Maximum-amount mortgage

A maximum amount mortgage is a special type of mortgage in which, rather than a fixed amount, a maximum amount is entered in the land register, up to which the property serves as collateral. Unlike a standard mortgage, which is tied to a specific claim, the maximum amount mortgage allows for securing variable or fluctuating claims-such as those arising from a revolving line of credit or business relationships. It is governed by Section 1190 of the German Civil Code (BGB).

Distinction from a land charge and a standard mortgage

Legally, the maximum amount mortgage falls between the traditional mortgage and the land charge. While the standard mortgage is strictly accessory (it expires with the claim), the maximum amount mortgage remains more flexible: The secured amount can fluctuate within the registered maximum without requiring a new entry each time. In practice, the land charge has largely replaced the maximum amount mortgage in bank financing of real estate because it offers even greater flexibility.

The land charge differs from the maximum amount mortgage primarily in its non-accessory nature: It remains in the land register even after the underlying debt has been fully repaid and can be reused for new financing. The maximum amount mortgage, on the other hand, expires as soon as there is no longer a secured debt-although it formally disappears from the land register only after cancellation.

Areas of Application and Practical Relevance

The maximum amount mortgage is primarily used to secure overdraft or working capital loans, where the borrower regularly draws down and repays amounts. It is occasionally encountered in the commercial real estate sector and in corporate financing. For private real estate buyers, it plays a minor role, as banks almost exclusively use land charges in this context. However, when purchasing commercial real estate or acquiring a business that includes real estate, one may encounter it in the land register.

In practice, real estate buyers frequently encounter the maximum amount mortgage when the purchased property is still encumbered by legacy liens from previous corporate financing. In such cases, it must be clarified prior to the purchase whether any claims still exist and whether deletion is possible. The process is handled by the notary, who obtains the creditor’s consent to cancellation and submits it to the land registry office.

Cancellation and Transfer of the Maximum Amount Mortgage

Since the maximum amount mortgage is accessory, it expires when there is no longer a secured claim. Formal cancellation in the land registry requires the creditor’s consent to cancellation and an application to the land registry office. When purchasing a property encumbered by a maximum amount mortgage, it must be verified whether and to what extent claims secured by it actually still exist. A release from encumbrances prior to the transfer of ownership is generally a prerequisite for the notary to handle the transaction.

Practical Tip for Property Owners in Nuremberg and Franconia

Anyone purchasing a property in Nuremberg or the metropolitan region who discovers a maximum-amount mortgage in the land register should immediately clarify whether any outstanding claims still exist. The notaries in Nuremberg responsible for handling the transaction are experienced contacts in this regard. Particularly with commercially used properties-such as former industrial buildings in Langwasser or commercial areas in Fürth-older current account encumbrances are frequently found that must be resolved before the purchase.

We are happy to coordinate contact with specialized financial and legal advisors for our clients to ensure the purchase proceeds smoothly and no surprises arise after the notary appointment.

Frequently Asked Questions

What is the difference between a maximum amount mortgage and a land charge?

A maximum amount mortgage is accessory-it is linked to an existing claim and expires along with it. A land charge, on the other hand, is not accessory and remains in the land register even after the loan has been repaid until it is actively deleted. For banks, the land charge is therefore more flexible.

Is a maximum amount mortgage a problem when buying real estate?

Not necessarily, but it must be clarified before the purchase. The decisive factor is whether any claims are still secured. If the secured claim has been fully repaid, deletion can be requested-a condition we routinely ensure when concluding the purchase agreement.

Can the maximum amount mortgage be transferred to the buyer?

In exceptional cases, a transfer is possible if the secured claim is also transferred. In practice, however, it is almost always deleted as part of the purchase price settlement and replaced by a new land charge held by the buyer.

Why do banks hardly ever use the maximum amount mortgage anymore?

Banks prefer land charges because, after the loan is repaid, they can be reused for new financing without requiring new land registry entries. The maximum amount mortgage, on the other hand, must be readjusted with every change to the secured claim. For the borrower, this means higher notary and land registry costs.

How do I identify a maximum amount mortgage in the land register?

In Section III of the land register, the maximum amount mortgage is listed under the heading “Maximum Amount Mortgage” along with the registered maximum amount. Additionally, the creditor and the purpose of the security are specified. Unlike a land charge, where no existing claim needs to be proven, the entry for a maximum amount mortgage often includes a reference to the underlying loan agreement. Anyone who encounters such an entry when purchasing a commercial property or a mixed-use building in Nuremberg should request a complete declaration of release from encumbrances and proof of debt repayment from the notary before transferring the purchase price. In case of doubt, it is advisable to inquire with the relevant Nuremberg Land Registry Office as to whether certified copies of the registration documents can be viewed.

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