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The impact of the Covid-19 crisis

on the real estate market

The impact of the Covid-19 crisis

The global coronavirus crisis is shaking up previously certain aspects of the real estate market and leading to uncertainties as a result, but it is also opening up new opportunities, too. Consequently, and given the generally gloomy economic outlook, we can expect to see commercial and office real estate experiencing somewhat of a cooldown in the foreseeable future. 

In terms of office space, the traditional open-plan office, an ideal transmission site for infectious diseases, will probably lose out in the long term compared to flexible space concepts. Conversely, demands are likely to increase in the residential real estate sector, given how common it is to work from home now: many people are currently discovering their need for a separate room for working from home, and the desire for private open spaces in the form of balconies or gardens (features that tend to be associated with luxury real estate) is also on the up. Recognising these trends, and comparable ones, early on and responding accordingly calls for consultants who think outside the box. In other words, consultants who are not only familiar with the legal framework but also with the market, too, and who are also knowledgeable about the economy to boot. LGP has been offering this form of holistic advice since day one and receives years of loyalty from its clients in exchange. They include both domestic and foreign investors, owners, project developers, purchasers, landlords and tenants across every aspect of real estate law. 

Thanks to our expertise and many years of experience in this field of law, we are by our clients’ side as a reliable partner for all of their concerns during national and international projects. The unique composition of our team, consisting of lawyers specialising in real estate law and property valuation, public construction law, civil law and tax law, sets us apart from our competitors and puts us head and shoulders above the rest. Issues under foreign law also play a role in real estate projects, especially when it comes to representing our clients in proceedings before authorities handling the transfer of land. Our law firm’s foreign law team provides support in this respect. In addition, we call in external experts, such as (technical and economic) surveyors and real estate valuers, insurance companies and banks for project financing if the assessment of a specific real estate project requires it. This enables us to offer seamless, comprehensive assistance and execution relating to real estate projects from the very beginning on, i.e. from planning to completion. 

Real estate transactions are always carried out in several stages: 

Looking for a suitable real estate project or property

Our advice and support begins with looking for a suitable property or a suitable real estate project. The following issues should be taken into account, in particular:

  • Working out the client’s wishes and needs
  • Clarifying tax and issues under the law on fees
  • Assisting with financing issues
  • Selecting the appropriate contract model (share deal/asset deal)
  • If necessary, establishing a project company
  • If a property has already been found: clarifying the legal framework for the optimum/desired use of the property (due diligence and feasibility check in terms of zoning and building law, trade law, plant law, plus EA check if necessary for large projects)
  • With foreign investors: examining of the basic principles of law relating to the transfer of property to foreigners
  • Necessary checks in line with national and international money laundering regulations
  • Creating a realistic timeframe for the implementation of the project
  • Assisting with the handling of the transaction as trustee
  • Contract drafting and fiduciary processes
  • Securing the ranking in the land register
  • Monitoring and reviewing the progress of construction or the project
  • Assisting with implementing the client’s special requests
  • Clarifying the legal questions concerning the special structural requirements to determine whether it is covered by the protection of historic monuments and the building regulations 

LGP has an extensive network of real estate agents, project developers and investors both in Austria and abroad. We can draw on these experts’ assistance to ensure that our clients find properties that meet their requirements and needs. 

Price negotiations

If our clients are interested in a piece of real estate but an agreement has not been reached on the price to be paid, we can enter into price negotiations on behalf of our clients in order to achieve an ideal result in their interest. 

The following points are particularly important:

  • Determining the market price
  • Determining possible encumbrances on the property and valuation
  • Negotiating with banks on financing issues
  • Acquiring existing loans and redemption of collateral
  • Determining any potential additional costs (taxes, fees, commissions etc.)

We have many years of negotiating experience and have developed the associated negotiating skills as a result. We use this experience and expertise, alongside a valuation report, if necessary, to support our clients in achieving a fair and acceptable price that is in line with the market. 

Drafting contracts for purchase, construction contracts, lease, rent, asset/share deals, forward purchase agreements and endowments 

Once a decision has been made as to the piece of real estate that is to be acquired, rented, given away or leased, we determine the appropriate contractual model in conjunction with our client and then draw up the corresponding contractual documents. The following considerations play a role when selecting the appropriate contract model (in particular, an asset deal/share deal):

  • Tax issues
  • Land acquisition for foreign nationals
  • Designation and use of the property

In addition, all the contracts from the other parties involved, such as architects, brokers or civil engineers, are reviewed by experts. The scope of contract drafting also involves checking noise plans, building permits, construction contracts, zoning, utility value appraisals and survey plans and inspecting the building files and registers of contaminated sites in question. In addition, we do not only act as contractors: we also take over the fiduciary handling of a real estate project. Furthermore, we deal with the self-calculation of taxes in connection with real estate transactions, especially land transfer tax, and pay them to the tax office responsible for them. 

Registering the real estate and obtaining the permits from the land transfer authorities

After signing the contracts, we register the piece of real estate in the land register. If the approval of the land registry authority is required on the basis of the provisions of applicable land registry law for the effective acquisition of a piece of real estate, we ensure that the necessary approval is obtained within a reasonable period of time. In this context, we have many years of experience in proceedings with the competent authorities.

Project coordination and project monitoring within the framework of the Developer Contract Act 

In the context of construction projects, especially under the Developer Contract Act, our clients often express various special requests in terms of construction and technical aspects. When these requests are made a reality, this ensures that the piece of real estate aligns with the client’s individual needs and tastes. During this phase of the real estate project, we act as a coordinator between the clients, developers, architects and civil engineers etc. on the one hand, and, on the other hand, review whether special requests have been fulfilled at an acceptable level of quality with the help of a suitable expert. 

Handover of the piece of real estate and support 

Once the real estate project has been completed, we assist our clients during the handover of the real estate and record any services that deviate from the agreed contract (defects). Within the warranty periods given, we will implement improvements to any defects that were already detected at the time of handover and any defects that may have occurred after handover. 

Authors:

Dr. Gerald Ganzger, Managing Partner at LANSKY, GANZGER + partner
Mag. Andreas Bauer, Attorney at Law and Head of Environmental & Public Commercial Law at LANSKY, GANZGER + partner
Mag. Osai Amiri, MSc, Associate and Head of Migration at LANSKY, GANZGER + partner

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