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Finance providers

What are the typical providers of real estate financing in your jurisdiction? Are there any restrictions on who may provide financing?

In general, real estate financing is provided by banks by means of a loan agreement. Restrictions on which parties can provide financing in relation to real estate transactions mainly stem from banking regulations which restrict the commercial granting of loans (including within groups).

Financing structures

What are the most common structures used to secure real estate financing and how are these security interests perfected?

Mortgages typically serve as collateral for real estate financings. In case of share deals, the following are also usually considered:

  • pledges over shares;
  • pledges over movable assets;
  • pledges over accounts;
  • assignments of receivables; and
  • the benefit of any major contracts.

To create a mortgage, the pledgor and pledgee must execute a mortgage agreement in writing and notarise the signatures. In general, both fixed-amount mortgages (securing a specific amount) and maximum amount mortgages (which can be recurrently used under a specific relationship) are possible under Austrian law. A mortgage is established only on its registration in the land register. 

What covenants are typically made in financing agreements?

Financing covenants in real estate financings may vary considerably from transaction to transaction, but the Loan Market Association’s real estate finance documentation typically serves as a starting point.

Enforcement of security

How are security interests enforced in the event of default?

Security interests (including mortgages) are generally enforced by way of a judicial procedure, provided that pledge agreements with regard to moveable tangible assets can also be enforced without a judicial procedure by way of a public auction through an authorised entrepreneur if no other enforcement procedures have been agreed between the parties (real estate is generally excluded from such extra- judicial enforcement). Assignments and title transfers can generally be enforced without court proceedings. As Austria is an EU member state, the EU Brussels I Regulation (44/2001) applies. 

What is the typical timeframe for the enforcement of security?

Enforcement proceedings relating to a registered mortgage (not taking into account potential prior proceedings) typically take between four and eight months.

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