Declaration of Assignment

Declaration of Assignment - a contractual agreement by which a creditor transfers a claim or a right to a third party (Section 398 of the German Civil Code (BGB)). In the real estate sector, it plays a central role, particularly in the transfer of land charges, rental claims, and purchase rights.

What does a declaration of assignment regulate in the real estate sector?

Assignment - also known legally as cession - makes it possible to transfer rights and claims to a new creditor without the debtor’s consent. Pursuant to § 398 BGB, the new creditor fully assumes the position of the previous creditor. For property owners, this instrument is relevant in several situations.

The declaration of assignment is most commonly encountered when switching banks during an ongoing real estate financing arrangement. Instead of deleting the existing land charge from the land register and having a new one entered, the previous bank can transfer the land charge to the new bank via a declaration of assignment. The land charge remains in the land register; only the creditor changes. This procedure is significantly cheaper and faster than a deletion followed by a new entry.

In addition, declarations of assignment are used in the transfer of rental receivables, for example when a landlord assigns his future rental income to a bank as collateral. Purchase rights or rights of first refusal can also be transferred in this manner, provided the underlying contract does not contain any restrictions on assignment. The declaration must generally be in writing; for transactions relevant to the land register, notarization is required.

Costs: Assignment vs. New Registration of a Land Charge

The financial advantage of an assignment over the cancellation and new registration of a land charge is significant:

Transaction	Costs for a 300,000-euro land charge (approx.)
New registration (notary + land registry)	1,500 - 2,000 euros
Assignment (certification + land registry amendment)	600 - 1,000 euros
Savings	600 - 1,200 euros

However, it is important to note: The transferring bank must approve the assignment and often charges a processing fee for this. We recommend inquiring about this fee in advance and including it in the overall calculation of switching banks. Some banks charge up to 300 euros to process the assignment-even that is still cheaper than a complete new registration.

Assignment of Future Rent Receivables as Security

A common practice in real estate loans is the assignment of future rent receivables as security. When granting investment loans, banks often require the landlord to assign their rent receivables to the bank-as additional security alongside the mortgage. Normally, the assignment remains in the background: Tenants continue to pay the landlord. Only if the borrower defaults on payment can the bank collect the rent receivables directly.

The tenant must be informed of the assignment in accordance with § 407 BGB (notification of third-party debtor) so that, in case of doubt, they can make payments to the correct creditor.

Typical Applications of the Assignment Declaration in the Real Estate Sector

Use Case	Assigned Right	Debtor’s Consent Required?
Change of Bank / Debt Restructuring	Mortgage	No (notification only)
Loan security	Future rent receivables	No (Section 398 BGB)
Transfer of right of first refusal	Right of purchase	Depends on contract clause
Bank portfolio sale	Loan receivables	No (Section 398 BGB)

Practical Tip for Property Owners in Nuremberg and Franconia

In the Nuremberg metropolitan region, we regularly observe in refinancing cases that property owners can save significant interest costs by switching to a more affordable bank-an interest rate advantage of 0.3 percentage points on a remaining debt of 250,000 euros translates to savings of around 7,500 euros over ten years. The assignment of the land charge makes this switch straightforward and cost-effective. We advise our clients in Nuremberg, Fürth, Erlangen, and the surrounding area to specifically inquire about the assignment option when refinancing-many banks in the region can complete the process within a few weeks.

An experienced local notary can quickly certify the assignment declaration and initiate the land registry amendment at the Nuremberg Local Court (Land Registry Office). Based on experience, the processing time at the Land Registry Office in Nuremberg is two to four weeks.

Frequently Asked Questions

Does the debtor need to consent to the assignment?

No, generally not. According to Section 398 of the German Civil Code (BGB), a claim may be assigned without the debtor’s involvement. The debtor must merely be informed of the assignment so that they make payment to the correct creditor. Exceptions exist only if a contractual prohibition on assignment has been agreed upon or the claim is of a highly personal nature-neither of which is typically the case with land charges.

Does a declaration of assignment for land charges need to be notarized?

An assignment of land charges must be notarized so that it can be entered in the land register. While notarization of the document itself is not mandatory, the certification of the signatures on the declaration of assignment is required. Without entry in the land register, the assignment is effective between the parties but has no effect in rem against third parties-which may become relevant in the event of the previous creditor’s insolvency.

Can a claim that has already been assigned be assigned again?

Yes, the new creditor may in turn assign the claim, provided there is no contractual prohibition on assignment. In the case of land charges, this occurs in practice when a bank sells loan portfolios to other institutions or debt buyers. In any case, the debtor retains all defenses against the claim, regardless of how many times it has been assigned-meaning, for example, that the debtor can assert a setoff that was already available against the original creditor.

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