Public Liability Based On Incorrect Land Register Entries Is Limited

Incorrect land register entries may trigger public liability. But in a recent decision the Austrian Supreme Court (1 Ob 198/18a) held that incorrect land register entries can only constitute public liability claims for a certain group of people.

The present case

In 2000 a woman agreed to transfer real estate to her nephew. A prohibition on encumbrance and sale (Belastungs- und Veräußerungsverbot) in favour of the nephew's son was also agreed. All corresponding land register entries were filed and approved by the land register court in 2001. Yet, the land register court failed to register the prohibition on encumbrance and sale, while registering all other approved entries.

Twelve years later the nephew assumed personal liability for a bank loan granted to his company. The real estate was the nephew's only asset that could be used as collateral. Prior to granting the loan, the bank checked the land register for encumbrances. It relied on the land register's