Purchase of Real Estate by Term Paper

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3 million buildings and plots of land. If it can conservatively be assumed that a minimum of five persons are affected for each business and a minimum of two persons for each building, then some 5 million people are directly involved in property-restitution claims - nearly a third of the population of the new Lander. (Blacksell et al., 1996, p. 200)

Since December 1991, the number of claims filed with the courts has not been significantly greater, with the exception of fluctuations experienced in Brandenburg and Berlin; such fluctuations were attributed to the different methods of computer-based data collection in these two areas and by the subsequent standardization of the system throughout the new Lander (Blacksell et al., 1996). In reality, 92% of all claims for property restitution were timely filed within the first 15 months following the reunification of the two German states (Blacksell et al., 1996). The administrative burden that these claims placed on the Offices for the Settlement of Disputed Property Claims was enormous, particular since the offices only became active after October 1990, with no existing precedents concerning how they should be administered (Blacksell et al., 1996). These researchers report that, "The huge volume of claims in their first year of operation, intimidating enough in itself, also created an expectation that the final number would be even larger than it has turned out to be, because there was no way of knowing that the vast majority of claims would be registered so quickly" (Blacksell et al., 1996, p. 200).

The differences in the number of claims among the five Lander and Berlin, spanning the range from 122,981 in Mecklenburg-Vorpommern to 281,473 in Brandenburg, suggest there are significant differences in area and population, certainly, but these trends also suggest that differences in the scope for actually making such claims are taking place because of the specific socioeconomic conditions in the different Lander (Blacksell et al., 1996).

An old adage in real estate suggests that location is the key, and this has been the case with German real estate sales in recent years; for example, Berlin, as the future capital of the unified Germany was quickly seized upon by investors because of the high level of interest in reclaiming property there, and this investment interest has also affected the surrounding state of Brandenburg, where cities such as Potsdam are effectively part of the Berlin greater metropolitan area (Blacksell et al., 1996). Likewise, Sachsen creates the core of Germany's major eastern industrial region, based around the cities of Leipzig, Dresden, and Chemnitz; by sharp contrast, Mecklenburg-Vorpommern is more isolated and rural, with a smaller population engaged in agriculture rather than industry as the drivers of its economy (Blacksell et al., 1996). Fewer property claims have been experienced in these regions, largely because much of what is being reclaimed in this most northerly of the Lander are individual farms, rather than housing and urban businesses; the same factors also apply to Sachsen-Anhalt, which is also largely rural in character, though not featuring the same large estates that characterize Mecklenburg-Vorpommern (Blacksell et al., 1996). Finally, there is also an emerging north-south division taking place in the former East Germany, with the majority of the population and industry being situated in the southern region, an unevenness that is also clearly reflected in the distribution of property-restitution claims (Blacksell et al., 1996).

If the claims are divided into subgroups, regional variations among the Lander are even more marked. Most obvious is the predominance of claims involving property and land. They range from 89% of all claims in Brandenburg to only 63% in Mecklenburg-Vorpommern and Berlin. Although the total number of businesses subject to a claim is little more than 5% of the total, the regional distribution is noticeable, with Mecklenburg-Vorpommern very much in the vanguard (Blacksell et al., 1996). While there remains a paucity of timely information to help explain these trends, these events suggest that there are a large number of farms that are being reclaimed and withdrawn from the collective farms of the communist era; in this regard, the distribution in the former East Berlin is also most apparent (Blacksell et al., 1996). "In comparison with the five Lander," the authors advise, "fewer claims involve property and land, and proportionately more involve money. The reason for this is the peculiar conditions stemming from Berlin's status as a divided city, which made it easier to resist straightforward state requisition by the East German regime, so that most claims are for financial compensation for an inadequate purchase price" (Blacksell et al., 1996, p. 201).

Given the enormous number of property claims experienced by these offices in recent years, it is not surprising that settling them has been a slow process, especially in view of the repeated recent changes in German property laws. Nevertheless, by 30 June 1995, 95,715 (52.9%) claims involving businesses and 1,351,459 (51.4%) of all other claims had been adjudicated; furthermore, the rate at which claims are being settled has shown a steady improvement of about 3% a quarter, with a notable spike in the rate at which claims involving land and property are being resolved most recently (Blacksell et al., 1996). Although many observers did not expect the system to work as well - or at all -- immediately following reunification in 1990 and 1991, and the expectations that resolution of claims would not be completed until today do not appear to have been realized. The authors conclude that, "The end appears to be in sight, despite the marked regional variations. The overall figures on the settlement of claims are somewhat misleading because, as we have already pointed out, each claim may incorporate several distinct elements and because the range of outcomes is wide" (Blacksell et al., 1996, p. 198).

Purpose of Study

Given the enormous changes that resulted from the reunification of the two German states, as well as the need to better understand how precedential cases and the current applications of the German Civil Code in an increasingly Europeanized environment will affect the interests of the stakeholders involved, the purpose of this study was three-fold, and was guided by the following research questions:

What types of judicial sales of real estate are currently practiced in Germany?

How are these judicial sales typically adjudicated?

What are the current and future trends for the judicial sale of real estate in Germany?

Importance of Study

Today, Germany represents one of the most important economies in the world, and the country has assumed a new leadership role in European affairs in recent years that will likely continue to guide the European Union in its efforts to forge an improved alliance from legal, military, social and political perspectives. Because all of the European nations have their own respective - and sometimes unique - types of laws to administer the sale of real estate through the courts, and because these laws are frequently complicated and convoluted from the outset, sifting through the morass of legalities has assumed new importance in recent years. According to one authority, compliance with the formalities for assuming an obligation to transfer real estate of 313 of the Civil Code are required to provide proof of the obligation and to caution the parties themselves because real property is regarded as an extremely important asset (Gordley, 2001).

Scope of Study

Notwithstanding the differences between the laws that control the sale of real estate by the courts in European and U.S. courts are similar, and in some cases identical. Therefore, the scope of this study extended to all such relevant discussions in the peer-reviewed and scholarly literature with a specific focus on real-world examples of how these processes have played out in recent years in the recently reunified German state.

Rationale of Study

Because many real estate laws are designed to help people protect their rights and interests, it just makes good sense to determine what can take place when international investors and German consumers alike are confronted with the complex laws that surround the adjudication of real estate sales in general, and in Germany in particular. In this regard, differences in judicial sales of real estate represent a matter of some importance "when major domestic investors in one jurisdiction look beyond their own borders to expand their portfolios and spread risk, as they now do almost as a matter of course" (Fordhan & Wiemann, 2006, p. 13).

Overview of Study

This study used a five-chapter format to develop the background and resources needed to answer the above-stated research questions. Chapter one introduced the topic and provided a statement of the problem under consideration. A discussion concerning the purpose of the study, its importance and scope was followed by supporting rationale. Chapter two of the study provides a critical review of the peer-reviewed and scholarly literature concerning the judicial sale of real estate in Germany today, but given the paucity of such timely studies in these sources, online governmental and…

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