The mortgage is a central component of German real estate law and is of considerable importance for property owners, borrowers, and banks. This article provides a comprehensive overview of the legal basis, current case law, practical case studies, and answers to frequently asked questions. Our focus is on thoroughly examining the perspectives of both property owners and lenders. You will learn how the mortgage affects your real estate financing and which legal aspects must be considered.
Mortgage: Definition and the most important types
A mortgage is a security right that allows creditors to seize the property in the event of a debtor's insolvency. In Germany, there are three main types of mortgage:
Pension debt: It secures recurring cash annuities, but is of little importance in today's practice.
mortgage: It is tied to a specific claim and expires automatically as soon as it is paid in full.
mortgage: This exists independently of a specific claim and can be used multiple times to secure different loans.
Legal basis of the mortgage: An overview
The mortgage is enshrined in the statutory provisions of the German Civil Code (BGB) and the German Land Register Act (GBO). The key provisions are:
§§ 29-35 GBO: Define the rules for the registration, cancellation and ranking of mortgages.
§§ 1113-1203 German Civil Code: Regulates the mortgage, land charge and annuity debt.
§§ 873, 875 BGB: Determine the conditions for agreement and registration in the land register.
Establishment of mortgages: How it works
A mortgage arises from a real agreement between the property owner and the creditor, which is concluded in accordance with § 873 German Civil Code must be notarized. For the validity of the contract, registration in the land register is also required, which must be § 875 German Civil Code This entry is made at the relevant land registry office, which checks the requirements and publicly records the mortgage in the land register.
Ranking of mortgages: How it is regulated
The ranking of mortgages is crucial when multiple security interests exist on a property. It regulates the order in which creditors can enforce their claims. The legal basis for this is §§ 10, 28 GBO to find.
- principle: “First come, first served” – The first registered mortgage has priority.
- ExceptionsDeviations from this order are possible if creditors agree on a different ranking. This agreement must be recorded in the land register.
- Ranking clause: Such a clause in the land register may give priority to a mortgage registered later over an earlier one.
Enforcement of mortgages: Foreclosure in detail
If the debtor fails to meet his payment obligations, the creditor can assert the mortgage through compulsory enforcement proceedings. The legal basis for this is set out in Section 1147 of the German Civil Code (BGB). In practice, this usually results in a compulsory auction, in which the property is auctioned off by the local court. The proceeds from the auction are then used to satisfy the creditors. Another option is compulsory administration, in which the property is administered by the court, and the creditors receive payments from rental income or other proceeds. Before compulsory enforcement can take place, however, the creditor must present an enforceable title, such as a judgment, writ of execution, or notarial deed, confirming both the claim and the mortgage.
Cancellation of mortgages: How it works
A mortgage does not automatically expire after the claim has been settled. It must be actively deleted from the land register. First, the creditor must obtain a notarized authorization for deletion in accordance with Section 875 paragraph 2 of the German Civil Code The property owner or debtor then applies for deletion at the responsible land registry office. The land registry office reviews the documents and records the deletion in the land register. Only once the deletion is registered does the mortgage finally expire.
Current court rulings on mortgages: Important decisions
There are several important court rulings on the subject of mortgages that are of great importance to both property owners and lenders. In a ruling by the BGH from February 21, 2020 (V ZR 33/19) It was decided that a mortgage remains valid even if the creditor receives the claim only after it has been registered in the land register. In another judgment of the BGH from September 28, 2018 (V ZR 188/17) It was clarified that mortgages do not automatically expire if the property is transferred to the creditor through compulsory auction or transfer of ownership. In this case, deletion from the land register is required. Furthermore, the BGH on March 10, 2017 (V ZR 178/16)that priority agreements between creditors are valid even without entry in the land register if they have been documented in a notarial deed and both parties refer to them.
These judgments underline the importance of precise legal regulations and individual agreements in the area of mortgages.
Our specialized banking law attorneys offer comprehensive advice and legal support in all matters relating to mortgages. Whether establishing, ranking, enforcing, or canceling mortgages – we protect your interests as a property owner, borrower, or creditor and ensure a legally compliant transaction. Trust our expertise to protect your rights!
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