Notice of Conveyance Meanings

When buying a property, it takes some time before the buyer is entered in the land register as the new owner. The priority notice of conveyance serves to secure the business and ensures that the buyer cannot sell a property or a piece of land several times.

  • The priority notice ensures that the seller of a property cannot access it between the purchase and the transfer.
  • It is entered in Section II of the Land Register.
  • The costs for registering the reservation are part of the acquisition costs and are to be borne by the buyer.

The notice of conveyance in the Civil Code

The Civil Code regulates the requirements and effects of the priority notice in § 883. It secures the right to the unencumbered transfer of ownership. Before ownership finally passes to the buyer, any land charges or mortgages that have been entered at the expense of the seller must therefore be deleted. The buyer is entitled to an unencumbered transfer of the acquired property.

The conveyance in the sales contract

The conveyance is part of the notarial purchase contract, in which the transfer of ownership from the seller to the buyer is agreed. It typically takes up to eight weeks for the transfer of ownership to complete. That is why the right to transfer ownership is entered in the form of a reservation in Section II of the land register. The purchase contract regulates the transfer of ownership and consists of two parts:

  • the business under the law of obligations and
  • the real deal.

In the contractual part, the claims of the parties are justified, while the real transaction regulates the real fulfillment of the claims. The BGB deals with conveyance in Section 925.

Prerequisite for the entry of the priority notice of conveyance

In order for the reservation to be entered in the land register, an application is required in accordance with the provisions of the land register regulations GBO § 13. Usually, the notarizing notary submits the application on the basis of the notarial purchase contract, which contains the approval of the persons involved. The costs for registering the reservation are part of the acquisition costs and are to be borne by the buyer. The amount depends on the notarized purchase price. As soon as the reservation is entered in the land register, its protective function takes effect and the seller can no longer dispose of the property.

Entry in the land register

As a rule, there is only a short period of time between the notarization of the sales contract and the entry of the notice of conveyance. The reservation is entered in section 2 of the land register. While section 1 shows the ownership structure, section 2 contains burdens and restrictions. These are, for example, easements such as rights of way, heritable building rights or the notice of conveyance, which is entered to secure the right to transfer of ownership. In section 3, land charges and mortgages are noted, which are usually used to secure a home loan. After the purchase price has been paid, the transfer of ownership can take place and the reservation is deleted.

Timeline of the purchase contract processing

First, the buyer and seller agree on the deal and agree on a purchase price. This is followed by the notary appointment with the notarial certification of the purchase contract. All necessary documents must be submitted to the notary for this purpose. If the transaction is carried out between a private person and a legal person, e.g. a company, there must be at least 14 days between the sending of the draft sales contract and the notarization. This regulation serves the consumer protection.

After the notarization, the notary takes the necessary steps to re-register the property. In addition to applying for the priority notice of conveyance, the notary also takes care of the redemption of existing land charges from the purchase price proceeds and initiates the corresponding processes.

The purpose of the priority notice

The priority notice of conveyance offers clear advantages for the purchaser of a property. Even if the buyer is not yet the final owner, the reservation secures his status until the transfer of ownership and restricts the seller in disposing of the property.

If the seller becomes insolvent after the conclusion of the purchase contract, the notice of conveyance ensures that the property cannot be accessed in the context of foreclosure. This regulation is called relative ineffectiveness.

If the buyer finances the business with a real estate loan , the reservation of the financing bank serves as security. Without proof that the priority notice has been entered, the bank will not pay out the loan.

The transfer of ownership and deletion of the reservation

In the sales contract, the buyer and seller agree under which conditions the purchase price is due. Once these conditions have been met, the notary confirms the due date and requests the buyer to pay the purchase price. The notary applies for the transfer of ownership after the receipt of the clearance certificate from the tax office. This is created after the property transfer tax has been paid. At the same time as the application for the transfer of ownership, the notary also requests the deletion of the notice of conveyance. After the transaction has been completed, the reservation becomes obsolete.