Pursuant to § 29 GBO, the proof of the inaccuracy of the land register for a land register correction claim pursuant to § 22 GBO must be provided by public or publicly certified documents. The land register can also become inaccurate when the registered right was granted subject to a condition and has extinguished as a result of the occurrence of the condition. If a correction consent (§ 19 GBO) is not available, only proof of inaccuracy (§ 29 GBO) comes into consideration. High requirements are to be placed on this proof, as the OLG Munich once again confirmed in its decision. No official investigation takes place and all possibilities that could argue against the accuracy of the existing entry must be comprehensively eliminated by public or publicly certified documents.
Commentary:
Such public or publicly certified documents are, however, not available in most cases. In the case decided by the OLG Munich involving a resolutory conditional right of way on foot and by vehicle, the property owner also failed to prove by public documents that the dominant property had in the meantime its own access via a public road, even though this was actually the case.
This decision is also of relevance for the tenant easements frequently encountered in tenancy law:
There too, proof of the occurrence of a resolutory condition (e.g. payment default, termination of the tenancy) provided for in accordance with the model of the Association of German Pfandbrief Banks would in most cases hardly be possible by means of public documents. In connection with tenant easements, it is therefore advisable from the landlord’s perspective to already obligate the tenant at the time of granting the easement to deposit a cancellation consent in trust, in order to avoid the proof of the occurrence of a resolutory condition that would otherwise not be achievable by public or publicly certified documents at a later stage. Proof of payment default, the termination or cancellation of the lease agreement or the occurrence of any other resolutory condition will hardly be possible by public documents. The cooperation of the tenant is therefore absolutely necessary and should be anticipated through the deposit of the cancellation consent. This is moreover increasingly being required by lending banks as land charge creditors and is therefore already advisable from a financing perspective.
Author: Anneke Focken – af@kfr.law
Reference: OLG Munich, Decision of 07.10.2016 – 34 Wx 256/16

Background: Land register correction and evidential obligations

Pursuant to § 29 GBO, the proof of the inaccuracy of the land register for a land register correction claim pursuant to § 22 GBO must be provided by public or publicly certified documents.

The land register can also become inaccurate when the registered right was granted subject to a condition and has extinguished as a result of the occurrence of the condition.

If a correction consent (§ 19 GBO) is not available, only proof of inaccuracy (§ 29 GBO) comes into consideration. High requirements are to be placed on this proof, as the OLG Munich once again confirmed in its decision. No official investigation takes place and all possibilities that could argue against the accuracy of the existing entry must be comprehensively eliminated by public or publicly certified documents.

Decision of the OLG Munich: Strict requirements for proof

Such public or publicly certified documents are, however, not available in most cases.

Practical case: Resolutory conditional right of way on foot and by vehicle

In the case decided by the OLG Munich involving a resolutory conditional right of way on foot and by vehicle, the property owner also failed to prove by public documents that the dominant property had in the meantime its own access via a public road, even though this was actually the case.

Significance for tenant easements

This decision is also of relevance for the tenant easements frequently encountered in tenancy law.

There too, proof of the occurrence of a resolutory condition (e.g. payment default, termination of the tenancy) provided for in accordance with the model of the Association of German Pfandbrief Banks would in most cases hardly be possible by means of public documents. In connection with tenant easements, it is therefore advisable from the landlord’s perspective to already obligate the tenant at the time of granting the easement to deposit a cancellation consent in trust, in order to avoid the proof of the occurrence of a resolutory condition that would otherwise not be achievable by public or publicly certified documents at a later stage.

Proof of payment default, the termination or cancellation of the lease agreement or the occurrence of any other resolutory condition will hardly be possible by public documents.

Recommendation for landlords

The cooperation of the tenant is therefore absolutely necessary and should be anticipated through the deposit of the cancellation consent. This is moreover increasingly being required by lending banks as land charge creditors and is therefore already advisable from a financing perspective.

Reference: OLG Munich, Decision of 07.10.2016 – 34 Wx 256/16

The OLG Stuttgart has ruled that amendments to a property transfer agreement also require notarial certification pursuant to § 311b para. 1 sentence 1 BGB when the amending agreement is concluded after conveyance but before the transfer of ownership is registered.

This shall apply at least where the contracting parties declare the conveyance in the original contract and the acquirer applies for the registration of the change of ownership in the land register, but the parties instruct the notary to issue a certified copy or engrossment of the deed containing the conveyance declaration only once payment of the purchase price owed has been evidenced to them.

In doing so, the OLG Stuttgart opposes the established case law of the BGH that such amendments can be made without formality and are not subject to notarization.

Previous BGH case law

In such cases, the BGH had previously assumed that there is no formal requirement and aligned itself in this respect with the case law of the Reichsgericht, as it was unable to identify reasons to depart from this legal development.

In particular, neither could the temporal limit of the notarization requirement be conclusively derived from the predecessor provision § 313 sentence 2 BGB, nor had the amendment of § 313 BGB by the Act of 30 May 1973 provided a reason to change the Senate’s case law.

New perspective of the OLG Stuttgart

The OLG Stuttgart takes a different view of this matter, however, and thereby expressly opposes the established case law of the BGH.

The OLG Stuttgart bases its reasoning, among other things, on the wording of § 311b para. 1 BGB, which contains no indication that amendments to a contract containing an obligation to transfer or acquire a property are exempt from the formal requirement of notarial certification if they are made before entry in the land register but after conveyance.

The systematic structure of § 311b para. 1 BGB also argues against such formal relaxations, since a contract concluded without observing the formal requirement only becomes valid once the conveyance and registration in the land register have taken place.

Furthermore, the 1973 legislative amendment had aimed to protect the acquirer as well as the transferor. However, this protective purpose could not be achieved if subsequent amendments before the transfer of ownership were to be possible without formality. Finally, the evidentiary function as well as the warning and protective function are equally relevant in the period between conveyance and registration of the change of ownership.

The BGH’s argument that the obligation to transfer ownership is fulfilled with the declaration of conveyance also does not hold where the notary has been instructed to issue a copy or engrossment of the deed only once payment of the purchase price has been evidenced to them. In practice, the notary would ultimately not forward the documents to the land registry office in the event of an informal purchase price reduction if the acquirer asserts a notarially uncertified purchase price reduction made after the conveyance but the transferor disputes this subsequent agreement.

Significance for practice

Whether further courts will follow this decision as a precedent and thereby depart from the BGH’s case law remains to be seen, as does whether the BGH will take this decision as an occasion to reconsider its previous case law. In the meantime, amendments in the period between the declaration of conveyance and the registration of the change of ownership should be notarially certified as a precautionary measure.

More on the topic:

• What is a priority notice of conveyance?
• Real estate purchase agreement notarized – what now?

Source: OLG Stuttgart, Judgment of 26.09.2017 – 10 U 140/16 (BeckRS 2017, 139536)