Payment requirement

Disbursement Requirements - Disbursement requirements are the conditions that must be met before a bank disburses an approved mortgage loan to the borrower or directly to the seller. Typical requirements include the registration of the mortgage, the submission of the notarized purchase agreement, proof of building insurance, and evidence of the down payment. Only once all conditions are met will the bank transfer the loan amount.

Typical Disbursement Requirements

Most banks require the following documentation before disbursing a mortgage:

• Mortgage registration or notary’s confirmation of priority: The mortgage must be registered in the land registry, or the notary must issue a binding confirmation that the registration is secured at the agreed priority level (notary confirmation pursuant to § 57 GBO, analogously)
• Notarized purchase agreement: The bank must have a certified copy of the notarized purchase agreement
• Building insurance: Proof of existing residential building insurance with assignment of indemnity claims to the bank (Section 1127 BGB)
• Proof of Equity: Documentation that the agreed-upon equity contribution has been transferred to the notary’s escrow account or directly to the seller
• Construction Progress Report: For new construction or renovations, banks regularly require construction progress reports prior to partial disbursements-this corresponds to the MaBV installment schedule for developers
• Authorization to remove encumbrances: If third-party real property liens or easements are registered in the land registry, proof of their removal must be provided or secured by a real right
• Submission of a valid building permit: Mandatory for new construction financing
• Certificate of completion: Often a prerequisite for the final loan installment in new construction projects

Timeline and commitment fees

Several weeks or months often elapse between the loan approval and the actual disbursement-especially if the land registry entry takes time. The Nuremberg Local Court processes land registry applications in three to eight weeks, depending on its workload.

Many banks charge commitment interest on the undrawn loan amount starting from a certain point in time. These costs must be taken into account when planning financing:

Bank Type	Interest-Free Period	Commitment Interest Rate
Savings Banks / Cooperative Banks	2-6 months	0.25%/month (3.0% p.a.)
Private Banks	3-6 months	0.25-0.30%/month
Online Banks / Direct Banks	2-3 months	0.25%/month
Building societies	6-12 months	0.10-0.20%/month

Calculation example: For a loan of 300,000 euros and a delay of three months after the expiration of the interest-free commitment period, 2,250 euros in commitment interest will accrue at a rate of 0.25%/month. Borrowers should therefore submit the documents as early as possible.

Disbursement Requirements for New Construction Under the MaBV

For new construction projects undertaken by a developer, the disbursement regulations of the Real Estate Broker and Developer Ordinance (MaBV) also apply. The MaBV protects the buyer by stipulating that payments to the developer may only be made in accordance with construction progress and upon receipt of a release statement from the mortgagee. The buyer’s bank will then also only disburse funds to the developer to the extent that the developer demonstrates compliance with the relevant MaBV requirements.

Important for buyers: The buyer’s bank is not obligated to verify compliance with the MaBV requirements-this is the buyer’s responsibility. We recommend consulting a specialist real estate lawyer or a notary for property development contracts to ensure the payment schedule complies with the MaBV.

Practical Tip for Homeowners in Nuremberg and Franconia

We recommend that buyers in the Nuremberg metropolitan region clarify their bank’s disbursement requirements in detail before the notary appointment and create a personal checklist. Ask your bank specifically which documents must be submitted and in what form, and whether a notary confirmation is accepted in lieu of the final land registry entry-most banks do this, enabling significantly faster disbursement.

Align the purchase price payment date in the purchase agreement with the expected disbursement timeframe. A payment term of four to six weeks after notarization is standard. Do not sign a purchase agreement with a shorter payment term without first confirming your bank’s readiness to disburse funds. Late payment interest owed to the seller begins if payment is not made on the due date and is generally 5 percentage points above the base rate (Section 288 of the German Civil Code).

Frequently Asked Questions

What happens if a disbursement condition is not met on time?

The bank will not disburse the loan until all conditions are met. For the buyer, this means they cannot pay the purchase price on time, which results in late payment interest owed to the seller. After a payment delay of more than 30 days, the seller may withdraw from the purchase agreement if the buyer is at fault. It is therefore crucial to work on meeting the conditions in parallel with the purchase process and to immediately notify the seller and the notary of any delays. In practice, most parties involved are interested in a mutually agreed extension-an early discussion prevents situations from escalating.

Can I negotiate the disbursement conditions?

Some conditions are indeed negotiable. The duration of the interest-free period can be agreed upon between the borrower and the bank-many institutions are accommodating, particularly with creditworthy customers and complex financing arrangements. Acceptance of a notary’s confirmation (priority confirmation) in lieu of the final land registry entry is negotiable and is accepted as standard by many banks. The land charge itself and the building insurance, however, are non-negotiable from the bank’s perspective, as they constitute the legal collateral value of the loan. We recommend clarifying the individual terms when the loan is finalized-not just shortly before the notary appointment.

When do interest payments on the loan begin?

Regular interest payments begin on the disbursement date, not on the date the loan is approved or the notary appointment. Until disbursement-provided the grace period has expired-only the lower commitment interest applies. From the disbursement date, the contractually agreed-upon borrowing rate is charged, and the first installment is typically due on the first day of the following month. In the case of partial disbursements (e.g., for new construction projects with multiple MaBV installments), the interest payment is increased accordingly in stages, while the commitment interest continues to accrue on the amount not yet drawn down.

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