What is the original mortgage

Land charges and mortgages

Land charges and mortgages are liens on real estate (real estate liens). They serve as loan collateral. If the debtor does not meet his payment obligations, the obligee can have the property foreclosed. From the auction proceeds he then receives what he is entitled to.

A mortgage always relates to a very specific claim. In the case of a land charge, the group of secured claims is determined by an additional agreement, the so-called declaration of purpose or security agreement. By adapting this declaration of purpose or security agreement, the group of secured claims of a land charge can be changed retrospectively. For example, the land charge originally ordered for a particular loan can be reused for a later loan. Land charges are more flexible than mortgages, so they are more common.

Land charges and mortgages are entered in the land register. Earlier entries usually take precedence over later ones. In the case of a foreclosure auction, the creditors entered in the land register are taken into account in the order of priority of their entry in the distribution of the auction proceeds. First, the creditor entered in the first rank receives what is due to him (but at most the amount entered for him in the land register), then the creditor entered in the second rank and so on - until the auction proceeds are used up. In order to limit the risk of default, a creditor must therefore pay attention to the priority of his mortgage lien as far as possible.

In principle, a simple land charge or mortgage only secures the creditor a certain position in the land register and thus protects him from other creditors who come later. If the creditor wants to apply for a foreclosure auction of the property, he must first sue the owner for toleration of foreclosure. That costs time and money. Most creditors therefore order a so-called enforceable land charge or mortgage right away. The owner already submits to foreclosure in the deed with which he approves the land charge or mortgage. The notarial deed then replaces the court judgment, and the creditor can enforce faster if necessary.

Forms for ordering an enforceable land charge usually also contain a personal acknowledgment of debt with submission to foreclosure. This gives the creditor access to the entire property by way of foreclosure.

The land registry can issue a land charge letter or mortgage letter at the request of the owner. This is an additional paper that describes the content of the land charge or mortgage. Anyone who wants to assert rights from such a letter mortgage or letter mortgage or have them deleted must also submit the letter. Land charges and mortgages for which no letter has been drawn up are called book land charges or book mortgages.

If you would like to order a land charge or a mortgage for a bank, savings bank, building society or insurance company, you will normally receive a corresponding form from the creditor and perhaps an accompanying letter or work instructions for the notary. Give us all of that and arrange a notarization date.

If you want to order a land charge or a mortgage for another obligee, we usually have to draft the text of the deed first. To do this, we need the following information from you: Who is the debtor (name, date of birth, address)? Who is the owner (name, date of birth, address)? Who is the creditor (name, date of birth, address)? Which property should be encumbered (land register district and sheet number)? Should a land charge or a mortgage be ordered? With or without a letter? With or without submission to foreclosure? What amount should be entered in the land register (possibly also interest and ancillary services)? Which position should the land charge or mortgage receive in the land register?

To order a land charge or mortgage, all owners must appear at the notary, as well as all debtors who are to personally submit to foreclosure. If the property lien pledges essentially all of the owner's free property, the owner's spouse usually has to cooperate as well (even if he is not the owner or borrower). If the new land charge or mortgage is to take precedence over previous entries in the land register, it is practical if the creditor of the right with the subordinate rank comes along at the same time.

To change the ranking of entries in the land register, you need a corresponding authorization from the creditor and the owner who has stepped down, both in a notarized form. The change of rank only takes effect when it is entered in the land register.

The transfer of a land charge or mortgage from one obligee to another requires a notarised declaration of assignment from the previous obligee. In the case of letter land charges or letter mortgages, the new creditor must also be given the land charge letter or mortgage letter. In the case of land charges or mortgages without a letter, the assignment only becomes effective when it is entered in the land register.

Financing land charge

Have the land charge or mortgage deleted