Your bank wants security on the purchased property for the purchase price financing. However, the seller is still recorded in the land register; the transfer of ownership is to take place only after payment. That is no reason to simply bring forward ownership or payment. You need a coordinated arrangement in which encumbrance of the property, authority and use of the purchase price are consistent.
Explain the concrete condition for disbursement
Our editorial recommendation: Submit the actual bank documents with the proposed purchase contract to the notary. Describe which security is required before disbursement and which part of the financing is intended to pay the purchase price. A general loan approval does not replace this coordination.
The land charge amount is not merely another way of writing the purchase price. §1191 BGB describes the encumbrance of real estate with a specific sum of money as well as possible interest and ancillary payments. [GRUNDSCHULD] The significance of the amounts actually demanded and any additional declarations must be explained for your instruction.
Have the power of disposal explained before the transfer
The Notary Chamber Koblenz describes the power to encumber (Belastungsvollmacht) as a way to mortgage the property for the purchase price financing already before the transfer of ownership in the land register. The seller thereby authorises the buyer within the agreed limits. [ABWICKLUNG] This authority is not derived from your intention to purchase alone.
§ 185 paragraph 1 BGB contains as a general starting point the disposition of a person without entitlement with the consent of the entitled person. [EINWILLIGUNG] The concrete acquisition case nevertheless requires its appropriate deeds and handling under land register law. This article does not constitute a power of attorney and does not turn a private message into full proof of the necessary authorities.
Link the power of attorney and the security purpose
The Chamber explains, in addition to the power of attorney, a limited security agreement to protect the seller, relating to the actual use of the loan for the purchase price. [ABWICKLUNG] Do not therefore ask only whether the word Belastungsvollmacht appears in the purchase contract. Have it explained what it may be used for and what corresponding arrangement with the bank exists.
Treat a required confirmation as a separate procedure. A desired protection is not yet an effective restriction reviewed by this article against every party. Which security agreement, disbursement and use fit together in your transaction will be determined by the competent specialist offices on the basis of the complete documents.
Disclose additional financing purposes
If you wish to finance a new kitchen or larger works in addition to the purchase price, describe these amounts separately. The seller may not assume a limited authority in the specific contract to extend further merely because of a higher total credit requirement.
In particular, when the financing changes, have the existing status of deeds reassigned. Afterwards have it explained to you in substance whether and how precisely this arrangement is intended to enable the required disbursement.
Fictional case: The kitchen is presumed to be included in the same authority
A buyer saw in the draft a Belastungsvollmacht limited to the purchase price financing. Later he plans additional funds for the kitchen and his own works. He initially assumes that the bank documents can be adjusted to the complete new package without further coordination.
Before making further declarations he discloses the purposes separately and has the possible route clarified with the bank and the notary. He does not confirm any further seller authorisation that does not arise from the discussed status. The case does not decide a specific clause nor a bank disbursement; it makes visible the difference between the total funding need and the authority actually clarified.
Conclude with a shared status for handling
You should be able to explain which property is to be encumbered with which authority for which financing purpose and which feedback is still missing. Transfer of ownership, due date of the purchase price and loan disbursement are not treated as the same step.
Assuming an already existing land charge and providing your own property for another’s debts are different tasks. This is about coordinated purchase price financing on the purchase property not yet transferred to you. A declared arrangement is not an approval of your deeds or payments given by this article.