Anyone who has fully repaid their mortgage loan is not automatically free of encumbrances: The land charge remains recorded in the land register until it is actively deleted. This becomes important at the latest when selling, as buyers and their banks expect an unencumbered property. We explain how to use your bank’s cancellation authorization to remove the land charge from the land register, what this costs, and why deletion upon sale often only takes place simultaneously with payment of the purchase price.
What Is a Land Charge—and Why Does It Remain in the Land Register?
The land charge is a proprietary security right in land. It entitles the creditor—usually your financing bank—to demand a specific sum of money from the property and, if necessary, have the property sold by compulsory enforcement (Section 1191 BGB). It is entered in Section III of the land register.
Contrary to what many owners assume, this entry does not disappear automatically once the loan has been repaid. The land charge remains in existence—it is then simply no longer drawn down, meaning it no longer secures any outstanding claim. Anyone who actually wants to make the property free of encumbrances must arrange for the deletion themselves.
The Cancellation Authorization—the Key to a Property Free of Encumbrances
The land registry office requires two declarations for the deletion. First, the consent of the affected party, meaning the creditor whose right is to be deleted (Section 19 GBO). Your bank’s declaration is called the cancellation authorization. Second, the owner’s consent, because a land charge may only be deleted with your consent (Section 27 GBO)—in practice, you provide this as an application for deletion.
Both declarations must be submitted to the land registry office in publicly certified form (Section 29 GBO); a notary certifies the signatures. The bank generally issues the cancellation authorization free of charge after full repayment. Expect a processing time of approximately one to six weeks.
Deleting the Land Charge in Five Steps
Step 1: Clarify the Outstanding Debt and Request the Authorization
Request the cancellation authorization from your bank as soon as the loan has been fully repaid. Is if a remaining debt is still outstanding, it must first be settled – upon sale, this is done from the purchase price (see below).
Step 2: Have the land charge certificate ready
If it is a certificated land charge, the land registry office additionally requires the original land charge certificate. In the case of a non-certificated land charge, the entry in the land register is sufficient. If the certificate has been lost, it must first be declared invalid in court cancellation proceedings – this can delay the sale by several months.
Step 3: Have signatures certified
The notary certifies the bank’s deletion authorization and your application for deletion. Only in this form will the land registry office accept the documents.
Step 4: Submit the application to the land registry office
The notary submits the application for deletion, together with all supporting documents, to the responsible land registry office, which reviews the documents.
Step 5: Deletion and a new land register extract
The land registry office deletes the land charge in Section III. Only after this is the property actually free of encumbrances. A current land register extract documents this for buyers and financiers.
Deleting a land charge upon sale: clearing encumbrances
When selling, you do not necessarily have to delete the land charge in advance. If a loan is still running, this would not be possible anyway, because the bank only issues the authorization after the remaining debt has been settled. In practice, the notary therefore handles the so-called clearing of encumbrances simultaneously with payment of the purchase price:
- The notary requests the deletion authorization from your bank. The bank issues this subject to escrow conditions – the notary may only use it once the outstanding remaining debt has been paid.
- The notary first forwards the settlement amount directly to your bank from the purchase price. Only the remaining balance is paid to you.
- As soon as the bank confirms receipt of payment, the notary submits the deletion to the land registry office.
This ensures that the buyer receives the promised property free of encumbrances and that your bank’s remaining claim is securely settled. Clarify with your bank at an early stage whether an early repayment penalty applies – the details go beyond the scope of this guide, but should be known before the notarial appointment.
How much does deleting a land charge cost?
The bank’s deletion authorization is usually free of charge. Fees are incurred for notarization and registration with the land registry office. Both are calculated according to the Court and Notary Costs Act (GNotKG) based on the registered land charge amount—not the purchase price. Only half a fee is charged for each cancellation.
- As a rule of thumb: around 0.2 percent of the total land charge amount, approximately half each for the notary and the land registry office.
- For a land charge of 200,000 euros, this amounts to approximately 400 to 500 euros.
- In addition, there are minor expenses and VAT on the notary’s invoice.
The owner usually bears the cancellation costs; when selling, this means the seller.
Advantages and disadvantages: cancel or leave in place?
Cancellation is not always the best choice. You should weigh up these points:
- Advantage – sale free of encumbrances: Buyers and their banks expect an unencumbered property. A cancelled land charge accelerates the sale.
- Advantage – clear circumstances: The land register reflects the actual status; misunderstandings about old rights are avoided.
- Disadvantage – costs: You pay the stated fees to the notary and land registry office without receiving any immediate equivalent value.
- Disadvantage – lost flexibility: An existing, non-utilised land charge can be reused for a later loan. Registering a new one later is significantly more expensive than leaving it in place or assigning it.
Those who retain the property and might finance it again in the medium term often deliberately leave the land charge in place. Those who sell, on the other hand, can hardly avoid cancellation—or the release from encumbrances through the notary.
FAQ on cancelling a land charge
Is the land charge cancelled automatically after repayment?
No. Cancellation never takes place automatically. Even after full repayment, the land charge remains registered in Section III until you actively arrange for its cancellation.
Do I have to cancel the land charge before selling?
Not necessarily in advance. The usual procedure is release from encumbrances simultaneously: The notary settles the remaining debt from the purchase price and then arranges the cancellation. The buyer ultimately receives the property free of encumbrances.
Who issues the cancellation authorisation?
Your financing bank, as the creditor of the land charge. It issues the authorisation after the loan has been fully settled, generally free of charge.
How long does cancellation take?
You should allow approximately two to six weeks from requesting the authorisation until registration. In the case of a lost land-charge certificate, theExtend the process by months through the public notice procedure.
What does deletion cost?
Approximately 0.2 percent of the land charge amount for the notary and land registry office in total. For a €200,000 land charge, this amounts to around €400 to €500. The bank’s consent is usually free of charge.
What is the difference between a land charge certificate and a book land charge?
With a book land charge, the entry in the land register is sufficient. A land charge certificate also includes a land charge certificate document, which you must submit in the original for deletion.
Conclusion: How to make the property free of encumbrances
A paid-off property is not automatically free of encumbrances—the land charge remains in the land register until you have it deleted. The process involves obtaining your bank’s consent to deletion, notarization, and registration with the land registry office. When selling, the notary usually handles the release from encumbrances concurrently with payment of the purchase price, so that the remaining debt and deletion are coordinated smoothly. Whether deletion outside a sale is worthwhile involves weighing costs against flexibility. If the sale is certain, clarifying matters with the bank and notary in good time ensures a smooth handover free of encumbrances.