3.2.2 Sub-questions

The first difference is the scope of application of both notices. In the Netherlands, the priority notice can only be used to anticipate the transfer of registered property (immovable property, ships and aircraft) itself (s. 7:3 Dutch Civil code). It is not possible to anticipate the creation of a security interest (hypothec). Whether and to what extent the creation, transfer and waiver of other limited rights can be anticipated upon, is unclear.1 The German priority notice, on the other hand, can be used to anticipate any real/proprietary change in rights in immovable property (“Dingliche Rechtsänderung”) (§ 883 BGB) (question 1). This wider scope of application boasts a huge benefit: since the buyer of land often requires external financing to cough up the purchase price, creating a security interest – and being able to anticipate it – is just as vital to the transaction as the transfer of the asset itself. Both instruments also differ in terms of duration: the Dutch Vormerkung lasts six months, whereas its German counterpart is, in principle, not limited in time (question 3).2 In terms of effect, both instruments are the same: they both provide the grantee a proprietary interest that can be invoked against other grantees and creditors/a bankruptcy trustee (question 4).

The biggest difference between the two instruments in this regard is the frequency with which the priority notice is used. This closely relates to the second question (type of application). In the Netherlands, the priority notice is not used very often. Instead, the performance interest of the buyer is protected by the client account of the civil law notary. The client account is a bank account held by the civil law notary that does not form part of the recoverable property of the notary itself. The money in the account still belongs to the parties involved. In the context of a transfer of real estate, the buyer will transfer the money to the client account. As soon as the civil law notary has established that the buyer has actually become the owner of the immovable property, the notary releases the money to the seller. If the buyer fails to acquire ownership – for instance, because the seller went bankrupt in the meantime – the notary releases the money to the buyer instead.3

In Germany, on the other hand, the priority notice is used very often. It even forms part of the template of sale-purchase agreements of land that can be downloaded by legal practitioners.4 What must be noted is that in Germany, the contract by which land is transferred must be recorded by a civil law notary anyway (§ 311b BGB), regardless of whether or not parties use a priority notice. In the Netherlands, the only requirement of the contract is that it is ‘in writing’, which means that the additional fee of the notary comes into play only when parties choose for a priority notice. This brings about that the ‘extra’ cost of registering the sale purchase agreement is substantially higher in the Netherlands. The German Vormerkung does not apply completely automatically like the Vendor Purchaser Constructive Trust (see next subsection), but because it is in practice used in almost all real estate transactions, the German Vormerkung closely resembles automatic application. Because the priority notice protects the performance interest of both parties,5 there is no need for a client account. This is reflected in German practice: the client account of the German civil law notary is hardly ever used in standard real-estate transactions, and the purchase price is transferred directly from the buyer to the seller. So why then does Dutch law have a priority notice in the first place? The difference between Germany and the Netherlands in this regard, perfectly illustrates the different functions that a vacuum instrument might have. Section 2 has listed three problems of a simultaneous transfer that can be overcome by vacuum instruments. For the sake of clarity, the problems are summarized here once more. Problem a is the necessity to check at the last possible second if the transferor still has the power to dispose, problem b is the possibility of an event that occurs with retroactive effect and problem c is the possibility that the preparations of the transferee have been in vain if the exchange does not occur. In Germany, the function of the priority notice is to solve all three problems.6 By contrast, in the Netherlands, the client account of the notary overcomes almost all difficulties relating to problem a and b by creating what is, in fact, a vacuum instrument in favour of the seller (see footnote 249). The priority notice provides an additional form of protection for the buyer by providing a remedy for problem c. It must be noted that the Dutch Vormerkung does have the potential to overcome problems a and b, just like its German counterpart.