Transactional certainty

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Transactional certainty. In Germany, how do you know who owns land?. Publicity in real property transactions Land register (German Grundbuch ) Protection of bona fide purchaser Techniques to create clear title Publicity in commercial transactions Commercial register - PowerPoint PPT Presentation

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  • Transactional certaintyPublicity in real property transactionsLand register (German Grundbuch)Protection of bona fide purchaserTechniques to create clear titlePublicity in commercial transactionsCommercial registerProtection against renegade agentsProtection of third-party expectations

    In Germany, how do you know who owns land?

  • German Civil Code 873. The conveyance of ownership in land, the encumbrance of land with a right, and the transfer or encumbrance of such a right requires the agreement of the affected persons with regard to the change and the registration of such change in the Land Register. 891. If in the Land Register aright has been registered in the name of a person, it is presumed the right exists and belongs to such person.

    If a registered right has been canceled in the Land Register, it is presumed that the right does not exist.

  • German Civil Code 892. For the benefit of a person who by jural act acquires a right in land, or an encumbrance of such right, or a right with respect to such encumbrance, the entries in the Land Register are deemed correct unless the incorrectness is known to the acquirer.

    If the registered holder of a right registered in the Land Register is subject to a restriction of his power to dispose of such right, and if such restriction exists for the benefit of a particular person, the restriction is not effective as against the acquirer, unless it appears in the Land Register or is known to the acquirer .

  • Transactional certainty

    Blackacre

  • Transactional certaintyHypothetical 1

    Bud is in bankruptcy and legally cannot sell his property, including Blackacre. But his bankrupt status is not registered, so he sells Blackacre to Percy.

    APercy is a bona fide purchaser and acquires good title.BIncapacity prevents Bud from transacting.

  • Transactional certaintyHypothetical 1

    Bud is in bankruptcy and legally cannot sell his property, including Blackacre. But his bankrupt status is not registered, so he sells Blackacre to Percy.

    APercy is a bona fide purchaser and acquires good title.BIncapacity prevents Bud from transacting.

    See 892

  • Transactional certainty

    German Civil Code 892.

    If the registered holder of a right registered in the Land Register is subject to a restriction of his power to dispose of such right, and if such restriction exists for the benefit of a particular person, the restriction is not effective as against the acquirer, unless it appears in the Land Register or is known to the acquirer .

    Moral: rights in Land Register

  • Transactional certaintyHypothetical 2

    Bud owns Blackacre, which is registered in his name. Bud sells Blackacre to Penny, who does not register the transfer in the Land Register.

    APenny is a bona fide purchaser and acquires good title.BPenny does not have rights to Blackacre unless registered in the Land Register.

  • Transactional certaintyHypothetical 2

    Bud owns Blackacre, which is registered in his name. Bud sells Blackacre to Penny, who does not register the transfer in the Land Register.

    APenny is a bona fide purchaser and acquires good title.BPenny does not have rights to Blackacre unless registered in the Land Register.

    See 873

  • Transactional certainty

    German Civil Code 873.

    The conveyance of ownership in land, the encumbrance of land with a right, and the transfer or encumbrance of such a right requires the agreement of the affected persons with regard to the change and the registration of such change in the Land Register.

  • Transactional certaintyHypothetical 3

    Bud inherited Blackacre, but the Land Register clerk enters that Bryan is the owner. Bryan conveys Blackacre to Paul, who has not inspected Land Register.

    APaul is a bona fide purchaser and acquires good title.BPaul does not have rights since Bud became owner of Blackacre by inheritance.

  • Transactional certaintyHypothetical 3

    Bud inherited Blackacre, but the Land Register clerk enters that Bryan is the owner. Bryan conveys Blackacre to Paul, who has not inspected Land Register.

    APaul is a bona fide purchaser and acquires good title.BPaul does not have rights since Bud became owner of Blackacre by inheritance.

    Public faith

  • Transactional certainty

    Greenacre

  • Transactional certaintyHypothetical 4

    A owns Greenacre and, by notarial agreement, sells to B. But before B is registered as new owner, A sells to C before a different notary. Cs ownership is registered in the Land Register.

    AIf C knows about sale to B, C is not a bona fide purchaser and acquires no title.BEven though C knows of sale to B, the Land Register is conclusive (unless and until B asserts his rights).

  • Transactional certaintyHypothetical 4

    A owns Greenacre and, by notarial agreement, sells to B. But before B is registered as new owner, A sells to C before a different notary. Cs ownership is registered in the Land Register.

    AIf C knows about sale to B, C is not a bona fide purchaser and acquires no title.BEven though C knows of sale to B, the Land Register is conclusive (unless and until B asserts his rights).

    See 891

  • Transactional certainty

    German Civil Code 891.

    If in the Land Register a right has been registered in the name of a person, it is presumed the right exists and belongs to such person.

    Can this be right? See 826

  • Transactional certainty

    German Civil Code 826.

    A person who intentionally causes damage to another in a manner contrary to bona mores is bound to compensate the other for the damage.

    But B wants the land, not money from A and C. See 249

  • Transactional certainty

    German Civil Code 249.

    He who is liable in damages, has to being about the condition which would exist if the circumstances making him liable had not occurred. If the liability exists for injury to a person then the obligee [at his election] may demand, instead of restitution in kind, the sum of money necessary to effect such restitution.

    All clear?

  • Transactional certaintyHypothetical 5

    A owns Greenacre and, by notarial agreement, sells to B. But before B is registered as new owner, A sells to C before a different notary. Cs ownership is registered in the Land Register.

    AIf C does not know about sale to B, C is a bona fide purchaser and acquires good title.BEven though C does not know of sale to B, the first transferee acquires title.

  • Transactional certaintyHypothetical 5

    A owns Greenacre and, by notarial agreement, sells to B. But before B is registered as new owner, A sells to C before a different notary. Cs ownership is registered in the Land Register.

    AIf C does not know about sale to B, C is a bona fide purchaser and acquires good title.BEven though C does not know of sale to B, the first transferee acquires title.

    Compare to common law

  • Transactional certaintyCommon lawPriority to the first transferee, regardless of good faith or bad faith of later transferee

    Notice-race statutesPriority to the transferee who first records purchase [register of deeds, not title], if transferee acquired interest in good faith and for valuable consideration.

    Is US same as German system (convergence)?

  • Transactional certaintyHypothetical 6

    X owns Redacre sells to Y for 25,000 euros. But before Y is registered as new owner, X gives Redacre to Z as a gift by notorial act. Zs ownership is registered in the Land Register.

    AIf Z does not know about sale to Y, then Z is a bona fide acquirer and receives good title.BEven though Z does not know of sale to Y, Z is not a purchaser for value and acquires no title.

  • Transactional certaintyHypothetical 6

    X owns Redacre sells to Y for 25,000 euros. But before Y is registered as new owner, X gives Redacre to Z as a gift by notorial act. Zs ownership is registered in the Land Register.

    Norbert Luehring (notary)

  • Transactional certaintyHypothetical 6

    X owns Redacre sells to Y for 25,000 euros. But before Y is registered as new owner, X gives Redacre to Z as a gift by notorial act. Zs ownership is registered in the Land Register.

    AIf Z does not know about sale to Y, then Z is a bona fide acquirer and receives good title.BEven though Z does not know of sale to Y, Z is not a purchaser for value and acquires no title.

    Is Land Register certain?

  • Transactional certaintyHypothetical 6

    J, who owns Whiteacre, is insane. J transfers Whiteacre to K, who registers. But K knows she is not an owner, since J lacked capacity to sell. Quite wily, K sells Whiteacre to innocent L, who immediately is registered as owner. AL must search the title to be sure there was no defect, such as Js insanity. BL is a bona fide purchaser and becomes owner, even though K was not an owner.

  • Transactional certaintyHypothetical 6

    J, who owns Whiteacre, is insane. J transfers Whiteacre to K, who registers. But K knows she is not an owner, since J lacked capacity to sell. Quite wily, K sells Whiteacre to innocent L, who immediately is registered as owner. AL must search the title to be sure there was no defect, such as Js insanity. BL is a bona fide purchaser and becomes owner, even though K was not an owner.

    What about J?

  • Transactional certainty

    German Civil Code 892.

    If the registered holder of a right registered in the Land Register is subject to a restriction of his power to dispose of such right, and if such restriction exists for the benefit of a particular person, the rest