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Sale of apartment on installment payment Payment confirmations and partial cancellation of the mortgage.

November 4, 2014 | 40,00 EUR | answered by Bernhard Müller

My parents sold an apartment with an associated garage and common living areas to the current tenants in 2002. The sale was notarized. Here are some important paragraphs from the contract:

"The purchase price is payable in monthly installments of € xxx per month […] monthly in advance by no later than the 3rd working day of each calendar month. If the buyer fails to make payment for even one month's installment […] in arrears, the seller may, at their discretion
- Either exercise the right to withdraw from the contract, with the installments paid up to that point […] not to be refunded,
- Or declare the entire remaining balance due, to be […] charged with 5% interest […]."

"It is clarified that the purchase price or the remaining purchase price is not subject to interest."

"To secure the payment claim in principal sum, the registration of a total security mortgage in the amount [of the purchase price] is granted and requested at the expense of all contract objects and in favor of the seller […].

With the passing of my parents, I inherited the contract and the monthly payments. I am not familiar with this type of contract, so I need to ask the following simple questions.

1) The buyer claims that according to the German Banking Act, every lender, even a private individual, must create an account statement at least once a year or upon request. Is this true? Am I considered a lender?

2) If so, what exactly should this letter include? Is it enough to indicate the total amount paid so far and confirm that all payments have been made on time? Should the remaining balance or remaining number of months be mentioned?

3) The buyer claims to have a right to deletion (partial deletion of the mortgage). As mentioned above, the full liability is currently registered in the property register. Is this true? Can I refuse it? What are the advantages or disadvantages?

4) If so, how does it work from a practical point of view (the steps), who applies for it and who pays for it? Because if the buyers have this right, and exercise it every year, it would be expensive for me if I had to pay for it? Do you need a notary for this or do you deal with the property register office directly?

5) If so, what implications does this have on the clause above regarding 'withdrawal from the contract due to late payment'? In that case, would the buyers have a partial right to the apartment due to the payments already made? In other words, would I receive less?

Thank you for your help!
Kind regards

Bernhard Müller

Dear questioner,

the Banking Act only obliges credit institutions. However, in this case also individuals. Neither you nor your parents were or are a credit institution.
However, according to § 368 of the German Civil Code, you are obliged to provide receipts for the money received upon request. In January, write down the amount owed at the beginning of the previous year and on which date you received which payment. The remaining debt and the number of remaining months can be calculated by the buyer themselves.
German law does not provide for a right to regular deletion of parts of the mortgage. At the moment the last installment is paid, the buyer acquires the mortgage according to § 1163 paragraph 1 sentence 2. They must then also take care of the deletion in the land register, i.e. submit the application.

Best regards,

Bernhard Müller, Lawyer