after a reasonable time. A loan granted for an indefinite term is generally revocable, usually on reasonable notice or immediately, where the lender is in urgent and unforeseen need of the property, where the borrower uses the property in a manner contrary to the terms of the contract, causes the property to deteriorate or unlawfully transfers the property to another. The borrower must make proper use of the property and is liable for all loss caused by improper use or use of the property in breach of the terms of the contract. The lender remains entitled to the fruits of the property.

In the case of a revocable loan of land, derived from the Roman precarium, the borrower’s position is very insecure since the permission (licence) may be revoked at any time. It is gratuitous, except in France and Belgium, where it requires a (modest in France) financial counterprestation. Most jurisdictions regard precarium as a special kind of gratuitous loan and regulate it by the same principles. In Portugal and Spain, it is usually granted among family members and the mere permission of the owner coupled with transfer is sufficient for its creation. The contract is revocable at will, except in South Africa, where the courts regard precarium as a more secure form of tenure and require reasonable notice and sometimes a just reason (nova causa) for its revocation.

Gratuitous loans seldom occur in respect of land, except in the form of a revocable permission for family members or farm employees to occupy part of the land on a farm in South Africa. In Poland, a variant of a loan for use is used in order to make residential premises gratuitously available to persons in need. In such circumstances, the borrower is not obliged to pay rent, but is held responsible for the maintenance of the property.

Austria

A and B can enter into a lease contract (Bestandvertrag). Under Austrian law, a lease gives rise to a personal right to use the leased object (such as land). The tenant has to pay rent. If the right to use the object is granted at no charge, this is not a lease but a loan. A lease contract does not require a specific form and is effective as soon as the parties have agreed on the leased object and on the rent.

There are two types of lease: an ordinary lease or tenancy (Miete) and a fruit-bearing or income-producing (usufructuary) lease (Pacht). Both are governed by Civil Code, § 1090. Under an ordinary lease, the tenant acquires the right to use the leased object. By contrast, under a fruit-

bearing (usufructuary) lease contract, the tenant is entitled not only to use the leased object, but also to enjoy its fruits.15 Hence, the right to use a flat is granted by an ordinary contract of lease. However, if a plot of land and its buildings serving the cultivation of the land are leased largely for agricultural purposes, the underlying contract is an agricultural fruit-bearing (usufructuary) lease. Equally, if a plot of land with premises is leased largely for the management of a business, the underlying contract is a business usufructuary lease. If a contract has elements of both a tenancy and a usufructuary lease, the essential elements prevail.16

The difference between a tenancy and a usufructuary lease is important because the Law on Tenancy applies only to tenancies and not to usufructuary leases. The Law on Tenancy contains various obligational provisions for the benefit of the tenant, in particular regarding termination (Law on Tenancy s 29) and rent (Law on Tenancy s 16 and 26). In practice, difficulties arise in particular as to the differentiation between the business usufructuary lease, which is governed only by Civil Code, § 1090 and the tenancy of premises, which (at least partly) may fall under the Law on Tenancy. The classification of the contract depends on whether it only allows for the use of a building or also for the use of business equipment and utilities, machinery, stock, goodwill, business licences etc. If the contract imposes on the tenant the obligation to manage an enterprise, the legal relationship is deemed to be a usufructuary lease.17

According to the general rules of the Civil Code, lease contracts can be for a fixed or an indefinite period of time. A contract for a fixed period of time expires after the period has lapsed and may only be terminated earlier owing to material breach (Civil Code, § 1117). Lease contracts for an indefinite period can be terminated by complying with certain agreed periods of notice or by a material breach without such compliance (Code on Civil Procedure, § 560).18 The Law on Tenancy contains obligational provisions regarding termination which deviate from the

15Schauer, in Koziol and Welser, Bu¬rgerliches Recht, vol. 1, p. 216; Wu¨ rth, in Rummel, Kommentar, § 1091, para. 1.

16Schauer, in Koziol and Welser, Bu¬rgerliches Recht, vol. 1, p. 216.

173 Ob 274/02v; JBl (2003), p. 643; 7 Ob 87/04a; wobl (2005), p. 205; 4 Ob 258/05b; wobl (2006), p. 269 (Hausmann); Iro, Kommentar, § 1091, para. 2; Schauer, in Koziol and Welser, Bu¬rgerliches Recht, vol. 1, pp. 216 ff.

18ss. 1113 ff. Allgemeinen bu¬rgerlichen Gesetzbuch; Schauer, in Koziol and Welser, Bu¬rgerliches Recht, vol. 1, pp. 235 ff.

provisions of the Civil Code. If residential premises are leased for a definite period, the lease must be for a period of at least three years (Law on Tenancy, s. 29, para. 1, line 3b). Contracts for an indefinite period can only be terminated by the landlord if he/she has good reason to do so (Law on Tenancy, s. 30). When the tenant of a residential lease dies, the lease is transferred to certain relatives: the spouse or the partner of the tenant if this person has been living with the tenant in the same household for a certain period.

An agricultural lease is additionally governed by the Law on Agricultural Leases. This statute contains obligatory provisions as to rent (Law on Agricultural Leases, s. 4) and lays down so-called benchmark periods (Law on Agricultural Leases, s. 5). The benchmark period is fifteen years for the lease of an agricultural business dedicated above all to horticulture, vinery or pomiculture; ten years for the lease of any other agricultural business or a single plot of land used for horticulture, vinery or pomiculture; and five years for all other agricultural leases. If a contract is concluded for a period shorter than the benchmark period, the tenant may apply for an extension. The court must grant such an extension if the interests of the tenant outweigh the interests of the landlord (Law on Agricultural Leases, s. 6, para. 3). Such an extension is also possible if an agricultural lease is concluded for an indefinite term and the landlord terminates the contract before the expiry of the benchmark period.19

The right to use the leased object and the right to enjoy its fruits are rights in personam. Nevertheless, the tenant has certain remedies against third persons who interfere with his/her rights.20 It is possible to register the lease in the Land Register in order to make it enforceable against third parties (Civil Code, § 1095).21 In the past, the Austrian Supreme Court only allowed the registration of leases for a fixed period. The court argued that – in consideration of Civil Code, § 1120 – the registration of a lease contract for an indefinite period would be useless.22 Today, the Supreme Court allows the registration of all lease contracts, which restricts the statutory right of the landlord to terminate the lease in any form.23

19 1 Ob 530/82; MietSlg 34/16. 20 For details, see Cases 2–4. 21 See Case 2.

227 Ob 88/72; SZ 45/47; 5 Ob 221/60; SZ 33/68; 5 Ob 500/59; SZ 32/124; Iro, Kommentar, § 1095, para. 1. For a critical analysis, see Schauer, ‘Zur Verbu¨ cherung’, p. 631. Regarding the protection under Civil Codes 1120, see Cases 2 and 3.

235 Ob 90/06f; EvBl (2007), p. 10 following Schauer, ‘Zur Verbu¨ cherung’, pp. 636 ff.

Typically, contracts for residential leases are based on standard form contracts, the aim of which is to deviate as far as legally possible from the rules which are to the advantage of the tenant.

A can grant B a personal servitude (Personalservitut) with regard to the land. The personal servitudes are usufruct, the right of use and the right of habitation (Civil Code, § 478). It is also possible to create irregular servitudes, for example, a right of way, for the benefit not of land but of a certain person (Civil Code, § 479).24

In principle, the consensual creation of servitudes requires an agreement and registration in the Land Register (Civil Code, § 481, para. 1). However, the Austrian Supreme Court and a part of the academic literature also recognise unregistered servitudes, provided that these servitudes are manifest,25 namely evidenced by recognisable objects or facts.26 In such cases, the manifest character of the servitude is a substitute for registration.27 There is no clear answer to the question whether this substitution of the registration is possible not only in the case of real (praedial) servitudes but also in the case of personal servitudes. The Austrian Supreme Court had formerly argued that personal servitudes could never be manifest and therefore always had to be registered.28 According to more recent decisions, the Supreme Court also accepts an unregistered right of habitation which is manifest.29 This is the case, for example, if the access to the premises subject to this right is apparently blocked.30

Personal servitudes may be created for an indefinite period or for a definite period of time. They expire at the latest with the death of the holder, unless they are expressly extended to the heirs. If the agreement

24Koch, in KBB, § 479, para. 1.

258 Ob 2024/96; NZ (1996), p. 302; 1 Ob 587/95; JBl (1996), p. 458; 7 Ob 547/95; wobl (1996),

p.240 (critical comment by Schauer); 7 Ob 560/94; NZ (1995), p. 108; 8 Ob 622/91; Hofmann, in Rummel, Kommentar, § 481, para. 2; Koch, in KBB, § 481, para. 4; contra Schauer, ‘Zur Verbu¨ cherung’, p. 240; Kletecka, in Koziol and Welser, Bu¬rgerliches Recht, vol. 1, p. 429; Rubin, ‘Offenkundige’, p. 545.

26Hofmann, in Rummel, Kommentar, § 481, para. 2; 7 Ob 560/94; NZ (1995), p. 108; 8 Ob 622/91; 1 Ob 1/84; NZ (1987), p. 22; 3 Ob 43/55; SZ 28/30.

278 Ob 2024/96; NZ (1996), p. 302; 7 Ob 547/95; wobl (1996), p. 240 (critical comment by Schauer).

288 Ob 622/91; 1 Ob 615/78; MietSlg 30.050; 3 Ob 43/55; SZ 28/30; contra 8 Ob 137/75; SZ 48/78.

291 Ob 14/97h; immolex 1997/143; 1 Ob 587/95; JBl (1996), p. 458; 7 Ob 547/95; wobl (1996),

p.240 (critical comment by Schauer). For a critical analysis, see also Rubin, ‘Offenkundige’, p. 545.

301 Ob 587/95; JBl (1996), p. 458.

does not specify the heirs, it is presumed that only the children will be entitled (Civil Code, § 529). Inheritance of personal servitudes is subject to the limits of Civil Code, § 612.31 Accordingly, if the agreed heirs are not descendants of the holder, they must be alive when the agreement is made. Servitudes for a fixed term automatically expire at the end of the term (Civil Code, § 527). In principle, servitudes are highly personal and cannot be transferred to another person (Civil Code, § 485).32

A personal servitude created in favour of a juristic person expires with the dissolution of that person.33

The usufructuary has the right to use the land and to enjoy its fruits to the extent that it does not interfere with the substance of the land (Civil Code, § 509). He/she may also sub-let the land. On expiry of the usufruct, such a sub-lease does not end automatically, but is transferred to the landowner (Civil Code, § 1120).34 The usufructuary has to take over a lease contract that the landowner had concluded before the usufruct was created.35

Whereas other servitudes cannot be transferred, special rules apply to the usufruct. According to some decisions of the Supreme Court, the usufruct as such is transferable, while according to other decisions and the majority view in academic literature, only the rights flowing from the usufruct may be transferred.

The right of use is similar to the usufruct. However, the usuary is allowed to enjoy the fruits only to the extent necessary for personal purposes (Civil Code, § 504).

The right of habitation is a proprietary right to use residential property (Civil Code, § 521). Depending on its concrete form, the right of habitation is governed either by the provisions regarding usufruct or by the provisions regarding the right of use.36 The right of habitation can be created for the use of residential space including adjoining rooms and related outside surface.37

31 Hofmann, in Rummel, Kommentar, § 529, para. 1. 32 For details see Case 9.

33Kiendl-Wendner, in Schwimann and Verschraegen, Praxiskommentar, vol. 2, § 529, para. 1.

344 Ob 3/29; JBl (1928), p. 392; Kletecka, in Koziol and Welser, Bu¬rgerliches Recht, vol. 1, pp. 425 ff. As to s. 1120 Civil Code, see Case 2 and, as to its application to ususfructus, Case 10.

351 Ob 171/48; SZ 21/152; 8 Ob 678/90; wobl (1992), p. 113; Kletecka, in Koziol and Welser,

Bu¬rgerliches Recht, vol. 1. pp. 425 ff.

365 Ob 2121/96; NZ (1997), p. 130 (Hoyer); 5 Ob 83/97k; NZ (1998), p. 306 (Hoyer); 8 Ob 55/ 97i; wobl (1998), p. 311; Koch, in KBB, § 521, para. 1; Kletecka, in Koziol and Welser,

Bu¬rgerliches Recht, vol. 1. p. 427.

37Koch, in KBB, § 521, para. 2.

A can grant B a building right governed by the Law on Building Rights (Baurechtsgesetz as amended by BGBl 1990/258). The building right is the proprietary right to have a building on or under the surface of a plot of land which belongs to somebody else. It is alienable and transmissible (Law on Building Rights, s. 1). The purpose of this right is for the ownership of the land to remain with the owner while simultaneously granting a developer a proprietary right to erect buildings on the land without buying the land.38 The building right can also be created in respect of an existing building.39

The building right is considered an immovable object (Law on Building Rights, s. 6, para. 1). The building is an accessory of the building right and is therefore an immovable object as well.40 The owner of a building right has ownership of the building, but only a right of use with regard to the land (Law on Building Rights, s. 6, para. 2).

The building right cannot be created for fewer than ten or more than 100 years (Law on Building Rights, s. 3, para. 1). When the building right expires, the landowner acquires ownership of the building and, failing any other agreement in this respect, has to compensate the developer for a quarter of the value thereof (Law on Building Rights, s. 9).

The creation of a building right requires registration in the Land Register as a charge of the respective land (Law on Building Rights, s. 5, para. 1).

The granting of rights of use over agricultural land often requires approval by the state authorities.41

Land and parts of a land may also be the object of a loan for use (Leihe) or a precarium (Prekarium).42 A loan for use agreement obliges the lender to permit the borrower to use the land at no charge (Civil Code, § 971). A loan agreement is a so-called ‘real contract’ and comes into existence only when the object is actually handed over to the borrower (Civil Code, § 971).43 Rights of the lender are personal rights. Nevertheless, the borrower has at least possessory remedies against third persons who

38Kletecka, in Koziol and Welser, Bu¬rgerliches Recht, vol. 1. p. 435.

39Kletecka, Rechberger and Zitta, Bauten, p. 31, para. 33; Kletecka, in Koziol and Welser,

Bu¬rgerliches Recht, vol. 1. p. 434.

40Kletecka, in Koziol and Welser, Bu¬rgerliches Recht, vol. 1. p. 435.

41Hofmann, in Rummel, Kommentar, § 509, para. 1; Law on Transfer of Tirol (Grundverkehrsgesetz), s. 4.

426 Ob 604/86; EvBl (1987), p. 134; Koziol, in Koziol and Welser, Bu¬rgerliches Recht, vol. 1, p. 203.

43Welser, in Koziol and Welser, Bu¬rgerliches Recht, vol. 2, p. 205.