Ground Lease Agreement for Germany

Ground Lease Agreement Template for Germany

A German Ground Lease Agreement (Erbbaurecht) is a specialized real estate contract governed by the German Hereditary Building Right Act (ErbbauRG) that creates a long-term right to build and maintain structures on another party's land. This document establishes a separable and transferable right that can be registered in the land register, typically lasting for 99 years. It details the rights and obligations of both the landowner and the ground lease holder, including construction requirements, usage restrictions, ground rent payments, and compensation provisions for improvements upon termination. The agreement must be notarized under German law and requires registration in the land register (Grundbuch) to become effective.

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What is a Ground Lease Agreement?

The Ground Lease Agreement (Erbbaurecht) is a fundamental instrument in German real estate law that enables property development while maintaining separate ownership of land and buildings. This document is particularly useful when outright land purchase is not feasible or desired, such as in cases involving public entities, religious institutions, or long-term estate planning. It creates a registrable right under German law that allows the ground lease holder to construct and operate buildings on the landowner's property for an extended period, typically 99 years. The agreement must comply with the ErbbauRG and requires notarization and land register registration. It's commonly used for commercial, residential, and public infrastructure developments, providing a balanced solution that benefits both landowners seeking steady long-term income and developers looking to minimize initial capital investment while securing long-term development rights.

What sections should be included in a Ground Lease Agreement?

1. Parties: Identification of the landowner (grundstückseigentümer) and the ground lease holder (erbbauberechtigter) with full legal details

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

3. Definitions: Key terms used throughout the agreement

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

5. Grant of Ground Lease: Formal establishment of the hereditary building right (Erbbaurecht)

6. Duration: Term of the ground lease (typically 99 years under German practice)

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

8. Permitted Use: Specified uses of the property and any restrictions

9. Construction Requirements: Building obligations, maintenance requirements, and construction standards

10. Insurance: Required insurance coverage for buildings and liability

11. Assignment and Transfer: Conditions for transferring or encumbering the ground lease right

12. Termination: Grounds for early termination and consequences

13. Compensation: Terms for compensation for buildings upon expiration of the ground lease

14. Registration: Provisions regarding land register registration requirements

15. Costs and Taxes: Allocation of costs, including registration fees and property taxes

16. Notices: Communication requirements and contact details

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

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

1. Existing Buildings: Required when the property includes pre-existing structures, detailing their condition and handling

2. Environmental Provisions: Needed when there are specific environmental concerns or requirements for the property

3. Development Obligations: Used when specific development timelines or requirements need to be imposed

4. Pre-emption Rights: Optional provisions for rights of first refusal for either party

5. Mortgage Provisions: Detailed provisions regarding the creation and handling of mortgages on the ground lease right

6. Special Use Provisions: Required for properties with specific use requirements (e.g., commercial, industrial)

7. Indexation Clauses: Detailed provisions for ground rent adjustments based on specific indices

8. Subdivision Rights: Needed when the right to subdivide the property or ground lease is contemplated

What schedules should be included in a Ground Lease Agreement?

1. Land Plan: Cadastral plan showing the exact boundaries of the leased property

2. Building Plans: Architectural drawings and specifications for permitted buildings

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

4. Existing Encumbrances: List of existing easements or other encumbrances affecting the property

5. Construction Timeline: Detailed schedule for any required construction or development

6. Form of Bank Guarantee: Template for any required bank guarantees or security

7. Insurance Requirements: Detailed specifications for required insurance coverage

8. Land Register Extracts: Current land register entries (Grundbuchauszug) for 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

Commercial Real Estate

Residential Development

Industrial Development

Infrastructure

Retail

Healthcare

Education

Religious Institutions

Public Sector

Renewable Energy

Agriculture

Relevant Teams

Legal

Real Estate

Property Development

Asset Management

Finance

Construction

Property Management

Risk & Compliance

Investment

Operations

Relevant Roles

Real Estate Director

Property Development Manager

Legal Counsel

Real Estate Investment Manager

Asset Manager

Facilities Manager

Property Manager

Construction Manager

Chief Financial Officer

Real Estate Transaction Manager

Land Acquisition Manager

Portfolio Manager

Development Director

Project Manager

Risk Manager

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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