The German real estate market rightfully bears the title of “reliable”. The system here works clearly and protects all participants in the transaction. But even in Germany, you cannot be sure that you will not be deceived, or you will not get into an unpleasant situation due to your own stupidity. We asked Regina Borger, CEO of Munich-based property management company WiP Immobilien GmbH, to recall difficult case studies.
Property management in Munich
The first and most difficult case. About what can happen if amateurs take care of your business
– A girl called our office, described her apartment in Munich – condition, house, location – and asked how much this could cost. We have a facility under management just on this street, so I knew the situation. I tell her that she can get €300,000 for the property, plus or minus 20%. And then it turns out that in two hours she has a deal, where she is offered to sell an apartment for €200,000.
I ask: when was the object purchased? Turns out it was eight years ago. It turns out that when it is sold now, it also gets taxed. In Germany, if an apartment changes its owner within 10 years, 25-40% is paid on income. Of course, it is more profitable to wait a couple of years. And for some reason she was told that after three years, sales taxes can not be paid.
The girl is in shock. On the one hand, she doesn’t know me. On the other hand, he does not want to lose so much in price. I thought for half an hour, decided to refuse the sale and came to our office to talk. When she told the details of this transaction, I was already shocked. But first things first…
Friends helped her buy a two-room apartment in Munich, and they rented it out for all these eight years. The owner received money from rent irregularly, every now and then they took some amounts from her allegedly for repairs.
Moreover, on the security of this apartment, friends took a five-figure loan for their own needs, the girl, according to her, did not receive money from the bank and did not see the loan agreement.
Then the same friends offered to sell the apartment, and the owner flew to Munich for this deal. She did not read the sale and purchase agreement and did not even know which notary to go to. She was simply told to wait at the bus stop, they say, they will drive up for her. And at the same time, they managed to take €1,800 from her for a notary, which is actually wrong, because. his services are paid after the transaction.
Then the situation unfolded, as in a detective film. I called her German friend, introduced myself as a translator and got the name of the notary. I found his contacts on the Internet, contacted him and asked him to warn all participants in the transaction that the seller would not come. The telephone terror began immediately. We turned off all means of communication and began to think what to do next.
I began to find out how the apartment is rented, where the money comes from, what is written in the contract. It turned out that the girl didn’t see the contract with the tenant either, she didn’t even know how much he pays, the money comes to her friend’s current account, and rent payments are transferred to her irregularly. In general, it became clear that the problems did not end with the refusal of the deal. The owner decided to give us the apartment for management, while she herself left for Russia.
First of all, we wrote a letter to the tenant, but it came back. When I arrived at the indicated address, I noticed that all the signs with the names of the tenant on the apartment and the mailbox had been torn off. Apparently, the “friends” tried …
I knocked on the door and the 80-year-old grandfather opened it. As it turned out, the tenant. He knows nothing about the signs, he has been living here legally for a long time. I introduced myself (of course I had a power of attorney from the owner). I talked with him for an hour and a half, made a copy of the lease agreement and asked him not to transfer money to the old account anymore – we will tell him the details of the new one.
We read the contract – again surprises. First, rents are low. Now a square meter in Munich is rented for €16 per month, and there – for €9.
Moreover, the contract was signed only two years ago, so prices do not rise so quickly. Secondly, the contract states that we do not have the right to increase the rent until 2019.
We told the tenant that he was paying less than the market price and offered to raise the rent. Grandfather, of course, refused, saying that I have a contract, it was promised so, I won’t give anything from above. They showed the contract to the lawyer – it turned out to be valid, you can’t dispute it in any way. It remains only to wait until the fixed rate period ends, then it will be possible to raise the fee by 15% every three years. The good thing is that now the owner receives the full amount of the rent on her account.
And even this is not all the problems that “friends” brought to the owner. We submitted a request to the tax office to find out if there are any debts. It turned out that for the past few years they have not paid property taxes. The amounts there are small – about €200 a year runs up for such an apartment. But the state machine in Germany works well: there are no taxes – real estate is sold at auction. The authorities take away what is due to them, and the remaining funds minus the costs (that’s a couple of thousand more) are returned to the owner. A little more and it would have happened, but we paid off the debt.
Meanwhile, friends have disappeared somewhere. We sent a request to the police.
They must also return to the owner a deposit – a two-month fee that tenants pay when they move into an apartment – and rent for 4-5 months.
As you can see, the girl was framed from all sides. Some things we were able to solve and some things we couldn’t. The loan is still hanging on this apartment, no one pays it, and the owner has no evidence in her hands that she was not involved in this. In this case, even the best lawyer will not help. She will have to repay this loan herself.
The second case is just complicated. About what problems dishonest sellers and unnecessary tenants can cause
– A Muscovite asked us to manage real estate in Munich with a request to take care of her store. The facility used to be run by a company from the former GDR, with an office 500 kilometers from Munich, they really did nothing but unsubscribe. Some problems appeared regularly, water leaks, non-payment of rent … In a word, the owner decided to change the manager.
We started looking at contracts. It turned out that she bought a commercial property in Munich with a profitability of 7% per annum. I don’t know what the seller promised her, but the price of the object itself and the rates were clearly higher than the market ones. Moreover, literally a couple of days before the deal, the tenant changed there, i.e. no payment history could be traced.
The new tenant was a Turk who opened a retail outlet in the premises. He paid for a couple of months, and then stopped. Either 30% will pay, then 50%. And all the time he was looking for ways to leave – he referred to the fact that the rates were too high, spoke about the need for repairs, that he simply did not have money right now …
We came to the site to talk with the tenant and understand his problems.
It turned out that there are indeed leaks and for such a room the stakes are really cosmic. We agreed with him that we will carry out repairs and reduce his rent. In this case, he promised to regularly transfer money. With real market rates, the profitability of the object fell to 4%, but it was important for the owner to regularly receive rent, because. there was a loan on the property. She agreed.
A repair company was called and they fixed the water leak. It cost €14,000, but the insurance company paid for everything. By the way, when during the repair they discovered how the Turk arranged the drain of water, they grabbed his head. He made a hole in the facade, brought the pipe out into the street, did not even connect it to the sewer, the water simply went into the ground. This mess has been removed.
The first couple of months the tenant paid according to the schedule, and then the situation repeated itself.
Then we asked him to leave. He didn’t want to. He can’t pay and won’t leave. I had to expel with a lawyer and witnesses. When he was evicted, they breathed a sigh of relief. True, the rent debt remained. But in this case, it is better to end the relationship, albeit at a loss, than to continue to incur losses regularly.
Now the object has been handed over to a new tenant – a well-known concern in Europe. He pays well, we have a wonderful relationship. He admitted that no one demanded as many documents as I asked before concluding the contract – a financial report for three years, a certificate from the chamber of commerce, recommendations from other places where he used to rent premises, even certificates of marital status. In general, they checked it thoroughly, it does not cause problems to the owner and us.
The owner regularly receives payment and has 4.8% per annum from this object. Those 7% that she was promised are very rare in our market. Apparently, she was misled, just to sell the object. In order not to be so disappointed, it is necessary to check in advance the correspondence of the indicated prices and market realities.
Case three, which could be tricky. About how important it is to study the object in detail before the deal
We were approached by property management in Munich by a family who wanted to buy an apartment in Munich for their student daughter. They found the object themselves – a very cheap, by local standards, apartment for € 120,000 – we were required to check the deal and get around the “pitfalls”.
They began to study the object. Found out that there was a leak, but the damage was repaired. It was planned to repair the facade of the house, but a good company was doing this and the accounts of the owners’ association were in order. That is, the owners did not shine with additional repair costs. In general, everything was clean.
Then they began to study the tenant and immediately suspected possible difficulties.
Firstly, the contract with him was drawn up unprofessionally. We always use contract forms prepared by the lawyers of the Society for the Protection of Owners’ Rights. It will take into account all the latest changes in laws and spell out all the nuances. And here the contract was drawn up in free form and they forgot to note the terms of the tenant’s eviction. In this case, the exit may be delayed for a year.
Secondly, the rent for the apartment was underestimated. Moreover, the tenant paid a fixed amount, excluding used utilities, and could use water and heating as much as he wanted. He lived there for a long time and, given the advantages he had, he would hardly have agreed to move out voluntarily.
Thirdly, from the point of view of personal qualities, he seemed somehow inadequate to us.
In general, we warned the buyers that there would be problems with the tenant. Most likely, he will not move out voluntarily. You will need to contact a lawyer, and this is an additional cost. We’ll have to tinker, but there is no risk that he will not be evicted through the court, because. the tenant does not belong to socially protected groups, he is not disabled, he does not have small children. Clients said they were ready to solve these problems in order to buy an inexpensive apartment.
As a result, it did. They did not want to give the apartment to us for management, because. they bought it not for rent, but for the residence of their daughter. Then we advised them a lawyer, without him the employer did not even want to talk about moving. Now everything is fine, the tenant should move out in October.
Yes, the owners had to wait nine months and pay for a lawyer, but at least they knew what they were getting into.
If they had not checked the object, they would have received a very unpleasant surprise. I bought an apartment, but you can not use it. And if the tenant also turned out to be some 80-year-old old man who suffered two strokes (as in the first case), it would be impossible to evict him. Therefore, even in such a reliable market as the German one, one cannot neglect a detailed check of the object before the transaction.
Read the following article to learn how not to get into difficult situations.
The editors of Prian.ru would like to thank WIP Immobilien GmbH and personally Regina Borger for their help in preparing the material.
Text — Anastasia Faley
Photo — pixabay.com