Strengthening the position of the provisional administrator — Land Registry must respect the provisional administration

BRRS partner Dr. Stephan Schlegel was recently able to obtain a decision before the Frankfurt am Main Higher Regional Court (OLG) that strengthens the position of the provisional insolvency administrator (decision of August 20, 2019; 20 W 98/19).

The OLG ruled that the Land Registry must respect disposal restrictions issued by provisional insolvency administration. In derogation of the formal principle of consensus, the execution of a purchase contract for a plot of land must not be continued and the conveyance must not be carried out if, at the time of the application for conveyance, the provisional administration has placed a restriction on disposal of assets and the Land Registry is aware of the restriction.

This decision strengthens the position of a provisional insolvency administrator. The estate is effectively protected from property dispositions in the petition proceedings and the provisional insolvency administrator is given the time to prepare the further course of action (Section 106 InsO and other provisions).

The OLG correctly states that the transfer of ownership is effective solely if either the seller is still authorized to dispose of the goods at the time of completion of the acquisition of rights or the conditions set forth in Section 878 BGB are met. Neither of these conditions have been fulfilled in this case. Since the Land Registry must prevent the Land Register from being inaccurate, it must not register the conveyance.