GERMAN STATE HOPES TO SELL GOTHIC FIXER-UPPERS CHEAP : STATE OF DISREPAIR.

Byline: Edmund L. Andrews The New York Times

The Gaussig Castle has everything that an up-and-coming duke or count might want: a ballroom, a fully stocked library, a hunting room complete with hundreds of deer antlers mounted on the wall. It even comes with a Gothic chapel.

All this and more than 30 acres of land is now on sale for just one German mark, or about 58 cents. Offers from foreigners, including Americans, are most welcome. Offers from just about anybody would be welcome.

There is a catch, naturally. Gaussig, lying about 30 miles east northeast of Dresden in what used to be communist East Germany, is a fixer-upper's nightmare. The roof has leaked so much rain and snow that the top floor has nearly collapsed. Many rooms, stripped down to brick and timber, look like they were bombed. The kitchen hasn't been renovated in at least a half-century.

The only non-negotiable requirement by the castle's current owner, the eastern German state of Saxony, is that the new owners must properly restore the property, consistent with its historical architecture. The likely cost: at least $7 million.

Gaussig is not unique. Seven years after communism collapsed, local governments in eastern Germany find themselves stuck with scores of empty castles in varying states of disrepair. Too expensive to keep up but too historic to tear down, the castles have problems ranging from flooded dungeons and crumbling turrets to buckling floors.

All of these castles, even those put to public use, were allowed to decay by East Germany's communist government, which had taken them over after World War II. When Germany was reunified, a special provision in the unification treaty kept the castles in government hands, unlike other expropriated property, with less historical value, which was supposed to be returned to its former owners.

Now officials in Saxony, which owns almost 100 castles and has already spent more than $300 million on renovations, has hit on the strategy of selling three big ones for one mark apiece. If the first three castles find new owners, state officials are ready to sell nine others for the same price.

And there are other bargain-basement opportunities. About 30 miles west of Dresden, state officials are looking for investors to take over Colditz Castle. Colditz, which needs at least $60 million in fix-up work, became immortalized in a best-selling book and several movies as the place where high-ranking British soldiers were kept prisoner during World War II and from which they made several spectacular escapes.

Freedom with castles

Buyers will have considerable freedom to use the castles as they wish. Government officials say that converting them to hotels, restaurants or private homes is perfectly fine, though they would probably draw the line at turning them into giant video-game parlors. The new owners are asked to provide at least some public access, but that could be through something as simple as holding one or two public concerts a year.

``The state has already spent an enormous amount of money restoring castles, and we have so many financial demands from all sides of the economy that we have to draw the line somewhere,'' said Vera Kretschmer, a spokesman for Saxony's Ministry of Finance. ``We can't fix up all the castles, so we are trying to find private investors.''

But the bargain-basement castles are generally not in areas that attract tourism. Bautzen, with about 600 residents, is in the middle of an old open-pit coal mining region that was relentlessly torn up under the old government. Today, the region is greener and cleaner, but nearly 40 percent of the workers are unemployed or in make-work jobs. The situation is so grim, in fact, that Saxony's Ministry of Economics has pinned much of its hope for recovery on a new Indianapolis-style speedway in the neighboring town of Lausitz, which would be built mostly with government money from Bonn.

Awesome sights

For all the problems, the castles are awesome to behold. The Milkel Castle, just a few miles from Gaussig, boasts a yellow facade with stately round towers on the east and west wings. A mausoleum in the nearby woods holds the remains of Count Carl Theodor Ludwig von Hohenstein.

But part of the basement is flooded, many floors are badly warped and much of the living space looks like that of a school dormitory - which was in fact the case during the Cold War.

The property is not entirely vacant. Eleven families live in the two buildings that flank the castle, and all of them are understandably ambivalent about the property's future. ``It would be a shame to see the castle come down,'' said Elsa Schmidt, a widow who has lived there for 30 years. But, she added: ``We all hope that if someone buys it, they let us stay in it.''

Though government officials emphasize that furniture and personal belongings are not part of the one-mark offer, there is room for negotiation.

At Gaussig Castle, the library was preserved under the old government as a mini-museum and remains stocked with leather-bound books, handwritten ledgers, china and even a baby-size sled that were all owned by the family of Count Karl Schall-Riaucour.

In the ballroom, which was carefully renovated during the 1980s, are pillars carved into Roman figures that appear to support the ceiling. Paintings and ornate friezes adorn the walls, along with full-length mirrors. The hunting room contains not only hundreds of deer antlers, but also silverware and china.

Kretschmer, from the Ministry of Finance, said the state had received more than 25 expressions of interest in the Gaussig and Milkel castles but no firm offers.

But castles-for-a-mark may be the start of a new trend.

Just a few weeks ago, the German federal agency in charge of privatization offered to sell two bankrupt shipyards in eastern Germany for one mark apiece.