Debt certificates can be further subdivided into paper bearer debt certificates, paper registered debt certificates and registered debt certificates. In the case of bearer or registered bonds in paper form, a security is issued, i.e. the bond is in paper form. In the case of a registered Schuldbrief, no security is issued and the Schuldbrief is only entered in the land register.
In earlier times in particular, promissory notes were issued as securities. If a property is now purchased or liens are to be settled (e.g. increase in the pledge amount, conversion of the paper bearer/registered mortgage note into a registered mortgage note, etc.), owners of the properties may be faced with the major problem that they can no longer find the securitized mortgage notes. However, the securitized promissory notes must be available. This is because they must be handed over to the new owner or submitted to the land registry when the liens are cleared.
If a securitized debt certificate can no longer be found, there is no choice but to initiate court proceedings and declare the securitized debt certificate invalid. In this procedure, the declaration of invalidity is made with a notice period of six months, i.e. the court publicly calls up the missing security. If no notification regarding the missing security is made within the publication period of six months, the court then declares the missing security to be invalid ex officio and publishes the decision. The procedure for declaration of invalidity means additional costs and a time delay.
If you require assistance in declaring lost securities invalid, our experienced notary’s office will be happy to assist you.