Land Charge/Mortgage Loan
In most cases, the buyer cannot completely pay the purchase price with their own capital, and he must therefore take out a bank loan. The bank is only routinely willing to grant the loan if a land charge (or rarer today: a mortgage) is entered into the land register as collateral in their favor. The land charge secures the bank’s claim for repayment of the loan installments in the following ways: If the borrower does not repay the loan installments as agreed upon, the bank, through the courts, may forcibly have the house auctioned off. The bank then receives the outstanding installments plus interest and the interest on arrears from the proceeds of the auction.
Land Charge Interest
You should not be alarmed by the land charge interest values of generally between 14% and 20%: For your loan, the interest rate specified in the loan contract is the only relevant factor. The land charge interest only causes the security amount of the land charge to increase over time. If, for example, in the land register there is a “land charge for 100,000.00 EUR plus 15% interest annually”, then the land charge grows to a security amount of 115,000.00 EUR after one year, and after two years to 130,000.00, and so on and so forth.
Frequently, the lending institutes also call for the entry of an additional security with the land charge, for so-called one-time ancillary services (between 5% and 10% of the land charge amount). Hereby, in the case of a compulsory auction, the – flat-rate – approximate foreclosure sale costs are thereby to be covered.
In the case of foreclosure, the bank can in principle claim the entire land charge debt plus interest and ancillary services from the proceeds of the action. However, in relation to the borrower, it may only retain the amount, which the latter still owes the bank on the loan; the excess amount is to be paid out to the borrower.
Submission to Execution
Declarations of Purpose
Removal of the Land Charge
In preparation of a land charge creation, I ask you to please send me the land charge creation application from the bank. Furthermore, I request the following information or documents from the parties:
Companies: Company, registered office, business address, district court, commercial registry number
Notary fees cannot be levied or negotiated at the will of the notary; they are strictly governed by law. Decisive is the Court and Notary Fees Act that applies throughout federal territory. Therefore, the same fees are always charged by each notary for the same notarial activity.
The notarization fees are based on the so-called commercial value, and in the case of a land charge, according to their amount. In addition, there are usually some additional small expenses for copies, postage and telephone as well as the statutory value-added tax. Under certain circumstances, particularly for mortgages for the financing of the purchase price, additional notary fees may arise.
|Land Charge of Euro 10,000.00||Net notary fees||ca. Euro 75,00|
|Land Charge of Euro 50,000.00||Net notary fees||ca. Euro 165,00|
|Land Charge of Euro 100,000.00||Net notary fees||ca. Euro 280,00|
|Land Charge of Euro 500,000.00||Net notary fees||ca. Euro 940,00|