Definition, purpose, costs
Anyone who buys a property and signs the purchase contract is not yet the official owner of the property. However, in order to offer a buyer a certain degree of protection, the notary will arrange for a priority notice of conveyance to be entered in the land register after the contract has been signed. It remains in place until the new owner can be entered in the land register. This priority notice prevents the property from being sold to another interested party and thus secures the right to acquire ownership.
Definition of conveyance and priority notice of conveyance
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.
Legal basis for registration
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.
Costs of a priority notice of transfer of title
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.
Deletion of the priority notice of conveyance
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.
Die Vormerkung der Auflassung im Grundbuch stellt eine verbindliche Kaufzusage dar, die gegenüber dem zukünftigen Eigentümer einer Immobilie getätigt wird. Dadurch erwirbt dieser spezielle Rechte, gleichzeitig ist das Kaufobjekt vor dem Zugriff dritter Parteien geschützt. Das bedeutet, dass keine andere Person den Zuschlag auf die Immobilie erhalten kann, auch wenn diese einen höheren Preis bieten sollte. Der Verkäufer kann dadurch vom Verkauf nicht mehr zurücktreten, überdies ist das Grundstück vor dem Zugriff von Gläubigern geschützt, sofern er Insolvenz anmelden muss. Darüber hinaus sichert die Vormerkung dem zukünftigen Eigentümer zu, dass er das Objekt so erhält, wie es gemäß Vertrag vereinbart wurde.
The transfer of ownership is announced as part of the priority notice of conveyance conditional on the purchase process. The priority notice in the land register secures the buyer’s claim to the transfer of ownership.
The priority notice is initiated via the notary, who submits a corresponding application to the land registry. If this is granted, the land registry will make the priority notice in section II of the land register. The requirements for the priority notice in the land register include the concluded purchase agreement and the corresponding application by the notary.
The period between the priority notice and the actual conveyance, i.e. the entry in the land register, usually lasts several weeks. Normally, ownership is entered in section I of the land register around six to eight weeks after the contract is signed.
The priority notice of conveyance can be found in section II of the land register, where all encumbrances and restrictions on a plot of land or property are noted.
