Loan paid off - and now?

When a loan is finally paid off, many owners ask themselves what happens to the land charge registered for it. Does it have to be deleted or can it simply remain in the land register? Contrary to popular belief, "leaving it in place" only brings advantages in a few cases, but at the same time involves considerable risks for a later sale or transfer of the property.

Cancellation of the land charge

"Once a loan has been paid off, a registered land charge does not automatically expire. In order to have a land charge deleted, you first need a notarized deletion approval from the bank and a notarized declaration of consent from the owner," explains notary Dr. Irene Kämper, press spokesperson for the Rheinische Notarkammer, and continues: "If it is a so-called letter land charge, the original land charge certificate must also be submitted."

Sale of the property

If the property is sold, existing land charges must generally be deleted, as otherwise the buyer would run the risk of a forced sale due to the seller's outstanding debts after the purchase price has been paid. If the seller does not (yet) have the deletion approval and any land charge certificate at this time, for example because the loan has not yet been paid off, the notary is usually commissioned to obtain these documents.

"The deletion approval and any land charge certificate are often sent to the borrower as soon as the loan has been paid off. If these documents are not immediately submitted to the land registry and the deletion is not carried out, there is a high probability that they will be lost over time - possibly over generations. If a land charge certificate is lost, a lengthy and expensive bidding procedure must be initiated before it can be deleted. This delays the completion of the property purchase contract by many months or, in the worst case, years and can result in non-acceptance compensation or additional rental costs for the buyer, for which the seller may be liable," warns Kämper. So the following applies here: if you delete it quickly, you avoid the risk that the necessary documents can no longer be found many years later. Land charges with a land charge certificate in particular should therefore be deleted immediately after the loan has been paid off.

Transfer of the property to children

Even if parents want to transfer their property to their children, in most cases it makes sense to "clean up" the land register and delete land charges. Parents often want to reserve rights of use to the property, such as usufruct or residential rights. "There may be a risk that the purchaser will reuse the land charge for a new loan. If he does not pay off the new loan properly, there is a risk of enforcement by the bank and, as a result, the parents' right of use being extinguished," explains Kämper.

Leave land charge in individual cases

"Only rarely can it make sense to leave the land charge in place. This is the case if another loan is to be taken out in the near future, for example to modernize the property. The bank may accept the existing land charge as security again under the same conditions. In this case, you save notary and court costs for the deletion of the old land charge and the creation of a new one," concludes Kämper.

Notaries provide support with the decision

Whether it makes sense to leave the land charge in place depends on the individual circumstances. Notaries will be happy to advise on this, provide information on the costs of deletion on request and obtain the necessary deletion documents.