The land charge is according to German law of property , the real right , from a land or leasehold rights (such as a condominium or leasehold ) the payment of a certain sum of money to demand. It is similar to the mortgage , but in contrast to it, it is not tied to a specific claim.
The land charge is one of the land charges and is regulated in § ff. In the 3rd book " Property Law " of the German Civil Code (BGB). The regulations on the land charge were last changed by the law to limit risks associated with financial investments on August 19, 2008. The regulations on the mortgage (in particular on the order and transfer) according to BGB apply accordingly to the , with the exception of the regulations that are based on the dependency ( accessory ) of the mortgage to the claim . In contrast to the mortgage, the land charge is independent of any underlying claim, so it is a non-accessory right. A link is typically made in an accompanying security contract under the law of obligations , which is intended to limit the utilization of the creditor to the security purpose.
In accordance with encumbered with the land charge in such a way that this property is liable for the payment of a certain sum of money . According to , Abs. 1 BGB in connection with BGB and in connection with BGB, movable objects can exceptionally also be encumbered with a mortgage if they represent accessories .German Civil Code (BGB), a property is
The land charge is entered as a right in rem in a property in Section III of the land register. It grants the obligee according to BGB a right to " tolerance of the foreclosure " against the debtor . The claim arises after the termination of the land charge ( BGB). The real estate is then used through a public foreclosure auction according to ff. ZVG or compulsory administration according to ff. ZVG.
The Roman law knew only the mortgage . It was not until Joachim Heinrich Campe included the basic charge in his dictionary in 1807 as "newly formed". The principle of the "abstract mortgage" spread through the "Mecklenburg mortgage regulations for country estates" of October 1848, followed in March 1868 by the "Mortgage Law for New Western Pomerania and Rügen". Its regulation was already taken over by the preliminary draft of 1868 for the "Prussian law on the acquisition of property and the encumbrance of real estate" from May 1872, where a mortgage independent of fault was mentioned as a "form of basic debt". However, the land charge as a new kind of lien could not initially prevail, so that Heinrich Dernburg described it in 1891 as a failed experiment.
Despite this criticism, the land charge was included in the BGB after Reinhold Johow , the editor responsible for property law , emphasized its justification in the requirements of practice for simple legal forms, interchangeability and diversity of purposes. According to § 1135 BGB-E, a property could be encumbered in such a way that “a certain person (land debtor) is entitled to demand that a certain sum of money be collected from the property for him by means of compulsory administration and foreclosure auction (land charge ) ". In the motives for the BGB it is made clear that the land charge differs from the mortgage only in that it is not dependent on a claim. The motives were far-sighted from the assumption that the development of mortgage law "seemed to require the displacement of the mortgage by the land charge".
However, this repression was a long time coming, because in 1957 Julius von Staudinger 's commentary on the Civil Code said that the expectation cherished when the Civil Code was discussed had only partially been fulfilled. Only in the mid-1960s did banking practice increasingly favor land charges. The causes of the displacement of the mortgage by the land charge are that the non-accessory land charge is easier to handle from the point of view of the credit institutions - which can regularly assert their interests. Because an exchange of the secured claim is possible with the land charge by simply changing the security contract, as is a new valuation . Today mortgages make up 80%, mortgages only 20% of the mortgage liens. The suppression has led the case law to compensate for the existing risk for the consumer (which lies in the abstraction principle and the lack of accessoreity of the land charge ) by demanding certain protective mechanisms by way of the construction of a security agreement and its interpretation . Through the Risk Limitation Act of August 2008, the security land charge has now also taken on a legal form, because (1a) BGB, (2) sentence 2 BGB mentions the “land charge to secure a claim”.
A land charge is the consent of the owner of a property to encumber his property (e.g. as collateral for loans ) with a land charge . The complex arrangements for land charge are in a form , the so-called land charge certificate contained. It is a security contract that represents a general business condition and is therefore subject to the judicial review of the content of liability clauses ( ff. BGB). The appointment of the land charge includes both the substantive legal requirements ( BGB) and the formal legal aspects, namely the application for the entry of the land charge in the land register and the approval of the property owner. The land charge is either a notary to notarize or publicly certified to the competent local court ( land registry ) is required. Notarization is required if the property owner submits to immediate enforcement in the deed ( (1) No. 5 ZPO).
Individual questions about the land charge
Book and letter mortgage
There are two types of land charge:
- Book land charge: It is entered in Section III of the land register.
- Land charge: In addition to the entry in section III, the land registry will issue a land charge on a form from the Federal Printing Office.
The letter exclusion must be entered in the land register, d. In other words, a land charge is basically a letter land charge, unless the letter exclusion is entered - then it is a book land charge (§Abs. 1, Abs. 1, Abs. 2 BGB).
The land charge is a security ; he embodies the land charge in legal dealings. While an entry in the land register is usually required for the transfer of a book land charge to another creditor , an assignment contract and the delivery of the letter are sufficient for a letter land charge . The letter mortgage does not always reveal who the creditor is from the land register; the creditor status may have changed outside of the land register. The assignment of a mortgage by letter can be made in private writing or in a notarized form. The disadvantage of privately written assignment is the lack of enforceability in the land register.
Independence to demand
Unlike mortgages, land charges are not an accessory to a debt; This means that they are not dependent on the existence and scope of the secured claim (s) (e.g. loan ) and can be transferred or used on their own. In practice, however, the land charge is almost only granted - like the mortgage - to secure a claim. This is referred to as the security land charge ( legal definition in (1a) BGB). But the security land charge is not dependent on the existence of the claim. Land charges can therefore - in contrast to mortgages - be used as security for other claims even after they have been ordered, simply by expanding the security agreement accordingly. That is also the reason why land charges are preferred over mortgages in practice. In addition to the actual land charge amount, land charge interest ( real interest ) and the ancillary service are usually entered. The land charge secures higher claims with the z. B. arise from default in payment and exceed the nominal amount of the land charge.
Security agreement and claim for restitution
Despite the legal independence of the land charge from the secured claim as a personal claim , the land charge and secured claim are linked by the security contract (declaration of purpose for land charges). After the repayment of all claims secured by the land charge, the security agreement gives rise to a claim for restitution . The claim for restitution can be directed towards the reassignment of the land charge, waiver by the obligee and the cancellation of the land charge . In practice, however, this right of credit institutions is usually limited to the right to be granted a cancellation permit. According to a ruling by the Federal Court of Justice (Az. XI ZR 244/90), the banks are not allowed to charge a fee for this.
Satisfaction of the creditor
The rank of its entry in the land register is decisive for the value and security of a land charge . The rank of a right in Dept. II and III is based on the sequence in the same section, otherwise according to the time of entry. The law registered earlier takes precedence over the law registered later.
In a foreclosure auction, the creditors are satisfied according to their rank, i.e. the order in which they are entered. Therefore, many credit institutions require a first-rate land charge to secure a loan. The hierarchy can be changed by agreement and registration (so-called ranking ). According to GBO, the relevant declarations require notarial certification.
Submission to foreclosure because of the claim in rem
It is also common for the owner to submit to immediate enforcement of the property in accordance with Code of Civil Procedure (ZPO) in such a way that enforcement against the respective owner should be permissible, which, however, also requires entry in the land register. Otherwise, the bank must have a final judgment stating that the owner of the property is obliged to tolerate the foreclosure. Such a process would be very costly and time consuming. This means that foreclosure on the property is possible even after a change of ownership, without having to obtain an enforcement title against the new owner beforehand.
Personal assumption of guilt and submission to foreclosure
In practice, on the occasion of the establishment of the land charge in the land charge deed, there is usually also an assumption of personal liability including submission to immediate foreclosure in the amount of the land charge and, if applicable, the ancillary services in the entire property. The personal assumption of liability is a process that must be separated from the actual establishment of the land charge. This is an abstract promise of debt and, because of the submission to immediate enforcement, also a separate enforcement title in accordance with (1) (5) ZPO . From the notarial deed, foreclosure can take place both in the encumbered real estate and in all other assets without a judgment being required.
When the land charge is assigned, personal enforcement submission does not automatically pass to the new creditor with the land charge. Rather, the independent claim from this must be expressly assigned . Submission to foreclosure in the land charge deed must also be explicitly agreed in the security agreement ( security contract ), unless it is effectively specified as security to be provided in principle according to the bank's general terms and conditions; otherwise it is void .
In the context of the land charge, the collateral taker is liable for the property in addition to the property, the essential components ( BGB), the property accessories ( BGB), and according to BGB, the rent and lease claims (for rented or leased objects on loan ); According to § ff. BGB, insurance compensation , in particular building insurance ( BGB) and other damage insurance ( BGB), is also liable . This can mean that, in exceptional cases, movable objects (or animals ) can also be encumbered with a land charge.
Special forms of land charge
Security land charge
Total land charge
One speaks of a total land charge when the same land charge rests on several pieces of land that do not have to belong to the same owner . The total land charge is not regulated by law, but the total mortgage ( BGB), the conditions of which may be applied to the total land charge ( BGB). According to the regulation in § 1132 Paragraph 1 BGB, the provisions of joint and several debt are applicable, because each individual property is liable for the entire claim. The encumbrance of each piece of property is therefore subject to the subsequent condition that the obligee is satisfied from another piece of property that is liable. The obligee can choose from which of the properties he wants his satisfaction, but he can also claim all encumbered properties at the same time. If the obligee is satisfied from one or more pieces of land, the other pieces of land are released from liability ( (2) BGB). If a property owner pays the land charge to satisfy the obligee (this also includes the distribution of the proceeds from the foreclosure auction) and if he has a claim for compensation against the owner of the other encumbered properties, then he acquires the land debts on the other properties in the amount of his compensation claim. The total land charge arises like the individual land charge; it only becomes effective as general law when it is entered on the last co-liable property. From each entry it is recognizable as a total land charge by a general liability notice ("joint liability exists in the land registers ...").
A total land charge is economically expedient if several pieces of land form an economic unit, for example if several pieces of land in their entirety form an agricultural enterprise. The obligee can at the same time apply for the foreclosure auction of all properties from the same land charge and through a procedural connection in the auction process (total offer) achieve that an acquirer acquires all encumbered properties at the same time, i.e. benefits from the economic unity. The creditor hopes that this will generate higher proceeds than if the economic unity were broken up.
A total land charge also arises when converting encumbered built-up property into condominium or partial ownership . In this case, the original land register sheet is closed and the original land charge is entered in full on all new apartment or partial ownership land register sheets, without it being distributed in any way.
According to German property law, an owner land charge is a land charge that is entered in the land register in the name of the property owner . This is possible because a land charge does not necessarily have to be matched by a personal claim (motto: "A land charge has no reason for guilt"), as is the case with a mortgage , for example .
The aim of registering an owner's land charge can be, for example, to secure a higher position for later borrowing . A fast means of securing is available, especially in the case of an owner mortgage. But an owner land charge can also arise through a gift or inheritance from the original lender .
An owner land charge also arises by law if the secured claim on a mortgage is wholly or partially extinguished, for example due to loan repayment ( , BGB). The "free parts" of the mortgage are then automatically converted into a (hidden) owner land charge. This is usually not evident from the land register.
If, in addition to an owner land charge, there are equal or subordinate land charges of third parties on the property, the owners of these land charges can assert the statutory cancellation claim fromBGB against the owner. The owner then has to delete his land charge. The purpose of this cancellation claim, introduced on January 1, 1978, is to enable equal or subordinate mortgage liens to be advanced. This right to cancellation can be contractually excluded; however, this requires entry in the land register.
Cancellation approval after loan repayment
In contrast to a mortgage, a land charge can continue to exist even after the secured debt has been settled. After repayment of the loan, for the security of which the land charge was entered in the land register, the security provider has a right to cancellation or transfer of the land charge . This deletion or transfer is a secondary obligation of the credit agreement. The bank may not charge any separate bank charges for this.
The debtor can, with the consent of the land debtor, leave the land charge (for a future loan). If the land debtor does not agree, he can grant cancellation approval and thus (regardless of an entry in the land register) comply with his ancillary credit contract obligation.
The debtor can freely decide whether to request a cancellation permit or a transfer of the land charge when the loan is settled. He can also have the land charge transferred to himself, which creates an owner land charge. With repayment, the security mortgage is only automatically converted into an owner's mortgage if (also) the mortgage and not only the secured claim is paid (banks usually exclude the redemption of the mortgage in order to secure the mortgage to preserve future claims).
Even if a residual debt persists, the lender can waive the security and grant cancellation approval.
Differentiation from the mortgage
In contrast to the mortgage, the land charge is abstract, more precisely non-accessory . This means that the land charge entered in the land register exists regardless of the loan amount secured with it. Example: The borrower agrees a so-called security agreement with the lender , according to which the land charge of € 150,000 to be ordered serves to secure a loan of € 150,000. However, if the borrower only needs € 140,000.00, the lender would have the right in rem in a foreclosure auction to demand € 150,000 as auction proceeds. This discrepancy also arises in the event of later repayment , because the remaining credit is getting smaller and smaller, but the land charge amount of € 150,000 remains unchanged. The land register law resolves this discrepancy by granting the borrower (or security provider ) an owner land charge in the amount of the land charge not used by credit. If the loan is therefore repaid in full, the mortgage has become the complete owner's mortgage. The borrower or protection seller has the right to use this land charge as collateral for new loans by entering into a new security agreement. Due to this flexibility of the land charge, it is favored by lenders over the mortgage and has the largest share of land charges (currently around 80%). Mortgages are only used by public authorities (e.g. the WfA - North Rhine-Westphalia Housing Promotion Agency) to secure state loans.
Risk Limitation Act
Acquisition of the land charge
In 2007 the media reported that land charges were allegedly being abused. Since the security contract is not automatically transferred to the new obligee in the event of an assignment (sale) of the land charge, the latter can theoretically enforce the land charge in full if he does not know the original security reason. The only countermeasure taken by the debtor is a claim for damages against the former creditor who sold the claim without ensuring a legally valid transfer of the security agreement.
The buyers of mortgage-backed receivables receives as part of a due diligence usually aware of the security purpose statements and therefore can not be enforced regardless of the loan due under the mortgage. In this case, the borrower would have the legal remedy of the enforcement counterclaim according to ZPO.
As part of the Risk Limitation Act, it was legally stipulated in 2008 that there can be no purchase of the security land charge in good faith, free of any objection. If the loan is sold, the borrower can hold this security agreement against the new creditor. A previously possible acquisition of the security land charge without any objection in good faith - due to lack of knowledge of the security agreement - according to 2 BGB is excluded by the new regulation according to paragraph 1a BGB.
Termination of the registered capital
The capital of a land charge must according to Risk Limitation Act by Paragraph 2 Sentence 2 BGB if the land charge serves to secure a monetary claim. The same applies to the compulsory administration of a property.Abs. 1 S. 1, 3 BGB can be terminated with a six month period before the foreclosure can be carried out from it. A contractual agreement that deviates from this is excluded due to the
Recognition under banking supervisory law
Mortgages primarily used as collateral at banks before using as collateral object residential or commercial properties are eligible and the collateral value of real estate is a priority. According to (4) of the KWG , credit institutions are obliged to carry out a particularly prescribed creditworthiness check for consumer property loan contracts , in which debt ratios such as the debt service coverage ratio must also be taken into account.
Since January 2014, credit collateral has been considered a credit risk mitigation technique for regulatory purposes . If loan collateral is recognized as a credit risk mitigation technique by the Capital Adequacy Regulation (CRR) applicable in all EU member states , it leads to a lower level of equity capital at banks compared to blank loans . As a result, secured loans can be granted with a lower interest rate .
Land charges belong to the credit risk mitigation techniques “with security deposit ” ( real securities ; Art. 4 Para. 1 No. 58 CRR). Art. 194 CRR establishes principles for the supervisory recognition of credit risk mitigation techniques, after which loan collateral in particular in all jurisdictions legally ( English valid ) and enforceable (English enforceable must be) sufficiently liquid , over time a stable value and a credit event promptly recyclable need to be. The positive correlation between the collateral and the borrower's creditworthiness must not be very high (Art. 194 (4) CRR). In case of doubt, any legal risk must be excluded by means of a legal opinion .
Land charges are considered mortgages which, according to Art. 125 para. 1a CRR, are given a risk weight of 35% of the book value if they are used or rented as residential property by the owner , the mortgage lending value of the property does not depend significantly on the creditworthiness of the borrower and the risk of the Borrower does not depend significantly on the property (Art. 125 Para. 2a and 2b CRR). The Solvency Ordinance (SolvV), which has been in force since January 2014 , clarifies the requirements that a mortgage lending value must meet for the purposes of the Capital Adequacy Ordinance. These requirements are finally listed in SolvV. After that, the mortgage lending value
- according to PfandBG in connection with the mortgage lending value determination ordinance or para. 2 sentences 1 to 3
- have been determined in accordance with BaFin in accordance with (2) No. 3 of the Building Societies Act or ( ) of the Building Societies Act, taking into account a provision approved by
- relate to a property in another country of the European Economic Area and have been determined on the basis of strict legal or administrative provisions applicable in this country, which BaFin has recognized as being equivalent to the Mortgage Lending Value Determination Ordinance or
- be a sustainably achievable value determined differently, which meets the requirements of Section 16 (2) sentences 1 to 3 PfandBG.
KWG also refers to the PfandBG that is now in force.(3) no. 1
The lending limit allowed under Art. 125 Para. 2d CRR 80% of the loan value or market value does not exceed. According to Art. 126 (1a) CRR, commercial real estate has a risk weight of 50% of the market value (or 60% of the mortgage lending value) with the same correlation requirements as for residential real estate. Repayment depend It must under Art. 126 para. 2b CRR on the ability of the borrower, the loan mainly from other financing sources than the object , special or project financing to repay to. In the event of default, both risk positions are assigned a risk weight of 100% (Art. 127 Paragraphs 3 and 4 CRR). For all loans exceeding the lending value, the risk weight for unsecured loans must be used as a basis in accordance with Article 124 (1) CRR. In addition, appropriate damage insurance (Art. 208 (5) CRR) is required for the property; an independent expert has to prepare a collateral assessment (Art. 229 (1) CRR) and regular monitoring by the lender (annually for commercial real estate, every three years for residential real estate) is required (Art. 208 CRR).
Only a few countries have liens on property like the German land charge. In Switzerland is Debenture to Civil Code ( Civil Code ) comparable with the mortgage legal institution . Due to its design as a security, it is even more fungible . According to § 448 ABGB Austria only knows the mortgage. In France , the “refillable mortgage” ( French hypothèque rechargeable ) is provided in accordance with Art. 2422 (1) Civil Code (CC), which can also be used to secure claims other than those specified in the original order . For this purpose, a replenishment clause ( French clause de rechargement ) must be agreed. English law knows next to the mortgage-related Mortgage abstract background levels ( English land charge or English country-debt ) that are not in the land registry ( English land register ) can be input. In Finland the land charge predominates, it is also known in Ireland .
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- Money & more - Finances - Investor - FAZ.NET - Real estate: Foreclosure sale despite punctual repayment
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