What does a registered real burden mean in the land register?

The term real burden, alongside many other technical terms in real estate transactions, is part of common professional vocabulary. A real burden is always entered in the land register of the encumbered property. During a property sale, it can become an important cornerstone of the mutual purchase agreement for both property sellers and buyers.

Meaning of real encumbrance in real estate

In practice, real encumbrances are often applied to agricultural land or real estate. The real encumbrance describes a person's right to receive recurring benefits under certain circumstances. In contrast to a land charge or a mortgage, the benefits received do not necessarily have to be of a financial nature, but rather, in most cases, consist of goods and services. The encumbered property serves as security for the creditor. The owner of the encumbered property undertakes to provide a permanent service. This service does not necessarily have to be generated from the encumbered property.

Examples of a real burden

An example of a real encumbrance could be a real estate sale in which a tract of forest is acquired in addition to purchased buildings. The encumbrance on this property itself could then be a monthly or annual delivery of wood. Instead of wood, in other examples, a delivery of grain, potatoes, or other individual services could also be agreed upon.

The legal basis

The legal basis for the real encumbrance can be found in the Civil Code – abbreviated as BGB – and is defined in more detail in sections 1105 to 1112. Under German law, it concerns the so-called property law. Property law is considered a legal field that regulates legal relationships regarding physical objects. In addition to actual physical objects, property law also includes movable property, parcels of land, and rights equivalent to real estate.

Creation of the real encumbrance on the property

A real encumbrance can only become effective during a real estate sale if the owner and the beneficiary agree on the creation of the real encumbrance. This then becomes part of the written purchase agreement and is also recorded in the land register. The services of a notary are required for both entries. It can be agreed that the real encumbrance is also transferable or heritable under certain circumstances. As a rule, unless otherwise agreed, the property owner is personally liable for the real encumbrance.

In the event of potential non-performance, the beneficiary can also enforce their claims through execution. If sufficient satisfaction of the outstanding claim cannot be achieved through such enforcement proceedings, the result may ultimately be expropriation and a forced auction of the property. The beneficiary thus holds a very strong position to enforce their claims.

Changes can be made to a real encumbrance

Pursuant to Sections 877 and 873 of the German Civil Code (BGB), the contents of a real encumbrance can be modified. This means that the claims of the beneficiary can be both reduced and increased. In most cases, the real encumbrance on the property remains in effect until the death of the beneficiary.

However, a complete cancellation of a real burden is also possible. However, this can only be done through a unilateral declaration by the beneficiary. The legal basis for the cancellation is set out in Section 875 of the German Civil Code (BGB). For a cancellation to become legally binding, the removal of the real burden from the land register is strictly required.

The real encumbrance in practice

In the past, the real encumbrance was frequently agreed upon in the context of retirement property law and in connection with the transfer, inheritance, or sale of agricultural enterprises and real estate. Retirement property law is understood to mean the transfer of a property, usually with buildings on it, by an owner during their lifetime. As a form of consideration for receiving the farm and land, the new beneficiary guarantees the former owner that they may continue to live in the property and will be cared for. In other cases, however, the real encumbrance can also apply to privately used real estate.

Furthermore, it is important to know that a real charge may also be subject to a time limit and conditions. Both the time limit and the conditions must be correctly entered in the land register.

Discuss exact regulations regarding a real encumbrance with a professional before selling the property

Anyone about to buy or sell real estate where a real encumbrance is to become part of the purchase contract is well advised, as both seller and buyer, to discuss the provisions with a lawyer and notary and to have them record the exact contents. Even minor errors or improperly included phrasing in a purchase contract could potentially lead to unintended consequences that cannot be reversed afterwards. Especially when an agricultural real estate sale is pending, a specialist should be consulted for advice.