Almost every financed property carries a land charge in the land register—and it does not disappear on its own as soon as the loan has been paid off. For sellers, this becomes an issue at the latest when the buyer demands a land register “free of encumbrances.” We explain what a land charge secures, how it differs from a mortgage, and how you can redeem or have a registered land charge deleted when selling without an agent’s commission.
What is a land charge?
A land charge is a real estate lien: It encumbers a property in such a way that a specific sum of money is to be paid from the property (§ 1191 BGB). In plain terms: If the owner does not repay their loan, the creditor—usually the financing bank—may initiate foreclosure proceedings against the property and satisfy its claim from the proceeds of the sale. The land charge is entered in Section III of the land register, usually for the full loan amount and additionally with high land-charge interest, which serves the bank as a security buffer.
There are two forms. In the case of a book land charge, the entry in the land register is sufficient. In the case of a land charge certificate, the land registry office additionally issues a land charge certificate—a security that you absolutely need in the original for the later deletion. If the certificate is lost, it must be declared invalid in a complex public notice procedure, which takes weeks to months.
Land charge or mortgage: What is the difference?
Both are real estate liens, but their legal essence differs. A mortgage is accessory: It is firmly linked to a specific claim (§ 1113 BGB) and automatically decreases with each repayment. Once the loan has been repaid, the mortgage loses its effect.
A land charge, by contrast, is non-accessory. It does not require a claim (§ 1192 BGB) and remains in full force, regardless of how much of the loan has already been repaid. This is precisely why banks today work almost exclusively with land charges: After repayment, they can be reused for another loan without a new registration. For sellers, this leads to the most important takeaway of this guide:
A land charge does not disappear automatically when the loan has been paid off. It remains registered in the land register until it is actively deleted.
Why the land charge becomes an issue when selling
Buyers generally want to take over a property “free of encumbrances” – that is, without third-party land charges registered in the land register. If the buyer finances the purchase through a bank, the bank also requires a first-ranking position for its own new land charge. A still-registered land charge belonging to the seller stands in the way of this. Therefore, the notarized purchase agreement usually provides for a transfer free of encumbrances: As the seller, you undertake to hand over the property free of existing encumbrances.
This applies to sales through an estate agent just as it does to commission-free private sales. The only difference lies in the organization: Without an estate agent, you coordinate the appointments with the notary and bank yourself – in both cases, the notary handles the actual transaction.
Redeeming and deleting the land charge: How to proceed
Step 1: Check the land register
Request an up-to-date extract from the land register and check Section III to see which land charges are registered, in what amounts, and in favor of which bank. It is not uncommon for old rights from loans that were paid off long ago to still be listed there.
Step 2: Ask the bank about the outstanding debt
Clarify with your bank whether the loan secured by the land charge has already been repaid in full. If an outstanding balance remains, have the exact redemption amount as of the planned handover date provided to you.
Step 3: Request a deletion authorization
To delete the land charge, you need a deletion authorization from the creditor. Once the loan has been repaid, the bank is obliged to issue this; as a rule, it may not charge a separate fee for the authorization itself. The deletion authorization must be notarized, otherwise the land registry office will not accept it.
Step 4: Redemption simultaneously through the notary
If the loan is still running at the time of sale, it will be redeemed from the purchase price. The notary obtains the redemption amount from your bank and handles the payment in escrow: Part of the purchase price flows directly to your bank, which in return releases the deletion authorization. In this way, the buyer pays only against freedom from encumbrances, and your bank deletes the land charge only against full redemption.
Step 5: Deletion at the land registry office
Finally, the notary submits the application for deletion together with the notarized authorization – and, in the case of a land charge certificate, the land charge certificate – to the land registry office. The registration of the deletion takes depending on the workload of the authority, several weeks.
Delete, leave in place, or assign?
As the seller, you essentially have three options:
- Delete: The clean standard case. The property is transferred to the buyer free of encumbrances. Buyers and their banks expect this in almost all cases.
- Assign to the buyer’s bank: If the buyer is financing the purchase through a bank, in some cases the existing land charge can be assigned to and reused by their bank. This is cheaper than deletion plus new registration, but in practice works only from one bank to another and only if both sides agree.
- Leave in place: Once the loan has been repaid, the land charge becomes an owner’s land charge and could be reused for your own future financing. This does not help with the sale – it only makes sense if you are keeping the property.
How much does deleting the land charge cost?
The costs of deleting the land charge depend on the amount of the registered land charge and are incurred for notarization and the land registry office. As a rough rule of thumb, they amount to around 0.2 percent of the land charge amount; for a land charge of 300,000 euros, the total costs are therefore in the range of several hundred euros. The bank’s deletion consent itself is generally free of charge.
The early repayment penalty must be considered separately. If you repay a loan before the end of the fixed-interest period because of the sale, the bank may demand compensation for this. This has nothing to do with deleting the land charge, but it can make the sale significantly more expensive – factor it in at an early stage.
FAQ about land charges when selling
Does the land charge disappear automatically when the loan has been repaid?
No. Unlike a mortgage, the land charge does not expire when the loan is repaid. It remains registered in the land register in full until it is expressly deleted upon application.
Can I sell my property with a registered land charge?
Yes. The sale is possible at any time; the land charge is deleted or discharged as part of the transaction. In practice, the notary handles this task and ensures that the buyer receives a property free of encumbrances.
Do I absolutely have to have the land charge deleted before the sale?
Not necessarily beforehand. If the loan has already been repaid, you can arrange the deletion in advance. If there is still an outstanding balance, it is customary and cheaper to handle the discharge and deletion simultaneously as part of the purchase transaction through the notaryto proceed.
What is a deletion authorization?
This is the creditor’s notarized declaration consenting to the deletion of the land charge. Without it, the land registry office will not delete it. After full repayment, the bank must issue the authorization.
What happens if I can no longer find the land charge certificate?
For a certified land charge, the original certificate must be submitted for deletion. If it has been lost, it is declared invalid in a public notice procedure – this takes time and causes additional costs. Therefore, look for the certificate at an early stage.
Advantages and disadvantages: delete in advance or simultaneously
Whether you have the land charge deleted before the sale or only during the settlement process depends primarily on whether the loan has already been repaid:
- Advantage of deleting in advance: A land register free of encumbrances appears credible to buyers and accelerates the settlement. This makes sense if the loan has already been paid off anyway.
- Disadvantage of deleting in advance: You bear the effort and costs alone and in advance, without a sale already being secured.
- Advantage of simultaneous settlement: Repayment and deletion are handled together through the notary and paid from the purchase price – the standard procedure when there is an outstanding balance, preserving your liquidity.
- Disadvantage of simultaneous settlement: The process is somewhat more complex and must be properly scheduled so that payment, repayment and deletion dovetail.
Conclusion: The land charge is not an obstacle to selling
A registered land charge prevents no one from selling – it simply has to be handled properly. Check your land register early, clarify the outstanding balance with your bank and leave the actual repayment to the notary. If the loan has already been repaid, deleting it in advance is often worthwhile; if it is still running, handle everything simultaneously during the purchase process. This way, you hand over your property free of encumbrances – regardless of whether you use an estate agent or sell without commission.