Definition, purpose, costs

According to the definition of conveyance, it represents an agreement in rem between the seller and buyer on the transfer of ownership of the property. A purchase contract with conveyance serves to protect the buyer, as the registration of the priority notice secures the future ownership of the property and gives the buyer special rights. In addition, the priority notice prevents the repeated sale of properties and is also applicable if the seller demands payment even though the buyer can only be entered as the owner in the land register at a later date. With the priority notice in the land register, the seller can no longer dispose of the property. It therefore acts as a priority notice of acquisition and remains in the land register until the actual transfer of ownership to the buyer has taken place.

The priority notice of conveyance is declared before a notary in the presence of both contracting parties. It is not subject to any conditions and is not limited in time. The legal basis for the priority notice can be found in §§ 883 ff. of the German Civil Code (BGB). It can only be used for immovable valuables. The priority notice of transfer of ownership precedes the actual transfer of ownership. Before the law, the change of ownership is bindingly reserved with the priority notice. Furthermore, it is not possible to lend against a property that is encumbered with such a priority notice. If this does occur, the registered buyer is not liable and can instead apply for the mortgage to be deleted. The remaining owner must also ensure that the original condition of the property is maintained. This may also mean that they have to pay for any damage that may occur. In accordance with Section 106 of the Insolvency Code, the priority notice of conveyance also applies in insolvency proceedings, which means that the seller’s creditors are denied access to the property. Even if the sale to third parties is no longer possible, the seller has the option of renting or leasing the property between the time of the priority notice and the transfer of ownership. With the change of ownership, the rental agreement and all associated rights and obligations are then transferred to the buyer.

The financial expenses for registering a priority notice of conveyance are among the ancillary purchase costs incurred when buying a property. The land register costs are generally estimated at around 0.5 percent of the purchase price for the property and usually comprise half of the costs for the land register entry. In addition, there are the fees for the notary.

If the new owner is entered in section I of the land register, the priority notice of acquisition is automatically deleted from the land register. The deletion is effective provided that all legally agreed contractual conditions have been fulfilled. This means that the purchase price and the real estate transfer tax have been paid by the buyer. Once this has been done, a tax clearance certificate is issued by the tax office and sent to the land registry. There, the priority notice of acquisition is subsequently deleted and the buyer is entered as the new owner. The point in time depends, among other things, on when the property no longer has any registered encumbrances, such as mortgages, and the buyer can present a financing plan. If the buyer fails to do so, the priority notice expires after ten years in accordance with Section 169 BGB.