The term “real estate” includes the following:
The laws governing real estate transactions can be divided into two categories.
Specific laws (including the following):
There are three public authorities involved in the Luxembourgish land registration system:
The land registration procedure entails three steps:
Title registration is jointly handled by the following authorities:
First, land owners can prove their ownership over real estate property via notarial deeds or their transcription by the AED. Secondly, a document evidencing the transcription can be obtained upon written request of the owner to the AED.
Only public administrations, administrations of municipalities, public entities operating in the real estate sector, geometers, bailiffs and notaries may perform an online search of title.
Foreigners are entitled to own real property in the same way as nationals; there are no nationality restrictions on land ownership.
Real estate property owners can be expropriated by the government only in case of public interest. Appropriate financial compensation must be paid to an expropriated owner according to Article 16 of the Constitution and Article 545 of the LCC, notably according to administrative procedure and regulations.
Generally, an interest in real estate is held by any of the following means:
The usual structures used in Luxembourg for investing in real estate are either regulated or unregulated vehicles.
Unregulated real estate investment vehicles include the following:
Regulated real estate investment vehicles include the following:
Short-term or long-term bank loans, mortgages, multi-currency and revolving credit line facilities represent the main source of financing of real estate investments in Luxembourg. However, external financing and equity may be pushed down in the form of inter-company loans, profit participating loans and other kinds of hybrids.
If a notarial deed is required, the notary will prepare the documentation. Lawyers often prepare a letter of intent (compromis de vente).
If private seal documentation is sufficient for the purpose of the transaction, documentation is usually drafted by lawyers.
An owner is liable for matters relating to the real estate even if they occurred before he/she bought it, meaning that he/she, in principle, inherits the liabilities for such matters. However, in most real estate transactions and especially relating to pollution matters, sales contracts often set forth that the real estate is sold without pollution casualties. Such clause allows the current property owner to shift liability to the former property owner.
Under Luxembourg law, the liabilities of the seller can be divided into two categories:
The law provides for a guarantee in respect of latent defects (vices cachés) of the sold property which renders it unfit for the purpose for which it was intended, or which affects the use of this property. The seller would be liable if the buyer would not have acquired, or would have paid a lower price, if he/she had known of such condition. The seller is not liable for latent defects which the buyer was able to discover himself/herself.
The seller/constructor of a building to be constructed is liable for hidden defects for 10 years upon acceptance of the construction used by the purchaser, pursuant to the LCC.
The action arising under this guarantee may be exercised by subsequent purchasers only against the original seller, ie, the constructor.