Comparative observations

(emphyteusis). By contrast, ordinary land leases, loans and precarious holding of land only give rise to contractual claims with regard to the land. In this category, some jurisdictions acknowledge that registered land leases give rise to limited real rights while others accord at least some proprietary effects to registered or even non-registered land leases.

For the validity of leases, most jurisdictions, except England and Poland, require the payment of rent. Poland recognises a rent-free agricultural lease where the tenant only has to pay taxes and other expenses related to the property. In some jurisdictions, rent could be paid in natura from the proceeds of the land. Most European jurisdictions distinguish between residential and agricultural leases and regulate them by separate provisions in their Civil Codes or in special statutes. Although writing is generally not required for the constitution of a lease, most jurisdictions reduce their leases to writing in order to facilitate proof or for tax purposes. In addition, most jurisdictions require execution in a notarial deed for the validity of long leases and registration for enforceability against third parties. The maximum duration of leases ranges from ten years for residential leases in Poland, twelve years for agricultural leases in the Netherlands, thirty years for long leases in, for instance, Portugal, which reduces leases for life and longer leases to thirty years, and Belgium, which allows long leases for ninety-nine years or for life. Most leases may be terminated on account of material breach or on sufficient notice being given to the tenant. The Polish Civil Code contains the interesting provision that on the death of a residential tenant the lease is transferred automatically to the tenant’s spouse, cohabitee, children or persons to whom the tenant was obliged to pay alimony, provided they occupied the premises on a permanent basis.

Most civil law jurisdictions recognise the personal servitudes of usufruct, the right of use and the right of habitation and accept that the last two rights accord lesser rights to the holder and that they are inalienable owing to their intensely personal character. Other jurisdictions such as Germany subsume the rights of use and habitation under the category of lesser personal servitudes. While the majority of jurisdictions require registration for the enforceability of personal servitudes against third parties, it is interesting that quite a number of them require little formalities or registration for their validity. Unlike leases, which are concluded for commercial reasons, personal servitudes are aimed at providing a livelihood mostly to family members until death. Personal servitudes usually expire on the death of the holder or after a period of thirty years if the holder is a juristic person,

but they can also be constituted for a fixed shorter term or indefinitely. In the last case, personal servitudes approximate leases and are constituted for less personal reasons. The Greek and Austrian Civil Codes even allow personal servitudes to pass to the heirs of the holder, subject to restrictions as to the order of succession.

Most jurisdictions, notably Austria, Belgium, Portugal, Spain and Poland, accept that the holder of a usufruct in principle has the right to use the land and to enjoy the fruits of the land and must return the land on termination of the usufruct without impairment of its substance.5 It is disputed whether a usufruct as such or only the rights under a usufruct can be transferred. The Austrian Supreme Court and the majority of Austrian academic opinion, as well as South African and Polish law, support the position that only the rights under a usufruct and not the usufruct itself can be transferred. The Dutch and Belgium Civil Codes imply that the usufruct as such can be transferred but adds that such alienation does not affect the duration of the usufruct which is still linked to the life of the original usufructuary.

On the issue of sub-lease by the usufructuary, Austrian law deviates from the position that subordinate rights created by a usufructuary expire on the termination of the usufruct. Instead, it holds that subleases do not expire automatically but are transferred to the landowner who is subrogated for the usufructuary in the contract of lease. In Belgium, the landowner is also obliged to respect a lease with a fixed date for a period not exceeding nine years, except in case of fraud, and a lease concluded for a period exceeding nine years for the nine-year period already started on termination of the usufruct. In tandem with this rule, Austrian law obliges a usufructuary to take over lease contracts that the landowner had concluded before the usufruct was created.

Generally, the right of use allows use of the land but use of the fruits only to meet the daily needs of the holder and his/her family.6 In Portugal, the family of the holder includes his/her spouse, their children, other relatives to whom the holder owes a duty of support, and domestic personnel, with the extent of the right depending on the holder’s social and economic status. In Belgium, Portugal, Spain and Hungary, the parties are free to determine the content and extent of a right of use and the rules on usufruct are applicable in so far as they are compatible with the right

5This obligation is interpreted in Spain and Italy as an obligation to preserve the economic destiny of the property.

6See e.g. the reports of the Netherlands, Spain, Italy and Hungary.

which may, but need not, be registered and even if not registered would be enforceable against a bona Þde acquirer of the land.

Most continental European jurisdictions, except Greece and Hungary, recognise a hereditary building right as a limited real right which allows the holder to erect buildings on the land of another in return for payment of a small rent, typically on a yearly basis.8 In Austria, Germany, Belgium, Spain, Portugal, Italy and Poland, a building right can also be established in respect of existing buildings, which entitles the holder (mostly a developer) to enlarge, modernise or reconstruct existing buildings. In Belgium, Portugal, Spain and the Netherlands, a building right also entitles the holder to improve the land by planting trees and crops or to take over existing trees and plants and to continue to improve the agricultural condition of the land.

Unlike a personal servitude, the hereditary building right is transferable and transmissible to heirs. The main effect of this right in Austria, Germany, Belgium, Spain,9 Italy and Poland, is that its holder becomes full owner of the structure (or plantation) for the duration of the right as opposed to the holder of a mere limited real right.10 It therefore forms an exception to the general rule that the landowner owns all accessories, in particular structures, which are permanently attached to the land. He may use, enjoy or demolish the structures or plants, provided that he returns the land in the condition in which he received it.11

Originally, the hereditary building right was introduced in order to encourage people of modest income to build residential accommodation for themselves. People who could not afford to purchase the land were put in a position to become full owners of a structure built on their behalf on someone else’s land against payment of a modest rent. Originally and also presently, building rights were and are also granted by the state or local authorities for the purpose of improving undeveloped land subject to specific obligations.12 Nowadays, this institution is often used for complex arrangements in land development.13

8In Belgium, a hereditary building right can also be constituted gratuitously.

9Under Spanish law, the holder becomes only a ‘temporary owner’.

10This is the view in South Africa and the minority view in Italy.

11Note that in Poland the building, once erected, must be maintained in a proper condition and even rebuilt if it has been damaged during the term.

12In Poland the grant of a hereditary building right is restricted to public authorities but academics favour its extension to private landowners and its replacement by the German Erbaurecht.

13See Cases 10–12 below.

account of its free alienability. The default position in the Dutch Civil Code is that the holder of the perpetual land lease may exercise the same rights of enjoyment over the land as the owner.

Hereditary land leases are regulated by legislation in Belgium and France and by the provisions of the Spanish, Italian and Dutch Civil Codes. Hereditary land leases may be granted for between eighteen and ninety-nine years in France and between twenty-seven and ninety-nine years in Belgium. In Italy, the minimum duration of a hereditary land lease is twenty years, but, like in the Netherlands and Spain, it may be granted in perpetuity. A hereditary land lease is most frequently created by a state grant, by an agreement between the parties or by prescription. The jurisdictions generally require that the agreement to establish a building right must be reduced to writing, executed notarially and registered in the Land or Mortgage Register for enforceability against third parties.

On expiry of the hereditary land lease, the land, together with all improvements, returns to the owner. The holder will usually have the right to be compensated for the improvements – in Italy, only to a modest degree. In the Netherlands, the holder of the hereditary land lease is entitled on expiry of the lease to remove all improvements on the condition that he/she restores the land to its previous condition. If not, the landowner is normally obliged to take over the improvements upon paying the leaseholder their value.

Today, the hereditary land lease has been eclipsed by the hereditary building right. It is seldom used in practice and, in Italy, most existing hereditary land leases were created decades ago. The reason for this is partially because the landowner is not allowed to demand a business-related yearly rent from the leaseholder and is not able to increase the rent in the light of changed circumstances. In the Netherlands, the hereditary land lease may be combined with a hereditary building right.

Most jurisdictions recognise a gratuitous loan for use of land derived from the Roman institution of commodatum. Some jurisdictions still regard a loan of land as a ‘real’ contract requiring a transfer of possession of the land, while others regard it as consensual in nature. While all jurisdictions accept that a loan for use creates merely personal rights, they attach certain proprietary consequences to a loan by protecting the occupation of the borrower against trespass and disturbance.

The borrower is under an obligation to return the property to the lender when the term of the loan expires, after he/she has used it or