Simultaneous mortgage in highest bid distribution: main and secondary property

Section 15 GBG permits a mortgage for the same claim to be entered undivided over two or more land register bodies or mortgage claims. The creditor may demand payment of the entire claim from each individual property. This multiple security does not mean that the same amount may finally be taken from every distribution fund.

In practice, a simultaneous mortgage is also called a Gesamthypothek. For distribution, the statutory rule in section 222 EO controls. The entry, mortgage instrument, current claim balance and every enforcement proceeding involving a jointly liable property must be checked.

A single property mortgage, by contrast, relates only to the identified property. The specific feature of a simultaneous mortgage is that several properties secure one claim, requiring coordination beyond the individual auction file.

The terms main and secondary property are used in practice to describe the allocation of jointly liable land register bodies. They do not establish a statutory quota. What matters is which properties are jointly liable under the mortgage instrument and which of them are actually auctioned.

A property called the main property is not automatically the only or preferred source of payment. A secondary property is not released merely because of its label. The instrument and land register entries must show whether the same claim is secured on both properties.

Priority must also be recorded separately for each property. Claims paid before the simultaneous mortgage reduce the remaining balance of that fund. Only then can that fund contribution to the common claim be calculated.

Section 222(1) EO provides for payment of a simultaneous mortgage from the distribution fund under sections 216 and 217 EO. If all properties jointly securing the claim are auctioned, section 222(2) EO determines the ratio. Each fund contributes in the same proportion as its balance after prior claims bears to the sum of all such balances.

This is not an allocation according to the size of the properties and not a free choice by the creditor. If two funds have different balances after prior claims, the simultaneous claim is allocated in that ratio. The outstanding claim including ancillary charges remains the upper limit.

Use the same cut-off date and claim statement for every property. Principal, interest and ancillary charges must not be calculated differently in separate proceedings. The distribution order should show the amounts and their priority clearly.

Section 222(3) EO protects subsequent parties if the creditor requests another allocation and they receive less than under the statutory ratio. They may require payment from the individual funds of the amount that would have been allocated under section 222(2), insofar as necessary to cover their loss.

The claim is not triggered by every different payment instruction in the abstract. It requires a specific disadvantage to a subsequent party. Priority, expected payment and actual shortfall therefore belong in the file.

If not all jointly liable properties are auctioned, section 222(4) EO replaces the individual remaining balances with the tax values of all jointly liable properties for the compensation calculation. The claim may be entered on the unauctioned property in the priority position of the satisfied and deleted simultaneous mortgage.

Section 222 EO concerns payment of the simultaneous mortgage from the distribution fund. This differs from debt assumption by the successful bidder. For other secured claims, section 223(1) EO permits assumption credited against the highest bid if the creditor agrees at the distribution hearing and releases the former debtor.

The land register entry alone does not mean that the successful bidder assumes the personal debt. Nor does joint liability mean that the creditor may choose any order of payment without regard to section 222 EO.

The portal article on land register and encumbrances explains the entry review. The article on distribution of the highest bid addresses filing and objections. Both questions must be matched to the actual proceeding.

A reliable review needs more than a current balance. Collect extracts for all jointly liable properties, the mortgage instrument and amendments, loan or title documents, one claim statement and the distribution orders or summonses in the relevant proceedings.

Record the prior claims, priority positions and balance remaining after their payment for every property. If only some properties are realised, add the tax values required by section 222(4) EO.

For a different payment or compensation claim, also document filings by subsequent parties, the expected shortfall and the requested payment route. Finally check the figures in the distribution order under section 229 EO.