Deposit Refund

Release of a Lien - A release of a lien is a declaration by the mortgagee (usually the financing bank) that a specific parcel of land or portion thereof is released from the liability of a land charge or mortgage. It is particularly necessary in cases of partial sales, property divisions, and the repayment of old loans, and is submitted to the land registry office as a cancellation authorization or release declaration.

When a release of lien is required

A release of lien is required when a property encumbered by a land charge is divided and only a portion of the property is to be sold, when the land charge is not assumed by the buyer in a sale, or when the land charge is to be discharged after full loan repayment. A release of lien is also essential in real estate development projects: If a property is divided into condominiums, the developer’s global land charge must be released for each individual unit as soon as the buyer has paid the purchase price (Section 3 MaBV).

A frequently underestimated scenario is the release of a lien in the case of ongoing loan agreements with a global land charge: If an owner has multiple properties and all are secured by a joint land charge with the same bank, they must obtain a release of the lien for the specific property before selling one of them. The bank will only grant the release if the remaining properties provide sufficient collateral for the outstanding loan.

Process and Costs

The owner or their notary applies for the release of the lien with the financing bank. The bank verifies whether the outstanding balance (outstanding loan amount) remains sufficiently secured by the remaining collateral. If this is the case, it issues a declaration of release in a notarized form. This is submitted to the land registry office, which deletes the land charge for the released property or lifts the joint liability. The bank fee for a release of lien is typically 150-500 euros. In addition, there are notary and land registry fees for the deletion (approx. 0.2% of the land charge amount).

Owners should plan for the entire process, from application to deletion in the land registry, to often take six to ten weeks. During periods of high workload at the Nuremberg Land Registry Office, it may take longer. We therefore recommend always starting the lien release process in parallel with the sales process, rather than waiting until after the purchase agreement has been signed.

Practical Tip for Property Owners in Nuremberg

We recommend that property owners in the Nuremberg metropolitan area who are planning a partial sale of their property or the cancellation of an existing land charge apply to the bank for release of the lien well in advance-ideally 4-6 weeks before the scheduled notary appointment. Experience shows that banks require 2-4 weeks for their internal review. In Nuremberg, it is particularly common for terraced house properties in neighborhoods such as Reichelsdorf or Kornburg to be encumbered by a single land charge on a plot that has not yet been subdivided. Without timely release of the lien, the sale is significantly delayed.

For buyers, the status of the lien release is a key point in reviewing the purchase agreement: The notary ensures that the transfer takes place free of encumbrances-either by prior cancellation of the land charge or by depositing the portion of the purchase price used to redeem the land charge. We coordinate this process for our clients as part of the purchase settlement.

Frequently Asked Questions

Does the bank have to agree to a lien release?

The bank is not generally obligated to agree to a lien release. It will only grant the release if the remaining collateral is sufficient for the outstanding loan. In practice, however, many loan agreements contain a release clause that stipulates the conditions under which the bank must release portions of the lien. If such a clause is absent, the owner has no legal right to a release and must negotiate with the bank.

What happens if the land charge is higher than the remaining debt?

This is the normal case. Land charges are generally not continuously adjusted to the decreasing remaining debt. The difference between the land charge amount and the remaining debt is the unencumbered portion of the land charge, which can serve as collateral for new loans to the owner. When releasing the lien, the bank only checks whether the remaining debt is covered by the remaining collateral-not the nominal value of the land charge.

How long does it take to delete the entry in the land register after the release of the lien?

After submitting the release declaration to the land registry office, the deletion is typically entered within 4-8 weeks in Bavaria. At the Nuremberg land registry office, it may take longer during peak periods. The notary can file an expedited request, which shortens the processing time to approximately 2 weeks-however, this incurs additional fees.

Can the release of the lien be included in the purchase agreement?

Yes, this is standard practice in real estate sales. If the land charge is not discharged in advance, the purchase agreement usually contains a provision stipulating that the purchase price is first transferred to the bank to repay the loan, and the bank issues the release declaration in return. The notary coordinates this process in a fiduciary capacity.

What special provisions apply to the release of a lien under the MaBV?

In developer sales under the Real Estate Broker and Developer Ordinance (MaBV), the release of the lien serves a special protective function: The developer may only call for purchase price installments once a release of the lien or equivalent security for the land charge on the developer loan has been obtained for the respective residential unit. This is intended to ensure that the buyer does not lose their money if the developer becomes insolvent. In the Nuremberg metropolitan region, we observe that coordination between the developer, the financing bank, and the notary for new construction projects can, in practice, take several weeks. Buyers of new-construction apartments should ensure that the MaBV protection in the form of a release of lien or bank guarantee is actually in place before making any payments. In case of doubt, the notary should expressly confirm this. If such protection is lacking, there is a significant risk of loss in the event of the developer’s insolvency.

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