Purchase of real estate in Austria by foreigners

Purchase of real estate in Austria by foreigners can be tricky. 

Provincial legal regulations

If foreigners intend to purchase real estate in Austria, one of the questions that always arises is the planned use of the property. In this context, it should be noted that the applicable regional planning and building laws are the responsibility of the provinces in terms of legislation and enforcement. Building permits are granted and zoning and development plans are issued on the basis of the applicable provincial laws, of which there are nine different ones.

If, for example, the property is to be used as a secondary residence (e.g. for holiday purposes), this must also be done within the framework of zoning law, otherwise sanctions may be imposed that could even lead to the revocation of ownership.

One set of regulations that is specifically aimed at the acquisition of land by foreigners is the Land Transfer Law. This, too, is a matter for the provinces (federal states) in terms of legislation and enforcement. Approvals by the land transfer authorities are issued on the basis of the respective provincial laws. 

Approval by the land transfer authorities

The acquisition of ownership or co-ownership of real estate by foreigners (third-country nationals) in Austria generally requires official approval. The following are considered foreigners:

- anyone who does not hold Austrian citizenship

- legal entities as well as partnerships under corporate law that have their registered office abroad; if legal entities as well as partnerships have their registered office in Austria but foreigners hold the majority of shares in them, they are also deemed to be foreigners; the same applies to associations;

- foundations and funds whose assets or income, according to their statutory purpose, are exclusively or predominantly allocated to foreigners, or whose administration is exclusively or predominantly the responsibility of foreigners. 

In the case of certain third-country nationals, a permit requirement may be waived on the basis of bilateral agreements.

Only nationals of EU and EEA member states are exempt from the requirement to obtain a permit from the land transfer authorities. They are treated in the same way as nationals. 

Since land transfer law is a provincial matter, the regulations specifically applicable to a transaction must always be observed. In very general terms, provincial laws may provide for the following conditions for acquisition approval:

- Cultural interest: For example, the applicant is of cultural benefit to the municipality or the province

- Social interest: The property to be acquired is intended to satisfy a personal housing need of the applicant; gifts between close relatives; anticipation of a testamentary disposition

- Economic interest: The acquisition serves, e.g., the establishment, expansion or maintenance of a business 

- State political interests must not be violated by the acquisition.

As mentioned above, differences in state law must be taken into account: 

In the province of Vienna, for example, no permission is required if married couples acquire real estate or condominiums, provided one spouse has Austrian citizenship. 

In Styria, for example, this does not apply.

In addition to the special rules for the acquisition of land by foreigners, the other requirements for the acquisition of agricultural and forestry land or building grounds must also be met. For example, the Styrian Land Transfer Act stipulates that, in order to acquire building land in certain municipalities, a declaration must be submitted stating that the intended acquisition of rights will not serve to create a secondary residence. 

Development costs

In general, it is important to check whether or not a connection to the public road network as well as to the supply and disposal network (water, sewage, electricity, telecommunications) has already been made (development). If this is not the case, the costs will be incurred at a later date and should be included in the purchase price.

Acquisition of real property

In Austria, the acquisition of ownership of a property (only) takes place through the corresponding entry in the land register (“Einverleibung”). The signing of the purchase contract and payment of the purchase price does not provide ownership. 

The priority of an entry in the land register is determined by the date of receipt of the corresponding application for entry in the land register. All rights registered in the rank prior to the registration of the property of the buyer must be taken over by the buyer or act against him. As a rule, it will be in the interest of the purchaser to take over the property free of encumbrances as far as possible. Therefore, if certain rights of third parties are registered (easements or mortgages), the seller and the buyer must agree on how to deal with them.

If, according to the respective provincial law, a land transfer authority approval is required for the real estate transaction, this must be legally in force before the entry in the land register takes place, otherwise the land register application will be rejected!

Attorney at Law for tourism law and business law

Attorney at Law Dr. Simon Harald Baier LL.M. assists you in the acquisition of land and real estate and advises you on all questions of tourism law and business law.

Article at shb-law.at