List of Charges (Division II)

Section II of the land register-also known as the encumbrances register-contains all rights and encumbrances attached to a parcel of land that are not recorded in the other sections (I: Owners; III: Mortgages). These include easements such as rights of way and utility rights, rights of residence, leasehold rights, rights of first refusal, and real encumbrances. Before any real estate purchase, an analysis of Section II is essential, as registered rights automatically transfer to the buyer and can significantly limit the value or usability of the property.

Typical Entries in Section II

In practice, Section II of the land register frequently contains the following encumbrances:

• Easements (§ 1018 BGB): Rights of a neighboring property to use the dominant property in a specific manner-e.g., right of way, right of passage, utility rights (gas, water, electricity)
• Limited personal easements (Section 1090 BGB): Example: a life-long right of residence in favor of a person
• Rights of first refusal (Section 1094 BGB): Municipalities, former owners, or third parties may have a preferential right to purchase the property upon sale
• Real encumbrances (Section 1105 BGB): Recurring payments from the property, e.g., annuity payments or obligations to provide for the owner’s retirement
• Leasehold right (ErbbauRG): Right to develop another person’s property; appears in part in Section II of the encumbered property

Less well-known but equally relevant: restrictions on disposal such as insolvency notes or foreclosure notes, which may be entered in Section II or in the margin, as well as priority notices of conveyance, which secure the acquisition by a new owner and are typically found in Section II in practice.

Impact on Purchase Price and Usability

Entries in Section II can reduce the value of a property:

• A registered right of residence significantly reduces the market value, as the holder of the right of residence is not obligated to vacate the property. The value deduction is calculated based on the annual value of the right of residence multiplied by a present value factor, which depends on the life expectancy of the beneficiary.
• A right of way in favor of a neighbor means that the neighbor is permanently permitted to walk or drive across the property-without the option to buy out the right.
• A municipal right of first refusal can subsequently jeopardize the purchase agreement if the municipality exercises its right. In Bavaria, the municipality must exercise its right of first refusal within two months of being notified of the purchase agreement.
• A utility easement restricts the buildability of part of the property and can reduce the value of certain areas to zero if, for safety reasons, no buildings may be erected there.

How to Read Section II

In Bavaria, the land register is maintained by the local courts as land registry offices. Authorized persons (owners, notaries, financial institutions) may inspect it. Important columns in Section II are: serial number, type of encumbrance, description (often as a reference to the authorization document), beneficiary or property, and date of entry.

Many entries are defined by reference to a deed of authorization, which is stored in the land files at the land registry office. This deed contains the exact details of the right-e.g., the exact width of a path or the specific conditions of a right of residence. Anyone who truly wants to understand Section II often must also review the deeds of authorization, which can be done through a notary.

Depreciation Due to Section II Encumbrances in Valuation

Professional real estate appraisers systematically take entries in Section II into account in their valuation. In the income approach, restricted rights of use (e.g., right of residence) are deducted from the income value as the present value of the lost use. In the comparative value approach, comparability with other properties is limited by existing encumbrances, and a corresponding discount is applied. Banks also factor Section II encumbrances into the mortgage lending value-a right of residence or a restricted right of first refusal can lead the lending institution to set a lower loan-to-value limit.

Practical Tip for Property Owners in Nuremberg and Franconia

In the Nuremberg area-particularly in municipalities with historically developed building structures (Fischbach, Laufamholz, Behringersdorf, Kalchreuth)-one frequently encounters old rights of way and utility easements in Section II that date back decades and are rarely used today. Nevertheless, they are legally binding and can cause unpleasant surprises for the buyer if, for example, they plan to build a garage exactly where a utility easement runs.

Before any purchase is finalized, we review the current land registry and explain to our clients which entries reduce value or restrict use-and whether and under what conditions a deletion is possible. In the case of old rights of residence stemming from inheritance, the situation is often particularly complex: The right may be divided among several people, which makes reaching an agreement on deletion difficult. In such cases, we recommend involving a notary or a specialist real estate attorney at an early stage.

Frequently Asked Questions

Can I have entries in Section II deleted?

Yes, but only with the beneficiary’s consent. A right of residence expires upon the death of the holder and can then be deleted upon request. Rights of way in favor of neighboring properties can only be deleted with a written declaration of waiver from the entitled party. In practice, deletion often fails because the entitled party demands a settlement payment or cannot be located.

As the buyer, do I assume all entries in Section II?

Yes. Registered rights automatically transfer to the buyer upon acquisition of ownership. An exception applies only if the purchase agreement expressly provides for the deletion of certain entries prior to transfer and this is actually carried out. Therefore, the notary must obtain a current land register extract before notarization and discuss all relevant entries with the buyer.

Why is Section II of the land register more important than the handover report?

The handover protocol only regulates the actual condition at the time of handover; Section II contains rights that are often not visible (e.g., underground utility rights). Anyone who only checks the protocol may be in for unpleasant surprises-which is why inspecting the land register before signing the purchase agreement is mandatory.

How can I tell if an entry in Section II affects my purchase price?

As a layperson, this is difficult to assess. As a rule of thumb: Any entry that restricts the use or exploitation of the property has the potential to reduce its value. We recommend obtaining a brief assessment from a notary or an appraiser for each Section II encumbrance-because an entry that appears harmless at first glance may, upon closer inspection, represent a significant restriction on use.

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