Weeks or months often pass between signing the purchase contract and being entered as the new owner in the land register. During this interim period, the priority notice of conveyance (Auflassungsvormerkung) protects the buyer, while the tax office levies the real-estate transfer tax (Grunderwerbsteuer) and, through the tax clearance certificate (Unbedenklichkeitsbescheinigung), holds a decisive lever. The two topics are often confused but should be kept clearly apart: the priority notice is a civil-law safeguard, the transfer tax a separate tax. For over 60 years we have accompanied buyers in Düsseldorf and North Rhine-Westphalia, and we explain how the notice, the tax and the transfer of title interlock over time.
What the priority notice of conveyance is (§ 883 BGB)
The priority notice of conveyance (Auflassungsvormerkung) is an entry in Section II of the land register that secures the buyer's claim to the transfer of ownership. Its legal basis is § 883 BGB: to secure a claim to the grant of a right in a plot of land, a priority notice may be entered in the land register.
Its protective effect follows from § 883(2) BGB: any disposition of the property by the seller made after the priority notice has been entered is ineffective against the buyer to the extent that it would frustrate or impair the buyer's claim. This expressly applies also to dispositions in enforcement proceedings or by an insolvency administrator.
In concrete terms this means: once the priority notice is entered, the seller can no longer effectively sell the property to a third party or encumber it with new land charges that would impair the buyer. Even a later insolvency of the seller no longer endangers the secured claim. The priority notice is thus the central safeguard between conclusion of the contract and transfer of title.
Conveyance (§ 925 BGB) and the priority notice: the difference
The terms sound similar but mean different things. The conveyance (Auflassung) under § 925 BGB is the agreement in rem between seller and buyer on the passing of ownership. It must be declared with both parties present at the same time before a competent authority, as a rule the notary. Only the conveyance together with entry in the land register brings about the passing of ownership under § 873 BGB.
The priority notice of conveyance (Auflassungsvormerkung) under § 883 BGB, by contrast, transfers no ownership as yet. It merely secures the buyer's claim to be entered as owner later. It is a kind of reservation with effect in rem, not an acquisition of ownership.
- Conveyance (§ 925 BGB): agreement on the passing of ownership, a building block of the actual transfer of title.
- Priority notice (§ 883 BGB): securing of the claim to that transfer of title in the interim.
In practice the conveyance and the consent to the priority notice are frequently already recorded in the purchase contract itself. The buyer becomes owner, however, only with the entry in the land register, not yet with the priority notice.
The timeline: from notarisation to transfer of title
The path from purchase contract to ownership follows a fixed sequence that safeguards buyer and seller alike:
- Notarisation: buyer and seller sign the purchase contract before the notary. The purchase is thereby legally effective.
- Entry of the priority notice of conveyance: the notary arranges for the priority notice to be entered in the land register. From that moment the buyer's claim is secured.
- Maturity and payment of the purchase price: only once the priority notice is entered and further agreed conditions are met does the notary give notice of maturity. The buyer pays the purchase price.
- Transfer of title: after confirmed payment and presentation of the tax office's tax clearance certificate, the buyer is entered as the new owner.
This sequence ensures that the buyer pays only once their position is secured by the priority notice, and that the seller loses ownership only once payment has been received. Several weeks to a few months often pass between notarisation and transfer of title.
When the transfer tax arises: with the purchase contract
Here lies the most common error: the real-estate transfer tax (Grunderwerbsteuer) does not arise with the priority notice or with the transfer of title, but already with the effective purchase contract. The taxable event under § 1(1) no. 1 GrEStG is the legal transaction that establishes the claim to transfer of title, that is, the notarised purchase contract itself. The tax arises upon realisation of this event (§ 38 Fiscal Code).
§ 14 GrEStG provides for an exception only in special cases: if the effectiveness of the acquisition depends on a condition, the tax arises only when the condition is met; if an approval is required, only with the approval. The standard case of an unconditional purchase contract, by contrast, triggers the tax immediately.
The priority notice is fiscally neutral. It is a pure safeguard and not a separate taxable event. Whoever notarises a purchase contract therefore owes the real-estate transfer tax regardless of whether and when a priority notice is entered. The amount depends on the federal state: in North Rhine-Westphalia the tax rate is 6.5 per cent of the purchase price.
The tax clearance certificate (§ 22 GrEStG)
The tax clearance certificate (Unbedenklichkeitsbescheinigung) is the link between tax and land register. Under § 22(1) GrEStG, the buyer may be entered as owner in the land register only once a certificate from the tax office is presented stating that no fiscal objections stand in the way of the entry.
The tax office must issue this certificate under § 22(2) GrEStG once the real-estate transfer tax has been paid, secured or deferred, or where there is tax exemption. It is issued in writing; purely electronic transmission is excluded by law.
The process interlocks cleanly here: the notary reports the notarised purchase contract to the tax office within two weeks (§ 18 GrEStG). The tax office assesses the real-estate transfer tax by notice. After payment, it issues the tax clearance certificate. Only with this certificate can the notary have the final transfer of title carried out at the land registry. Whoever does not pay the tax therefore does not get into the land register.
Practical significance for buyers and sellers
For both sides, the priority notice and the tax procedure fulfil important functions:
- For buyers: the priority notice safeguards the purchase price that has been or is to be paid. Without it, the buyer would be only an unsecured creditor during the limbo period and unprotected in the event of a double sale or insolvency of the seller. The priority notice is therefore almost always a precondition for a bank to release the financing.
- For sellers: the ordered sequence ensures that ownership passes only after payment has been received. At the same time, the priority notice binds the purchase, so that the processing reliably moves towards the transfer of title.
Regarding the tax debtor, it is important to note: under § 13 no. 1 GrEStG, the persons involved in the acquisition, that is, buyer and seller, are the tax debtors. Both are liable to the tax office as joint and several debtors. Most purchase contracts do stipulate that the buyer bears the real-estate transfer tax economically; this agreement, however, has effect only between the contracting parties. If the buyer does not pay, the tax office can in principle also turn to the seller.
Costs of the priority notice and its later deletion
Entry of the priority notice of conveyance incurs fees at the notary and at the land registry. They are governed uniformly throughout the federal territory by the Court and Notary Costs Act (GNotKG) and are calculated on the purchase price as the transaction value. The priority notice is only one part of the overall notary and land-register costs, which together often lie in the order of around 1.5 to 2 per cent of the purchase price. The buyer customarily bears these costs, since the priority notice serves their protection.
Once the buyer is entered as owner, the priority notice has served its purpose: the secured claim is fulfilled, and the priority notice becomes moot. In practice it is therefore deleted together with the transfer of title. The purchase contract frequently already contains the necessary consent to deletion, so that the notary can have the deletion arranged in the same step.
For the deletion, usually only minor additional fees arise, or it is already part of the completion package. What matters above all is that, after the transfer of title, no old priority notice in fact remains entered in the land register.
