After signing the purchase contract, the buyer does not automatically become the new owner of the condominium. Only once the entry in the land register has been made can the buyer legally call themselves the owner. The priority notice of conveyance prevents a condominium from being sold several times to different people. It therefore serves to protect the property buyer. But where is this priority notice made, when is it applied for and how much does the process cost?
These are some of the many questions on the subject of priority notice of conveyance that we will answer in this guide.
What is a priority notice of conveyance and how does it work?
Once the buyer and seller have found each other in the property sale and have agreed on the price of the property, it usually takes some time between this agreement and the entry in the land register. First, all the necessary procedures must be completed. Once the contract has been signed, the money is transferred to the seller, but the buyer does not legally own the property until the change of ownership has been entered in the land register. The priority notice of conveyance is applied for by the buyer and submitted to the land registry by the notary. It guarantees the buyer of a property that the conditions set out in the contract will apply when the property is entered in the land register.
The conveyance itself is the entry in the land register. The two terms are often confused in everyday language, which is why a distinction is made here. It is therefore a priority notice, which grants the buyer the rights to the property, and conveyance, which signifies the legal change of ownership through the entry in the land register.
How does the buyer benefit from the priority notice of conveyance?
The main beneficiary of a priority notice of conveyance is the buyer of a property. The priority notice guarantees that the change of ownership of the property will take place under the agreed conditions. Even if ownership has not yet been transferred to the buyer, they already have a legal claim to this process. This prevents the property from being sold to several buyers, for example.
Once the purchase contract has been signed, it may take several months before the new owner is entered in the land register. The processing time depends, among other things, on the location where the sale of the property takes place. If a seller has bad intentions, they could have several people sign the purchase contract and wait for the money to arrive. However, the priority notice of conveyance gives the buyer a guarantee that the property will be sold exclusively to them and that the same conditions will apply at the time of entry in the land register as when the purchase contract was signed. In addition, with such a priority notice of conveyance, the seller of the property is no longer able to take out a new mortgage for the property.
The legal basis of the priority notice of conveyance
The priority notice of conveyance is dealt with in Section 883 of the German Civil Code. The priority notice secures a future or conditional claim. If the remaining owner of a property or plot of land wishes to dispose of it, he cannot do so if the buyer’s claim is restricted as a result. This even applies if the property is to be disposed of as part of a compulsory execution.
Conveyance is dealt with in § 873 BGB “Acquisition by registration” and § 925 BGB “Conveyance”.
What does a priority notice of conveyance cost?
The calculation of the priority notice of conveyance is based on the value of the property or land. It is generally half of the amount that will later be due upon entry in the land register. The land register entry costs around 0.5 percent of the purchase price of a property.
For a property value of €150,000, the costs for the land register entry are around €750 and the priority notice of conveyance costs around €375 accordingly.
However, other factors also play a role in calculating the price of a priority notice of conveyance. These include, for example, the amount of the land charge to be registered. In addition, some courts charge costs for the subsequent deletion of a priority notice of conveyance. The fees must be paid by the buyer of the property and are part of the ancillary purchase costs.
When does the priority notice of conveyance take place and is it absolutely necessary?
The conveyance order is issued immediately after the purchase agreement has been signed. Both parties have agreed on the purchase of the house or apartment and have agreed on a purchase price. Some time passes before the purchase price is entered in the land register, as the money must first be transferred to the seller. In many cases, a loan is taken out for this purpose. The amount must therefore first be paid out by the bank and transferred to the seller. Once this has been done, the notary applies for entry in the land register. However, this process can take several months. For this reason, the priority notice of conveyance is applied for first, which takes a few days. The priority notice of conveyance is regarded by the notary as an obligatory part of the purchase or sale of the property and is applied for directly by the notary.
If there was no priority notice of conveyance, the buyer would have no legal certainty about the purchase of their dream property. The purchase price has been agreed with the seller, but the seller can continue to dispose of the land and apartment even after the purchase contract has been signed. This includes, for example, the option of registering a land charge for the existing property in order to purchase a new property. This would place a heavy burden on the buyer. Legal trouble would be inevitable, because without a priority notice of conveyance, the existing owner could sell the property to several people. If there are no legal claims by the first buyer, the second buyer could insist on his right to buy. The priority notice of conveyance creates the necessary trust. After signing the purchase contract, the buyer receives a guarantee that his claims can be legally enforced, even if the entry in the land register has not yet been made.
How quickly is the priority notice of conveyance entered in the land register and how long does it run?
Applying for and registering the priority notice of conveyance only takes a few days. The priority notice is then valid until the transfer of ownership is entered in the land register. This may take between two and five months. When the new owner is entered in the land register, the priority notice of conveyance becomes invalid. It is therefore removed from the land register at this time.
FAQ - Frequently asked questions
What happens after the priority notice of conveyance?
If the priority notice of conveyance has been applied for by the notary and entered in the land register, the buyer has a legal right to purchase the property on the terms set out in the contract. After handing over the money, the buyer and seller wait for the transfer of ownership to be entered in the land register. In most cases, this process takes between two and five months.
Who enters a priority notice of conveyance in the land register?
The application for a priority notice of conveyance is submitted by the notary directly after the purchase contract has been signed. The entry is made directly at the land registry.
Where is the priority notice of conveyance?
The priority notice of conveyance is noted in section II of the land register and deleted from the land register by the land registry office after the new owner has been entered.
Is a priority notice of conveyance inheritable?
According to case law, an approved priority notice of conveyance expires upon the death of the creditor. The claim cannot be transferred and is also not inheritable.
What is a priority notice of rescission?
A priority notice of rescission is often used in connection with properties that are sold by a municipality or city. The priority notice of rescission is also entered in the land register. These are sales that are linked to specific conditions. If the city has sold a plot of land to a private individual and the development conditions are not complied with, the city has a claim for retransfer.
