A land charge is a limited right in rem on the basis of which a sum of money is payable from a property. In contrast to a mortgage, a land charge does not require a claim. It is not dependent on the claim (accessory). The owner is not personally obliged to pay. However, he must tolerate enforcement of the land charge against his property. Pursuant to § 1192 of the Civil Code, the provisions on mortgages also apply to the land charge, unless it follows otherwise that the land charge does not presuppose a claim.
2. Owner's land charge
It is a real security right over real property and grants the same rights as a third-party land charge. However, the owner as creditor cannot enforce the owner's land charge for the purpose of satisfaction (§ 197 (1) BGB). The owner is only entitled to interest if the property is seized at the request of another person for the purpose of forced administration and only for the period of forced administration (section 1197 (2) BGB).
In order to create the owner's land charge, § 1196 (2) BGB requires the owner's declaration to the land registry that the land charge is to be entered in the land register on his or her behalf and the entry in the land register. The declaration must be certified by a notary (§ 29 GBO).
A mortgage becomes an owner's land charge if the claim has not arisen or expires again (§§ 1163, section 1, sentences 1 and 2, 1177 BGB).
3. Land charge by way of security
The Sicherungsgrundschuld is a third-party land charge which secures the acquirer or a third party on account of a claim against the owner or a third party in that it may be realised to satisfy the claim in the event of non-fulfilment. It is not regulated by law and, due to its lack of accessoriness, does not correspond to the security mortgage according to § 1184 BGB. There is therefore no accessoriness between the claim and the land charge. The security purpose cannot be entered in the land register. According to § 873 BGB, an informal agreement and entry in the land register on the basis of an application according to § 13 (1) GBO with the consent of the owner as the entitled party according to § 19 GBO in notarially certified form (§ 29 GBO) is required for the creation.
The land charge may be transferred without the claim and the claim without the land charge. For the assignment of a land charge by letter, the declaration of assignment must be made in writing and the land charge deed must be handed over (§§ 1192, 1154 (1) BGB). The written form of the declaration of assignment may be replaced by the fact that the assignment is also entered in the land register (sections 1192, 1154 (2) BGB). For the assignment of a land charge without letter, an informal agreement and the entry in the land register on the basis of an application under section 13, subsection 1 GBO with the consent of the land charge creditor as the entitled party under section 19 GBO in notarially certified form (section 29 GBO) is required (sections 1192, 1154, subsection 3 BGB).