Экзамен зачет учебный год 2023 / European Condominium Law

David. David acquires ownership by the registration of the transfer in the land register. If Alex defaults, David can either claim for performance of the contract or for damages (CC ¤ 918). David would also be entitled to cancel the contract if Alex failed to perform for a sufÞciently long period and claim compensation for his losses

In the present scenario David decides to cancel the contract. If David withdraws from the contract after insolvency proceedings are commenced, David can reclaim his money directly from the insolvency administrator (Insolvency Code ¤ 102 ff.).17 Otherwise, the claim must be addressed to Alex.

In either case, the purchaserÕs major problem is that the insolvent seller does not have sufÞcient Þnancial resources to refund the advance payments of the purchaser. The Austrian legislator established several means by which to protect the purchaser of a future apartment (Wohnungeigentumsbewerber: Law on Apartment Ownership ¤ 2 par. 6).

The Law on Property Development (Bautra¨gervertragsgesetz) was enacted in 1997 to speciÞcally address this matter.18 Despite its wide scope, apartment ownership is certainly the main focus of the Law. The Law requires the developer (Alex) to protect the purchaserÕs (DavidÕs) advance payments using one of the means of protection speciÞed in the legislation (¤ 7). One possible measure is to grant security in the form of a personal security right (¤ 8), for instance, a bank guarantee or relevant insurance. A more pertinent protective measure is for the purchaser to register his right of (future) acquisition of ownership in the land register (Sicherstellung des Rechtserwerbs im Grundbuch) (¤ 9).19

This can be accompanied by a payment plan (¤ 10), whereby instalments fall due after the completion of predeÞned stages of construction.20 Ultimately, all potential claims against the seller can be secured by a security right in the land (Pfandrecht auf einer Liegenschaft) (¤ 11). Finally, the developer is obliged to appoint a notary or attorney as trustee to safeguard the interests of purchasers (¤ 12). Effectively, the purchaser is protected by the fact that his advance payments are held in trust, and therefore do not form part of the developerÕs insolvent estate. The extent to which David will be able to reclaim payments from Alex is dependent on whether or not Alex has complied with his

19See further Pittl and Prader, ÔErwerbersicherung und Treuha¬ nderpßichten beim grundbu¬ cherlichen Sicherungsmodell im Bautra¬gervertragÕ (2001), p. 125.

20RIS-Justiz RS0119703.

legal obligations under the Law on Property Development and which measures of protection have been chosen by him.21

Aside from the measures listed above, there are also apartment ownership-speciÞc measures aimed at protecting the purchaser from the sellerÕs insolvency. Their purpose is Þrst to facilitate the purchaserÕs ability to effectively reclaim his payments in the case of a withdrawal from the contract. Second, they encourage the developer or insolvency administrator to complete the building and establish the apartment ownership scheme. Court proceedings can also be raised if necessary to prompt activity (Law on Apartment Ownership ¤ 43).

The most important security measure available to the purchaser is the pre-notation of an undertaking by the developer to establish an apartment ownership scheme in the land register (Anmerkung der Zusage der Einra¨umung des Wohnungseigentums im Grundbuch) (Law on Apartment Ownership ¤ 40 par. 2). The purchaserÕs expectant inchoate right on establishment of apartment ownership is thereby given proprietary effect, enforceable against third parties.22 The pre-notation of this undertaking, combined with the acquisition of co-ownership by a mere prospective owner of an apartment (Wohnungseigentumsbewerber) already has the result that certain co-ownership rights exist and certain management provisions of the Law on Apartment Ownership are applicable even before the establishment of apartment ownership (¤ 37 par. 5).23 In addition, the prospective owner already has certain rights in particular the right of use, equipment and alteration of the apartment as well a right to be rendered Þnancial statements by the manager on the ground of the pre-notation. When the pre-notated apartment has become part of a registered apartment ownership scheme, the prospective owner can demand the registration of the apartment in his or her name with a rank in accordance with the date of the pre-notation even if the unit has subsequently been transferred or mortgaged to a third party. Rights registered in the land register after the prospective ownerÕs pre-notation can be extinguished at his or her instance (¤ 40 par. 4).24 If the developer defaults on the establishment of the scheme, the prospective owner can insist that the current

developer can only release the deposit upon completion (ÔdeliveryÕ) of the building.

Protective measures are thus in place to reduce the risk of signiÞcant losses in the event of the insolvency of a developer-seller. However, the general law does not provide for any security in favour of purchasers. Purchasers are therefore non-preferred unsecured creditors who participate in the paritas creditorum (i.e. the equality of creditors), who realise the assets of the debtor in proportion to their claim (Law on Mortgage, art. 8). The receipt of advance payments in contravention of the law, renders the developer criminally liable. However, this will be of little use to the buyer, who is unlikely to recover much of what he has paid.

Metalegal formants

The promulgation of the Breyne Law was prompted by the bankruptcy of numerous large building construction companies which were unable to repay any of the advances made by purchasers of apartments still under construction. The Law was introduced to protect purchasers against similar losses in future sale of apartments of buildings still under construction.

Catalonia

Operative rules

There is no problem with selling and buying an apartment in a condominium based on building plans. This type of future sale was very common throughout Spain during the last construction boom (1995Ð2007). However, the buyer only has a personal right against the developer to enforce transfer of the property, which can only crystallise once all apartments in the building have been completed, the scheme is registered as a condominium and the apartment is transferred to and registered in the name of David. Transfer is only completed by the signing of a notarial deed of transfer or through the delivery of the keys of the apartment (titulus plus modus system of land transfer).

The contract of sale creates mutual obligations for the seller and buyer and if one fails to perform their part of the contract, the other has the right either to enforce performance or to cancel the contract. Under the Spanish CC art. 1124, David has two options, namely, to force Alex to complete the building Ð which seems impossible because

insolvent to continue his activity). In this case Alex has not even started to construct the building that would contain the unit David bought. However, the insolvency administrator may, in the interest of the insolvency process, decide to cancel the contract. In such a case DavidÕs claim would be regarded as a claim against the insolvency mass (Law on Insolvency art. 61.2.2 and 154 LC).

(b) If the agreed date to transfer the property was after the commencement of the insolvency proceedings, David could have terminated the contract before this event on the grounds that Alex had not furnished the insurance policy or the bank guarantee referred to above. In such a case, DavidÕs claim would rank as an ordinary claim as discussed above. If this was not the case, his claim would be regarded as a claim against the insolvency mass. If the contract had not been terminated at the moment when a distribution agreement was reached between all the creditors, the payment to David would be directly from the insolvency mass, as he would not need to take part in that agreement. His claim would thus not be subject to reductions and/or respites (Law on Insolvency art. 61.2).

This would be the case regardless of the type of deposit and the instalments that David has paid. Spanish law (also applicable to Catalonia) recognises many types of deposit but their treatment is the same in the case of insolvency.28

Descriptive formants

The sources which form the basis for the above answers are the traditional rules of the law of contract on future sales, the provisions of the Spanish Law on Construction of 1999 for the protection of purchasers in future sales and the provisions of the Spanish Law on Insolvency.

Metalegal formants

The above exposition of the position of David on the insolvency of Alex is based on the view of Angel Carrasco.29 But views on the effect of insolvency proceedings differ due to the complexity of the insolvency provisions and the huge amount of work that commercial judges had to cope with due to the credit crunch that started at the end of

28These are security deposits (arres penitencials), a simple deposit (arres confirmato`ries), or a penalty clause (arres penals).

29Carrasco, Concurso de la inmobiliaria promotora y situacio´n concursal de los contratos de compraventa de vivienda con precio adelantado (2009), pp. 1Ð4.

2007 and led to the bankruptcy of many developers and building contractors which left more than 5 million people unemployed in Spain (about 21 per cent of the labour force) in December 2011.

Croatia

Operative rules

Because the building has not been completed, it is legally impossible to register and thereby establish a condominium. This is because the Law on Ownership and Other Real Rights of 1996 requires an existing building for the establishment of a condominium, and an administrative body must issue a certiÞcate that a unit is Þt for independent use (art. 73). The Law on Obligations of 2005 states explicitly that a sale may be concluded for future property (art. 380(3)). In such a case the seller has a duty to deliver the completed property at the time of performance. During the initial phase the developer may sell a future apartment based on a building plan, but this sale is conditional on the completion of the unit. Another possibility is to conclude a preliminary contract (predugovor) where the prospective buyer and seller enter into an agreement to conclude a future contract of sale for a speciÞed unit on a speciÞed future date (art. 286).

Under either of the alternatives discussed above, it is legally impossible to convey any property to the buyer, because there is no condominium, and thus there is no possibility of registering condominium ownership. However, the buyer can pay the purchase price in advance in anticipation of the sellerÕs future performance under the contract. This naturally puts the buyer at risk in that he could lose his investment in the case of the sellerÕs insolvency because he is classed as a general creditor who does not enjoy priority in case of insolvency, unless he has taken security from the seller. A security interest would protect the buyer to the extent that he could recoup some or all of his investment through his collateral, which may be scant consolation given he will still be left without an apartment (Law on Insolvency of 1996 art. 164).

Descriptive formants

The provisions regulating the object of condominium stem from the general principle of speciÞcity, which dictates that a property right must have a designated object (species). Otherwise, it would be difÞcult, if not impossible, to physically determine the precise boundaries of the

rights and responsibilities of a particular co-owner. Furthermore, the provisions of the Law on Ownership and Other Real Rights of 1996 now controls the problem of illegal building, which has plagued the Croatian real estate market for many years. Thus, the restriction on the creation of condominiums in advance of their completion serves as an additional check on developers to comply with building regulations. The operative rules of insolvency law do not recognise a prepaying buyer as a secured creditor, but treat all creditors equally and limit the number of statutory preferences.

This particular sale itself is rarely used in practice for two reasons. First, tax considerations deter parties from entering into a sales contract because tax becomes due at the moment the contract is concluded (Law on Taxation of Land Transactions of 1997 art. 14(1)). Second, building plans are rarely so accurate as to guarantee that the Þnal unit will exactly match the building plans, without any discrepancy, and it is the Þnal administrative certiÞcate rather than the building plans that conÞrms that the unit is Þt for independent use (samostalna uporabna cjelina). This in turn impacts on the description of the unit in the land register upon registration.

The description provided in the contract of sale must match precisely the description of the property in the land register in order to be approved for registration. If there is any discrepancy between the building plans and the administrative certiÞcate, the buyer will not be able to register his ownership without the contract amending the building description. Unsurprisingly, in practice it is far more common to use the pre-contractual structure, which contains similar elements but allows the parties to conclude the contract of sale at a later date (after the building has been built and condominium has been registered). The tax consequences are also preferable, because tax is only payable if and when the actual sales contract is concluded. The tax payable on the transaction will be incorporated into the agreed price.

Finally, the buyer may conclude a contract to acquire a coownership share of the plot of land on which the condominium is to be erected, which will later be attached to a speciÞc unit. This is not without its difÞculties, because the co-ownership shares are invariably allocated according to the size and physical properties of the units, and only once condominium is registered. The structure presented here ßies in the face of the requirement for the building description to match the Þnal property, because the developer would be required to allocate co-ownership at an early stage. In such a case,