Case 7

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usufructuary, which justifies an alteration of the purpose of the property. In Spain, the nude owner is apparently entitled to replace the burdened property with an equivalent or to sell the property and pay the usufructuary legal interest on the proceeds of the sale for the duration of the usufruct. Where being forced to ‘exploit’ the property caused severe hardship to a widow, South African case law allowed the nude owner to sell the property and to allow the widow a usufruct on the proceeds of the sale on the grounds that this was financially sensible and also to the advantage of the nude owner.2

Most national reporters indicate that the usuary and habitator will not be entitled to effect the above conversions under any of the circumstances mentioned.3 By contrast, the holder of a hereditary land lease can alter the destination of the property when the character of the neighbourhood changes, provided that this would enhance the value of the land. Similarly, the holder of a hereditary building lease is entitled to exploit new structures on the land to their fullest economic potential, even if this involves changing the property’s economic purpose.

2See the Belgian, French, Italian, Spanish and South African reports, Case 7.

3See e.g. the Greek and South African reports, Case 7.

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to pay a fixed annual sum to the usufructuary until the expiry of the usufruct.7

A major difference between usufruct and lease is that the most important remedy of the nude owner is an injunction (interdict) against the usufructuary, compelling him/her to refrain from serious or repeated violations of his/her obligations,8 which in the case of minor violations is restricted by the fact that the usufructuary has a certain degree of discretion in deciding how and when to comply with his/her obligations. This forces the prudent nude owner to wait until the expiry of the usufruct before requesting restoration of the property and compensation.

Another difference is that in cases where the usufructuary’s conduct constitutes a risk of serious damage, most jurisdictions allow the nude owner to demand either security against future damage to the property9 or the placement of the administration of the usufruct under the supervision of the court, a professional manager or even the nude owner.10 The management of the property is handed back to the usufructuary as soon as the grounds justifying the placement no longer prevail.

A third difference is that most jurisdictions allow a claim for damages only on termination of the usufruct. Exceptionally, in Belgium, the landowner may claim compensation for damages even during the term of the usufruct if immediate and certain damage can be proved.

The nude owner generally has fewer remedies in the case of misconduct by the holders of the lesser servitudes of use and habitation. Some jurisdictions allow a court order to stop interference with the rights of the nude owner and an action for damage caused negligently or intentionally. Generally, no security can be claimed against future unconscionable use of the property. Under Spanish law, the entitlements rights of use and habitation expire automatically in the event of serious

7See the Belgian, French and Italian reports, Case 8. In Portugal and Spain, the landowner must hand over the net income of the property to the usufructuary every year.

8See e.g. the German, Austrian, Italian and South African reports, Case 8.

9See e.g. the German, Austrian, Greek, Italian, Hungarian and Polish reports, Case 8. In Poland, security can be demanded only where the usufructuary is allowed to

undertake mining activities.

10See the German, Austrian, Greek and Dutch reports, Case 8. Under Italian law, the court may order instead that the property be leased out. Under Greek law, this remedy

is also available if the usufructuary is unwilling or unable to provide security.

misconduct and if the relationship is strained. The Polish Civil Code allows either party to request a court order to convert some or all of the habitator’s rights into a fixed annual sum, or, in an extreme case, to terminate the right of habitation.

Owing to the fact that the constitutive agreement establishing a hereditary building lease prescribes the parties’ rights and obligations in much more detail than those creating a personal servitude, the landowner’s most important remedy is an action for breach of contract. If the holder has substantially altered the physical condition of the structure without the landowner’s consent (as required by the contract), the court may, on request, order the restoration of the original structure or award compensation for damage suffered. Under German law, the landowner may in addition claim for the re-transfer of the building right against payment of fair compensation for improvements if the conditions are met.

In a hereditary land lease, the landowner may terminate the lease if the holder seriously fails to comply with his obligations,11 grossly abuses his/her rights or causes serious damage to the property.12 Under Belgian and Dutch law, the landowner is entitled to claim expenses and compensation for damage and loss of rent caused by the holder’s negligence and lack of maintenance.

11E.g. under Dutch law if the holder fails to pay the annual rent for two consecutive years and under Polish law if he fails to erect buildings that he undertook to erect.

12See the Belgian and Polish reports, Case 8.