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Seller Financing Addendum

Seller Financing Addendum Template for Germany

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Key Requirements PROMPT example:

Seller Financing Addendum

I need a Seller Financing Addendum for a commercial property sale in Berlin, where I'm providing 70% seller financing (€2.5M) over 15 years at 5.5% interest, with quarterly payments starting March 2025; this needs to include specific provisions for the Grundschuld registration and cross-border payment arrangements as the buyer is based in Austria.

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Document background
The Seller Financing Addendum is essential in transactions where traditional bank financing is not used and the seller agrees to finance the purchase directly. This document is particularly relevant in the German market where specific legal requirements govern private lending arrangements in property transactions. It must comply with the German Civil Code (BGB), Banking Act (KWG), and various financial regulations. The addendum typically includes detailed financing terms, security arrangements through property liens (Grundschuld), and mandatory consumer protection provisions where applicable. This document is commonly used in both commercial and residential property transactions, especially in situations involving unique properties, expedited sales, or when traditional financing is not optimal. The Seller Financing Addendum must be notarized and registered with the German Land Registry (Grundbuchamt) when it involves property liens.
Suggested Sections

1. Parties: Identification of the seller-financier and buyer-borrower, including full legal names and addresses

2. Background: Reference to the main purchase agreement and explanation of the seller financing arrangement

3. Definitions: Key terms used in the addendum, including financial and legal terminology

4. Loan Amount and Purchase Price: Specification of the total purchase price and the amount being financed by the seller

5. Interest Rate and Payment Terms: Details of the interest rate, payment schedule, and total amount payable in compliance with PAngV requirements

6. Security Arrangements: Description of property lien (Grundschuld) and its registration in the land register

7. Payment Mechanics: Procedures for making payments, including account details and payment methods

8. Default and Remedies: Consequences of default and enforcement rights under German law

9. Representations and Warranties: Statements of fact and assurances from both parties

10. Governing Law and Jurisdiction: Confirmation of German law application and jurisdiction

Optional Sections

1. Consumer Protection Provisions: Additional protections required when the buyer is acting as a consumer under German law

2. Prepayment Terms: Terms for early repayment of the loan, if permitted

3. Insurance Requirements: Requirements for property insurance and assignment of benefits

4. Transfer and Assignment: Provisions regarding the transfer or assignment of rights under the agreement

5. Tax Considerations: Specific provisions regarding tax implications and responsibilities

6. Servicing Arrangements: Terms for loan servicing if handled by a third party

Suggested Schedules

1. Payment Schedule: Detailed amortization table showing payment dates, amounts, and interest calculations

2. Form of Grundschuld: Template for the land charge (Grundschuld) document

3. Property Description: Legal description of the property as it appears in the land register

4. Notice of Default Form: Template for formal notice of default

5. Calculation of Annual Percentage Rate: Detailed breakdown of the effective interest rate as required by German law

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

Linkedin in social icon imageX social icon image
alex.den.21@genieai.co
Relevant legal definitions
Agreement
Purchase Agreement
Property
Purchase Price
Financed Amount
Down Payment
Interest Rate
Payment Date
Due Date
Default Rate
Term
Maturity Date
Monthly Payment
Prepayment
Security Interest
Grundschuld
Grundbuchamt
Land Register
Event of Default
Borrower
Lender
Parties
Business Day
Banking Day
Consumer Protection Period
Effective Date
Interest Calculation Period
Late Payment
Notice
Principal
Accrued Interest
Annual Percentage Rate
Amortization Schedule
Default Notice
Enforcement Proceedings
Collateral
Notarial Deed
Registration Costs
Permitted Encumbrances
Transfer of Title
Repayment Schedule
Security Documentation
Loan Account
Payment Instructions
Clauses
Loan Terms
Payment Obligations
Interest Calculation
Security Interest
Property Registration
Default and Remedies
Representations and Warranties
Notice Requirements
Amendment and Modification
Assignment and Transfer
Consumer Protection
Prepayment Rights
Insurance Requirements
Property Maintenance
Title Matters
Regulatory Compliance
Documentation Requirements
Cost Allocation
Tax Matters
Dispute Resolution
Force Majeure
Severability
Integration
Governing Law
Enforcement Rights
Recording and Registration
Further Assurance
Survival
Relevant Industries

Real Estate

Property Development

Construction

Banking and Finance

Legal Services

Commercial Property

Residential Property

Real Estate Investment

Relevant Teams

Legal

Real Estate

Compliance

Finance

Risk Management

Investment

Property Management

Contract Administration

Relevant Roles

Real Estate Attorney

Property Lawyer

Real Estate Agent

Property Manager

Financial Manager

Compliance Officer

Real Estate Developer

Investment Manager

Legal Counsel

Notary

Contract Manager

Risk Manager

Real Estate Investment Advisor

Industries
Bürgerliches Gesetzbuch (BGB): German Civil Code - particularly §§ 433-480 (sales contracts), §§ 488-507 (loan contracts), and §§ 873-902 (property law)
Kreditwesengesetz (KWG): German Banking Act - relevant for private lending arrangements and exemptions for seller financing
Verbraucherkreditgesetz (within BGB): Consumer Credit Law (integrated into BGB §§ 491-505) - applicable if buyer is acting as consumer
Grundbuchordnung (GBO): Land Registration Act - crucial for registering property liens and encumbrances
Gesetz über die Zwangsversteigerung und die Zwangsverwaltung (ZVG): Foreclosure Law - relevant for enforcement rights in case of default
Preisangabenverordnung (PAngV): Price Indication Regulation - requirements for indicating interest rates and total costs of financing
Geldwäschegesetz (GwG): Anti-Money Laundering Act - due diligence requirements for significant financial transactions
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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