
- •Time-Limited Interests in Land
- •The Common Core of European Private Law
- •Contents
- •General editors’ preface
- •Preface
- •Contributors
- •Abbreviations
- •1 Setting the scene
- •1. The scene
- •2. Balancing the interests: a handful of common problems
- •3. Time-limited interests arising by operation of law
- •2 General introduction
- •1. Overview
- •2. The hybrid character of time-limited interests in land
- •3. The approach and purpose of this study
- •3.1. Background
- •3.2. Drawing a geographical map of the law of Europe
- •4. The genesis of the book
- •4.1. Narrowing down the topic
- •4.2. Terminology
- •5. Structure of the book
- •3 Historical evolution of the maxim ‘sale breaks hire’
- •1. Introduction
- •2. The Roman-law approach
- •3. The ius commune position
- •3.1. Medieval learned law
- •3.2. From medieval learned law to the Prussian Civil Code
- •3.3. From the Prussian Civil Code to the German Civil Code
- •4. Conclusions
- •4 The many faces of usufruct
- •1. Usufruct in tax and estate planning
- •1.1. Transferring assets yet retaining control and income
- •1.2. Overview
- •2. The concept of usufruct
- •3. The traditional face
- •3.1. Control
- •3.2. Income
- •4. The modern face of usufruct
- •4.1. Control
- •4.2. Income
- •5. The Janus face
- •6. The twisted face
- •6.1. Default rules
- •6.2. Contractual expansion
- •6.3. Limits
- •7. Conclusion
- •Comparative observations
- •Austria
- •Belgium
- •Denmark
- •England
- •France
- •Germany
- •Greece
- •Hungary
- •Italy
- •The Netherlands
- •Poland
- •Portugal
- •Scotland
- •South Africa
- •Spain
- •Comparative observations
- •Austria
- •Belgium
- •Denmark
- •England
- •France
- •Germany
- •Greece
- •Hungary
- •Italy
- •The Netherlands
- •Poland
- •Portugal
- •Scotland
- •South Africa
- •Spain
- •Comparative observations
- •Austria
- •Belgium
- •Denmark
- •England
- •France
- •Germany
- •Greece
- •Hungary
- •Italy
- •The Netherlands
- •Poland
- •Portugal
- •Scotland
- •South Africa
- •Spain
- •Comparative observations
- •Austria
- •Belgium
- •Denmark
- •England
- •France
- •Germany
- •Greece
- •Hungary
- •Italy
- •The Netherlands
- •Poland
- •Portugal
- •Scotland
- •South Africa
- •Spain
- •Comparative observations
- •Austria
- •Belgium
- •Denmark
- •England
- •France
- •Germany
- •Greece
- •Hungary
- •Italy
- •The Netherlands
- •Poland
- •Portugal
- •Scotland
- •South Africa
- •Spain
- •Comparative observations
- •Austria
- •Belgium
- •Denmark
- •England
- •France
- •Germany
- •Greece
- •Hungary
- •Italy
- •The Netherlands
- •Poland
- •Portugal
- •Scotland
- •South Africa
- •Spain
- •Comparative observations
- •Austria
- •Belgium
- •Denmark
- •England
- •France
- •Germany
- •Greece
- •Hungary
- •Italy
- •The Netherlands
- •Poland
- •Portugal
- •Scotland
- •South Africa
- •Spain
- •Comparative observations
- •Austria
- •Belgium
- •Denmark
- •England
- •France
- •Germany
- •Greece
- •Hungary
- •Italy
- •The Netherlands
- •Poland
- •Portugal
- •Scotland
- •South Africa
- •Spain
- •Comparative observations
- •Austria
- •Belgium
- •Denmark
- •England
- •France
- •Germany
- •Greece
- •Hungary
- •Italy
- •The Netherlands
- •Poland
- •Portugal
- •Scotland
- •South Africa
- •Spain
- •Comparative observations
- •Austria
- •Belgium
- •Denmark
- •England
- •France
- •Germany
- •Greece
- •Hungary
- •Italy
- •The Netherlands
- •Poland
- •Portugal
- •Scotland
- •South Africa
- •Spain
- •Comparative observations
- •Austria
- •Belgium
- •Denmark
- •England
- •France
- •Germany
- •Greece
- •Hungary
- •Italy
- •The Netherlands
- •Poland
- •Portugal
- •Scotland
- •South Africa
- •Spain
- •Comparative observations
- •Austria
- •Belgium
- •Denmark
- •England
- •France
- •Germany
- •Greece
- •Hungary
- •Italy
- •The Netherlands
- •Poland
- •Portugal
- •Scotland
- •South Africa
- •Spain
- •Case 1
- •Case 2
- •Case 3
- •Case 4
- •Case 5
- •Case 6
- •Case 7
- •Case 8
- •Case 9
- •Case 10
- •Case 11
- •Case 12
- •Belgium
- •Denmark
- •England
- •Germany
- •Greece
- •Hungary
- •Italy
- •Poland
- •Portugal
- •Scotland
- •South Africa
- •Spain
- •Bibliography
- •GENERAL BIBLIOGRAPHY
- •AUSTRIA
- •BELGIUM
- •DENMARK
- •ENGLAND
- •GERMANY
- •GREECE
- •HUNGARY
- •ITALY
- •THE NETHERLANDS
- •POLAND
- •PORTUGAL
- •SCOTLAND
- •SOUTH AFRICA
- •SPAIN
- •General index
- •Country index
- •Books in the series
Case 10
The reports suggest four alternative mechanisms where the landowner does not want to participate in the construction and initial management of the structure, but wants to retain control of the structure and have eventual unburdened ownership of the land. The favoured solution is the mechanisms based on limited real rights,1 with the hereditary building lease being the preferred mechanism. This solution is preferred to the combination of various traditional or new types of contracts that can achieve the desired goal. The limited real right solution is also preferred to the full ownership solution where full ownership is transferred to the developer with the landowner retaining a right of repurchase.
1Leasehold covenants are an exception to this. The position will therefore be different if the purchaser acquires the development site itself where leasehold covenants
can come into play.
490
Case 11
With regard to the option of the developer to purchase the land from the landowner, we have seen that options can be construed as personal rights, limited real rights (mainly in the mould of a right of preemption), and personal rights which acquire proprietary effect on registration. If construed as a mere personal right, the option is only enforceable against the third party purchaser of the land if the latter had the required knowledge of the option. If construed as a limited real right, the holder of the option (the developer) will be entitled to assume the rights and obligations of C as set out in any subsequent sale and transfer agreement concluded between A and C. If the option takes the form of a right to purchase the property, German law construes this as a personal right which can be given real effect against a third-party purchaser by registering a prior notification in the Land Register.
Most jurisdictions accept that the transfer of a maintenance obligation to a third party successor-in-title will only be effective between the parties to the constitutive agreement. In English and Scots law the beneficiary (B) cannot enforce the maintenance obligation against the successor-in-title because the latter is not privy to the contract and because positive covenants do not ‘run with the land’.1 B’s position can, however, be strengthened by fortifying an undertaking by A that his successors-in-title will be burdened with the obligation with a penalty clause. This will force A and his successors-in-title to transfer the land to a third party purchaser subject to a chain of conditions
1Leasehold covenants are an exception to this. The position will therefore be different if the purchaser acquires the development site itself where leasehold covenants
can come into play.
491
492 c o n c l u d i n g r e m a r k s
or covenants burdening every third party purchaser with the maintenance obligation.2 Such a maintenance obligation can also be enforced against a third-party purchaser if this positive obligation can be construed as ancillary to a right capable of registration, such as a hereditary building right or a hereditary land lease.3
2Belgian law construes this as a stipulation in favour of a third party.
3See the German, Spanish and Belgian reports, Case 11. Depending on their exact phrasing, such rights and obligations constitute an integral part of the real right of superÞcies or emphyteusis if registered together with the principal right, and are therefore effective against third party purchasers.
Case 12
If A wants to exploit an existing building as a shopping centre without managing it directly, but wishes to retain some control over the structure and still have unburdened ownership of the building at the end of the period, the obvious solution is to enter into a commercial lease1 or a management contract2 with B. In jurisdictions which allow the exploitation of existing buildings by the holder of a hereditary building lease or a hereditary land lease, the same result can be achieved by the grant of such rights to B. The Belgian report suggests that this is also possible by the grant of a usufruct of the land to B for a fixed term. The sale and repurchase device suggested by the Danish report might not give A the necessary proprietary protection.
The institutions of a hereditary building lease (superÞcies) and a hereditary land lease (emphyteusis) were originally designed by the State and other public institutions like local authorities and city councils to conclude arrangements with developers to develop unimproved land in the public interest, subject to the proviso that the land and the improvements must be returned to the State or other public institution after a fixed term.3 This is evidenced by the special Italian Law of 1971, which gives municipalities the authority to expropriate urban land and grant rights of superÞcies to developers for a fixed term of between sixty and ninety-nine years for the purpose of constructing affordable housing units on the expropriated land.
1See the Austrian, Greek, French, Belgian, Portuguese, Spanish and English reports, Case 12.
2See the Belgian and Danish reports, Case 12.
3Before 1999, a hereditary building right could only be created in Austria in favour of the state or the church.
493
494 c o n c l u d i n g r e m a r k s
The use of these institutions has in the course of time been extended to private developers. Public institutions must comply with national and European Union public procurement provisions.4 In Portugal, hereditary building leases granted by a public institution must last at least seventy years, the grant must contain provisions against speculative transactions, but no time limits for the completion of constructions, and transfer may be made subject to prior authorisation or a right of pre-emption in favour of the public authority.
Some jurisdictions allow public authorities to grant a concession instead of the above hereditary rights to a developer, which can be shaped to satisfy the needs of the public body, for example, by including the right to terminate or alter such concession in the public interest. The Belgian and French reports contain details of recent legislation on Public Private Partnerships to facilitate the provision of public services and the construction of houses.
4 E.g. public tender provisions.
Modern significance of time-limited interests in land
We could gather only scant evidence of the modern practical significance of the various time-limited interests in land. However, our reporters were asked to give an idea of the importance of the respective interests by giving each a rating of between 0 and 10 (see Appendix, below). This rating gives an indication of the frequency with which each time-limited interest is used today.
First of all, residential and agricultural leases are important in most countries. On the other hand, loan for use and revocable permission to use land (precarium) seem to be of very limited significance in modern times.
Usufruct seems to be a popular time-limited interest, especially in a family context. In this context, the law of succession, by virtue of which usufructuary interests are still largely recognised, plays an important role. In certain jurisdictions usufruct is a popular device in the practical sphere of estate and tax planning.1
Use and habitation are much less frequently used. One notable exception is Italy, where the practical importance of usufruct was radically reduced by a change to the law of succession in 1975. Since then, the right of habitation seems to have superseded usufruct in practical application. In Spain, following trends in the law of succession, usufruct and use and habitation appear to be equally important.
Hereditary land leases (emphyteusis) and hereditary building leases (superÞcies) enjoy a mixed practical application. In Belgium and England (in the form of long leaseholds), they are still often used. In Poland, the same is true for the former, but not for the latter. Belgium
1 See Part I, Ch. 4.
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496 c o n c l u d i n g r e m a r k s
has experienced a revival of the use of the hereditary land lease (erfpacht) by public authorities as mechanism for the implementation of various welfare policies and other political objectives, especially in the sphere of land planning, the provision of housing and community financing.2 In 2006, the court of Cassation had to pronounce on the minimum duration of a hereditary land lease granted by a private landowner to a private person.3 Since 2003, certain Belgian municipalities granted hereditary building leases over their sewerage systems to American enterprises for a term of ninety-nine years, with an immediate retransfer to these local authorities for a term of twenty-five years with an option to purchase at the end of the twenty-five years. This cross-border leasing of public sewerage systems had fiscal benefits for American investors and helped local authorities to update their outdated sewerage works.4
In Italy, hereditary building leases (superÞcies) are sometimes granted to football associations by public authorities over public land to develop football stadiums, which gives superÞcies a qualitative rather than a quantitative importance in that country. The hereditary land lease (emphyteusis) has virtually disappeared in Italy owing to unfavourable legislation that significantly impedes its practical application. Instead, local authorities grant ordinary leases to developers for the development of unimproved land in return for a nominal rent.
There are also instances in which hereditary land leases (emphyteusis) have been utilised in the Netherlands. In 2000, the local authority of The Hague converted a temporary hereditary land lease (erfpacht) of seventy-five years for the construction of houses into a land lease in perpetuity, accompanied by a considerable increase in the yearly rent (canon). The sitting holders contended that this was in conflict with the general principles of orderly management and the general private law principles of reasonableness and equity.5 Moreover, the Dutch Department of Public Works has in the past granted hereditary land leases for the development of river banks, channels and harbours. Recently, the Commissioners of Crown Lands granted hereditary land leases over agricultural plots in the reclaimed polders of the Ijsel Lake. If a public authority owns the land, the constitutive agreement usually makes
2See van Oevelen, ‘Actuele ontwikkelingen’, pp. 342–3. See also Vanhove and Baudoncq, ‘Combinatie van beperkt zakelijke rechten’, p. 135.
3See Vanhove, ‘Note on the Decision of the Court of Cassation’, pp. 678 ff.
4Verstappen, Erfpacht, opstal en vruggebruik, pp. 1–2.
5See Struycken, ‘Erfpacht en redelijkheid’, p. 91.
m o d e r n s i g n i f i c a n c e o f t i m e - l i m i t e d i n t e r e s t s i n l a n d |
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provision for the enforcement of conditions by public sanctions.6 Presently, combinations of hereditary land leases (erfpacht) and hereditary building leases (opstal) are being granted at an increasing rate to municipalities and financial institutions over agricultural land for the construction of conduits for the transportation of gas and other chemical substances.7
6Pitlo, in Reehuis, Heisterkamp, van Maanen and de Jong, Het Nederlands Burgerlijk Recht, vol. 3, p. 496.
7Pitlo, ‘Goederenrecht’, pp. 511–12. While not a widely used device in Louisiana, it was suggested by Rome, ‘An Elegy for Emphyteusis’, p. 17, that hereditary land leases could be revived to restore public and private land devastated by Hurricane Katrina.