Creating a mortgage or land charge

Mortgages and land charges are rights to a property that are usually created for third parties (usually credit institutions) and authorise them to obtain satisfaction from the property by way of forced sale or forced administration (mortgage liens) under predetermined conditions (security case).

They are primarily used to secure loans:

• The mortgage secures a specifically defined claim and its existence depends on this claim.

• The land charge is not linked to a specific claim and is therefore not dependent on a claim for its existence. It can be used as security as often as desired, even for new loans. A security agreement ("security purpose declaration") concluded between you as the borrower and the bank granting the loan stipulates which claims are secured by the land charge.

The land charge is the most frequently created mortgage; due to its independence from a specific claim and the associated flexibility, it has largely replaced the mortgage in practice.

Liens on real property can also be created in the form of a registered mortgage. In the case of the mortgage, this facilitates the assignment of the claim secured by the mortgage and, in the case of the land charge, the transfer of the land charge itself, as no entry in the land register is required for this in the case of a mortgage by letter.

Note: Numerous individual cases are conceivable. Individual advice from a notary is therefore essential.