesetz and related civil law provisions, making it a distinct legal instrument different from regular lease agreements. It's commonly used for both commercial and residential developments, offering a viable alternative to land purchase while providing long-term security for developers.

What sections should be included in a Building Lease Agreement?

1. Parties: Identification of the landowner (Grundstückseigentümer) and the building lease holder (Erbbauberechtigter), including full legal names, addresses, and registration details

2. Background: Context of the agreement, including property details and parties' intentions

3. Definitions: Key terms used throughout the agreement, including technical and legal terminology

4. Property Description: Detailed description of the land plot, including land register details (Grundbuch) and cadastral information

5. Grant of Building Lease: Core provisions establishing the hereditary building right, including duration and basic rights

6. Duration: Term of the building lease, typically 99 years, with specific start and end dates

7. Ground Rent: Amount, payment terms, and adjustment mechanisms for the ground rent (Erbbauzins)

8. Construction Requirements: Specifications for buildings to be constructed, including timing and quality requirements

9. Use Restrictions: Permitted and prohibited uses of the property and buildings

10. Maintenance Obligations: Responsibilities for maintaining the building and land

11. Insurance Requirements: Mandatory insurance coverage for buildings and liability

12. Transfer and Encumbrance: Conditions for transferring or encumbering the building lease

13. Termination: Grounds for early termination and consequences

14. Compensation: Provisions for compensation of buildings at lease end

15. Governing Law: Confirmation of German law application and jurisdiction

What sections are optional to include in a Building Lease Agreement?

1. Pre-emptive Rights: Rights of first refusal for either party, used when parties want to secure future purchase options

2. Development Obligations: Specific development requirements and deadlines, included when immediate construction is required

3. Commercial Use Provisions: Detailed regulations for commercial use, included for business properties

4. Residential Use Provisions: Specific provisions for residential use, included for residential properties

5. Environmental Provisions: Special environmental requirements or protections, included for environmentally sensitive areas

6. Heritage Protection: Special provisions for protected buildings or historical sites

7. Subletting Rights: Conditions for subletting, included when subletting is to be permitted

8. Value Added Tax Election: VAT treatment provisions, included for commercial properties where VAT election is relevant

What schedules should be included in a Building Lease Agreement?

1. Land Register Extract: Current extract from the land register (Grundbuchauszug)

2. Site Plan: Detailed plan showing the leased property and any relevant boundaries or easements

3. Building Specifications: Technical specifications for permitted buildings and constructions

4. Ground Rent Calculation: Detailed methodology for calculating and adjusting the ground rent

5. Existing Buildings Inventory: Description and condition report of any existing buildings

6. Planning Permissions: Copies of relevant building permits and planning permissions

7. Contamination Report: Environmental assessment and contamination status of the property

8. Prior Encumbrances: List of existing encumbrances on the property

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Jurisdiction

Germany

Publisher

Genie AI

Document Type

Lease Agreement

Cost

Free to use
Relevant legal definitions
Clauses
Relevant Industries

Real Estate

Construction

Property Development

Urban Planning

Commercial Property

Residential Property

Public Sector

Religious Institutions

Education

Healthcare

Industrial

Retail

Relevant Teams

Legal

Real Estate

Property Management

Construction

Development

Finance

Investment

Compliance

Risk Management

Asset Management

Corporate Affairs

Operations

Relevant Roles

Real Estate Manager

Property Developer

Construction Manager

Legal Counsel

Corporate Lawyer

Property Manager

Facility Manager

Investment Manager

Development Director

Asset Manager

Municipal Property Officer

Real Estate Investment Officer

Urban Planning Officer

Chief Financial Officer

Risk Manager

Compliance Officer

Industries
Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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