Investor Guide
2026-10-10 09:22

Lastenfreistellung (release from encumbrances): The Price Pays Off the Seller's Debts

Lastenfreistellung is the release of a sold plot from the encumbrances the buyer does not take over — above all, the land charges (Grundschuld) of the seller's banks. In a German deal it is a mechanism, not a promise: the notary collects deletion approvals before the price falls due, and part of the price goes straight to the seller's creditors.

What it is

The seller must deliver the plot free of legal defects — that is, free of third-party rights other than those the buyer accepted in the contract (§§ 433(1), 435 BGB). It must remove a registered right even if the buyer knew of it (§ 442(2) BGB), and an entry for a right that does not in fact exist also counts as a legal defect (§ 435 BGB).
Technically, the release consists of the right holders' deletion approvals (Löschungsbewilligung) plus the owner's consent (§§ 19, 27 GBO). When the buyer purchases from a developer who is still building, the law demands more (see Part 6 of the series German Prime Retail). Before the first payment, release must be secured from the land charges ranking ahead of or equal to the buyer's priority notice — also for the case that the building is not completed (§ 3(1) MaBV).

Why it matters to investors

The release is not confined to section III of the land register (Grundbuch). Many section II rights are ones the buyer must keep rather than delete — an energy company's easement for the transformer station that powers the store, for example, or the tenant's own easement. The contract must therefore name each accepted right; the seller must remove everything else. For public charges that are not entered in the land register, such as public-law encumbrances (Baulasten), the seller is not liable by law (§ 436(2) BGB): only due diligence reveals them (Part 7).
The money moves in a fixed order. The notary receives the banks' approvals with their trust instructions and gives notice that the price is due; the buyer then pays the redemption amounts to the banks and the balance to the seller (Part 8). If the seller owes its banks more than the price, the plot cannot be released without further funds — and that must be established before signing.

What to check

• The rights from sections II and III that you accept, each named in the contract.
• Deletion approvals for every other entry, in the notary's hands before the price falls due.
• The redemption amounts in the banks' trust instructions, compared with the price.
• The municipality's certificate on development contributions, and their allocation in the contract (§ 436(1) BGB).
• In a purchase from a developer, a release secured also for the case that the building is not completed (§ 3(1) MaBV).
Related terms: Löschungsbewilligung · Grundstückskaufvertrag · Baulast
Sources: BGB §§ 433, 435, 436, 442; GBO §§ 19, 27; MaBV § 3; Gordon Real Estate Group, "German Prime Retail", Parts 6, 7 and 8. Legal position as of 10 October 2026.
Photo: Peter Herrmann / Unsplash
This entry is general information and not legal or tax advice.