Third Party Mortgage Agreement Template for Germany

The Third Party Mortgage Agreement is a critical document used in German financing transactions where a property owner agrees to secure a third party's debt obligations by granting a mortgage over their property. This arrangement is commonly used in corporate group structures, family business contexts, or when supporting business partners' financing needs. The agreement must comply with German civil law requirements, particularly the provisions of the BGB regarding property security interests and the GBO for land registry matters. It includes detailed provisions on the secured obligations, enforcement rights, property maintenance requirements, and necessary declarations for land registry registration. The document requires notarization and careful drafting to protect all parties' interests, especially the third-party property owner who bears significant risk by providing their property as security for another's debt.

1. Parties: Identification of all three parties: the lender (mortgage holder), the borrower (principal debtor), and the third-party property owner

2. Background: Context of the agreement, including reference to the underlying loan agreement and the third party's willingness to provide security

3. Definitions: Key terms used in the agreement, including 'Secured Obligations', 'Property', 'Mortgage Amount', and 'Security Period'

4. Creation of Mortgage: Express declaration of the creation of the mortgage (Hypothek) over the Property, including ranking and amount

5. Property Details: Detailed description of the mortgaged property, including land registry details and current encumbrances

6. Secured Obligations: Definition and scope of the obligations secured by the mortgage, including the underlying loan details

7. Third Party Declarations: Express declarations and consents of the third-party property owner regarding the security

8. Representations and Warranties: Confirmations regarding property ownership, authority to grant security, and absence of restrictions

9. Registration and Notarization: Requirements and authorizations for land registry registration and notarial requirements

10. Enforcement: Rights and procedures for enforcing the mortgage, including specific German law enforcement provisions

11. Costs and Expenses: Allocation of costs related to creation, registration, and enforcement of the mortgage

12. Notices: Communication requirements between parties

13. Governing Law and Jurisdiction: Confirmation of German law application and jurisdiction of German courts