Property debt background debt

Your own property or your own property offers excellent security for credit institutions. And high collateral goes hand in hand with low risk to the bank, reflected in a favorable interest rate. For the taking up of a loan, the home offers itself as security so officially. So that the security is also recorded in writing, it is necessary to enter the loan as a mortgage on the house. This is done at the land registry, which enters a mortgage. If the property is currently unencumbered and the lending bank is the first to be registered, it will be ranked first. That is, in the case of a case, for example, a foreclosure sale, the first-ranked registrant is preferred and gets the money first. On the other hand, if the auction does not bring enough, it may be empty. If the mortgage is paid off at some point, it will be deleted. The registered mortgage remains however. See http://ayaaaak.net for an illustration

Mortgage has no debt

Mortgage has no debt

However, it does not necessarily have to be a bank in whose favor a mortgage is registered. Even a homeowner can do that by registering a landlord’s lien on his property. Under German property law, the landlord’s lien is therefore a mortgage, which is entered in the land register in the name of the landlord. Since a mortgage has no debt – that is, a mortgage is not a repayable loan – any landlord or landlord can register a landlord’s lien without incurring any monthly costs, as is the case with a mortgage , For the following reason, this makes sense first and foremost with an empty lot:

A landlord’s lien gives the landlord the opportunity to secure a “pole position” for (later) targeted borrowing. As just described, a high rank offers some benefits. For example, the owner may offer his first mortgage to a credit institution, resulting in a loan with more favorable terms than subordinated debt. Especially with a Eigentmer-letter Grundschuld a quick securing means is available. The owner can therefore at any time provide security for a loan by transferring the mortgage deed to the bank. The beneficiary no longer has to be entered in the land register, so that there are no additional costs due to a rewrite.

Repayment of the loan

Repayment of the loan

In order to own a landlord’s own debt, the passage to the land registry office is not necessarily required, because this can also arise by virtue of law. As we have already seen, a mortgage is always associated with registering a mortgage. If, however, the secured claim is extinguished in whole or in part in the case of a mortgage, for example by repayment of the loan ( 1164, 1177 BGB), then the “free parts” of the mortgage are automatically converted into a landlord’s lien. It is available to the owner for further use.

However, this provision only comes into effect if there are no other (equal or subordinate) land charges of third parties apart from the landlord’s land charge that has just arisen on the property. Should this be the case, the owners of the subordinated land charges can claim a statutory cancellation of the landlord’s land charge. This is regulated since 1977 in 1179a BGB. If such a claim is asserted, then the owner must cancel his own landlord’s lien. The purpose of this regulation is to allow equal and subordinate land charges to be called. This claim for indemnification may be excluded by contract; but this requires the entry in the land register.