Is a deviation in market value possible when selling real estate within the family?

The loan runs until 31.12.2024, the remaining debt including all interest accrued until then amounts to approximately €20,000, which we would like to pay off so that the bank (or in my case an insurer) is no longer listed in the land register, as I also need financing for my construction project.

Where is the problem? It's peanuts, if necessary take out a private loan and pay it off. Screw the penalty interest, it can't be that high on that amount anyway. That way the land register is clean and nothing stands in the way of a transfer / gift / sale. Then you can start again completely fresh at zero with a clean land register. Regards Olli

Are there any special repayment options for the loan? Increase the installment? So that one can simply pay it off faster and then, let's say, cancel the mortgage around mid '22?

Then just buy the property at market value and your parents can gift you the purchase amount for the construction project (later). No real estate transfer tax applies anyway, and there are tax exemptions for gifts in the direct line. Only the notary fees increase, but that should be worth it to be able to build faster...

My equity is currently enough for about 50% of the market value. I want to use the property as equity in the later financing of the house (100% of course). And therefore not take out a loan for the property.

Exactly! Agree in the notary contract that the payment at market value will only be due in X years, but the transfer in the land register takes place immediately and no mortgage is registered on your parents. The notary will (rightly) point out to your parents that they are taking a big risk with this (at least if they needed the money). Before the X years, you make a gift contract with your parents where sum Y is gifted to you and must be used to pay off your "debts" from the purchase contract.

Is that possible? Sounds like a solution! I'll take that with me! Thanks.

I would argue that you obviously have to buy (become the owner in the land register) so that your substantial investment (construction) and the associated financing are secured. I find the idea of a sham transaction just to terminate the loan far-fetched. I also don’t know if the notary is really the right source for legal advice in this case (and usually I value notaries very highly). After all, he also benefits from a higher purchase price (higher notary fees).

So you think it would also be possible below market value? Unfortunately, the insurer has not been accommodating at all so far.

Honestly, I don’t understand why the insurance is being so difficult. What do they gain from being listed somewhere in the land register for a low-value property? Are you sure they can’t be bought out?

I don’t understand that either. We have tried every option to reach an agreement with the insurance. Unfortunately without success, therefore further cooperation is also ruled out.

Where is the problem? It’s pocket change, if necessary take out a private loan and pay it back. To hell with punitive interest rates, they can’t be that high for this amount anyway. That way the land register is clean and nothing stands in the way of a transfer/gift/sale. Then you can start again completely fresh with a clean land register. Regards, Olli

The problem lies with the insurance; I would pay off the amount immediately. However, the insurance will not release us from the contract that way. Therefore, a purchase must take place, then there is a special termination right.

Are there special repayment options for this loan? Increase the installments? So that you simply pay it off faster and then, say, in mid-'22 you can simply cancel the mortgage?

Unfortunately not, we have considered everything. The loan contract will run properly until 12/31/2024.

Exactly! Agree in the notary contract that the payment at market value is due only in X years, but the registration in the land register takes place immediately and no mortgage is registered on your parents.

How is that supposed to work? The bank issues a release authorization, which goes into the custody of the notary. He may dispose of it if a part of the purchase price is paid to the insurance. Otherwise, nobody can ensure that a repayment will occur. So at least this part of the purchase price must flow now.

How is that supposed to work? The bank creates a deletion authorization, which is held in trust by the notary. He can dispose of it if a part of the purchase price is paid to the insurance. Otherwise, no one can ensure that a repayment takes place. So at least this part of the purchase price must already be paid now.

It may be, the OP makes it clear that the remaining debt of 20,000€ is not the problem. Only that the lender does not want to cancel the loan (not even against payment of the VFE). Let's assume the market value of the property is 220,000€, the notary contract states that the 20,000€ remaining debt is immediately due to the lender, the 200,000€ as stated above.

But is the procedure of the insurance company even lawful? If that were allowed, a land charge would never be deleted. Logically, the bank only has a right to the land charge as long as the loan has not been repaid. If I now offer the bank to repay the loan plus early repayment penalty, it must accept this and accordingly approve the deletion. Maybe get a lawyer involved? This matter seems fishy to me.