Discharge (Mortgage)

The cancellation of a land charge is the removal of a land charge entry from the land register after the underlying loan has been repaid in full-this removes the encumbrance on the property, and ownership is recorded as unencumbered in the land register. Cancellation does not occur automatically upon repayment of the loan; rather, the owner must actively apply for it. A prerequisite is a notarized release authorization from the creditor bank.

Process for Discharging a Mortgage

After the loan has been fully repaid, the bank issues a release authorization-an officially certified document by which it waives the mortgage. This document must be submitted to the land registry office, either directly by the owner or through a notary. The land registry office then cancels the land charge by means of an official notation. The process incurs land registry fees, which are based on the value of the land charge. If a notary submits the application or certifies documents, additional notarization fees apply.

The cancellation authorization typically contains all necessary details: the land register page, Section III, and the serial number of the entry, as well as the exact details of the encumbered property. Some banks issue the cancellation authorization with a notarized signature already in place; in other cases, notarization by a notary must still be completed before the document can be submitted to the land registry office.

Discharge versus Assignment of the Land Charge

Instead of a discharge, owners can also assign the released land charge to a new creditor-for example, when one bank is replaced by another or in the case of a sale with assumption of financing. The assignment is more cost-effective than a new registration because no new land charge registration fee is incurred. For buyers, however, it is often advisable to insist on cancellation in order to obtain an unencumbered land register.

The purchase agreement governs the cancellation in connection with the payment of the purchase price. Typically, the buyer pays the purchase price directly to the seller’s bank (repayment of the land charge), and the bank issues the cancellation authorization upon receipt of the amount. The notary coordinates this process and ensures that both buyer and seller are protected.

Costs of Land Charge Discharge

The total costs of a land charge discharge consist of two components: land registry fees and notary fees. Both are based on the value of the land charge in accordance with the Court and Notary Fees Act (GNotKG). For a land charge of €200,000, the land registry fees are approximately €200-400 and the notary fees (if a notary is involved) are approximately €100-200. For lower land charge values (under €50,000), minimum fees apply.

Compared to the costs of establishing a new land charge (which can cost approximately €800-€1,200 for a land charge value of €200,000), the cancellation costs are moderate. Owners planning to take out new financing should therefore consider whether cancellation makes sense or whether the existing land charge should remain in place for continued use.

Practical Tip for Owners in Nuremberg and Franconia

In Nuremberg and the metropolitan region, we recommend that after the loan has been fully repaid, you do not wait for the cancellation authorization but actively request it from the bank. Some financial institutions only issue the document upon request and require several weeks internally to process it. Plan the cancellation well in advance-especially if a sale or follow-up financing is pending, as land registry procedures in Bavaria can take 4-8 weeks.

The notary who assisted you with the purchase can also handle the cancellation and clearly outline the fees. If you wish to submit the cancellation authorization yourself, carefully check that all information is correct and complete-incorrect documents will result in rejection and delays.

Frequently Asked Questions

Do I have to have a land charge removed after the loan is paid off?

No, there is no legal obligation. The land charge remains registered in the land registry as a so-called “unencumbered land charge” and can be used for future financing. However, removal is advisable before a sale, as buyers generally expect a land registry free of encumbrances.

How much does it cost to remove a land charge?

The land registry fee is based on the value of the land charge. For a land charge of €200,000, land registry fees amount to approximately €200-400. Notary fees apply if the notary submits the application or certifies documents. Overall, total costs of €300-600 should be expected.

How long does it take to remove a land charge from the land register?

The land registry office typically processes removal applications within 4-8 weeks. In exceptional cases-such as when there is a high volume of work-it may take longer. Upon completion, the owner receives notification of the completed removal.

What if the bank has become insolvent?

If the creditor bank is insolvent, the approval for deletion must be issued by the insolvency administrator. The process takes longer than usual, but is generally possible. In this case, we recommend consulting a lawyer who can establish contact with the insolvency administrator.

Should I retain an unencumbered land charge for future financing?

Anyone who has fully paid off a property can leave the registered land charge in place as a so-called “free owner’s land charge” and reuse it later for new financing. Reusing the lien is more cost-effective than establishing a new one, as no new land charge registration fee is incurred-a simple assignment to the new creditor suffices. In the Nuremberg metropolitan area, where many owners consider follow-up financing for renovations (heating system replacement, insulation, kitchen renovation) after paying off their debt, this option can make economic sense. We recommend consulting with your notary and financial advisor when deciding between canceling and retaining the land charge: If you have concrete plans for follow-up financing in the near future, there are many reasons to retain it; if you anticipate remaining debt-free in the long term, cancellation is preferable to keep the land register clear.

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