162 c a s e s t u d i e s

discretion to make an order that the holder has ‘sufficient title’ to remain in possession of the property. In the case of insolvency, the insolvent or the insolvency administrator may apply for the termination of the loan if it will serve the interests of the insolvency proceedings. In Italy and Belgium, the right of a holder for use (comodatario) is not protected against creditors.

Austria

On application of the judgment creditor, the competent court may satisfy the judgment by liquidating the land either by forced administration (Law on Execution, § 97) or by forced auction (Law on Execution, § 133). Hence, the judgment creditor will be satisfied either by the income of the property (such as the rent for a lease) or by the purchase price.

The placing of the land under forced administration does not have any effect on existing lease contracts (Law on Execution, § 111, para. 1). Civil Code, § 1120 does not apply in this case.14 However, the tenant is directed to pay the rent to the administrator and not to the owner (Law on Execution, § 110) so that the money can be used to satisfy the judgment creditor (Law on Execution, § 109).

If the property is sold in execution, the question arises whether the right of the tenant may be enforced against the successful bidder. Similarly to the contractual sale of land, the answer to this question depends on whether: (a) the tenant has already been given possession,

(b) the lease falls under the Law on Tenancy, and (c) the lease is registered in the Land Register.

(a)If the tenant has already been given possession of the property, Civil Code, § 1121, sent. 2 provides that the contract is transferred to the successful bidder who substitutes the previous landlord. He/she takes

over the whole lease contract, including any accessory clauses, except for provisions on termination which are to his/her disadvantage.15

(b)If the lease contract falls under the Law on Tenancy, the successful bidder has no specific right of termination under Civil Code, art. 1120 (Law on Tenancy, § 2, para. 1, sents. 4 and 5). The whole contract is

transferred with the exception of uncommon accessory clauses of which the successful bidder neither knew nor ought to have known.16

14Angst, Kommentar, § 111, para. 2.

151 Ob 344/99s; JBl (2000), p. 793; Iro, Kommentar, § 1121, para. 2.

168 Ob 122/00z; OGH 22.12.1998, 5 Ob 117/98m; immolex 1999/70.

These two rules will also apply if the creditor has a prior mortgage.17 In order to avoid devaluation of the mortgaged property by the creation of leases, the mortgage creditor can claim non-conclusion of new or cancellation of existing lease contracts. However, the lease can only be cancelled against the tenant if the tenant acted negligently (Civil Code,

§458).18

(c)If the lease is registered in the Land Register, it is treated like a servitude (Civil Code, § 1121 and Law on Execution, § 150, para. 3). The successful bidder has to take over the contract and does not have a right to terminate in accordance with CC§ 1121, sent. 2. If the creditor is a mortgage creditor, the ranking in the Land Register (which depends on priority) is decisive, as it is for servitudes.

If the landlord becomes insolvent, the lease contract continues. There is no specific right of termination in this case. If the object of the lease is

sold in the course of insolvency proceedings, the provisions regarding sales in execution apply.19 The rights of mortgage creditors are enforced

in accordance with the provisions of the Law on Execution. The same rules as described above apply.20

The forced administration does not have any effect on personal servitudes. In a sale in execution, the successful bidder acquires the land subject to the servitude. In the case of a prior mortgage, the mortgage will rank higher than the servitude (Law on Execution, § 150). The successful bidder will only acquire the land subject to the servitude if

the proceeds of the sale subject to the servitude are sufficient to satisfy the mortgage creditor.21

By an analogous application of Civil Code, § 462 and Law on Execution,

§200, no. 2, the holder of a lower ranking servitude is entitled to acquire the better rank of the mortgage creditor by satisfying his/her claims. Thereby he/she can make sure that the successful bidder acquires

the land subject to the servitude. When he/she redeems the mortgage, he/she acquires the claim together with the mortgage concerned.22

17See e.g. Austrian Supreme Court 18.9.1986, 5 Ob 576/86; SZ 59/155.

186 Ob 107/98y; MietSlg 50.029; 6 Ob 136/98p; EvBl (1998), p. 184; 8 Ob 254/99g; immolex 2000/145; Kletecka, in Koziol and Welser, Bu¬rgerliches Recht, vol. 1, p. 391; Hofmann, in Rummel, Kommentar, vol. 1, § 458, para. 6.

19Oberhammer, in Konecny and Schubert, Insolvenzgesetze, § 24, para. 1.

20Schulyok, in Konecny and Schubert, Insolvenzgesetze, § 48, paras. 168 ff.

213 Ob 102/84; JBl (1986), p. 124 (comment by Hoyer).

22JBl (1986), p. 124 (comment by Hoyer); Hofmann, in Rummel, Kommentar, vol. 1, § 462, para. 3; Angst, Kommentar, § 200, para. 4.

164 c a s e s t u d i e s

The same rules apply if the land concerned is sold in the course of insolvency proceedings.23

The hereditary building right is governed by the same rules as those applicable to personal servitudes (Law on Building Rights, § 11). Note that Austrian insolvency law allows certain contracts and dispositions to be set aside upon application of the creditor if they were wilfully made to the detriment of the creditor, provided that the other party to the respective disposition/contract acted at least negligently (Law on Insolvency, §§ 27 ff.).

Belgium

The time limited rights in rem of B (usufruct, hereditary land lease (emphyteusis), or hereditary building lease (superÞcies)) cannot be attached by the creditors of A or included in the insolvency/bankruptcy assets of A provided that, in the case of attachment the time-limited rights have been recorded in the Mortgage Register prior to the attachment (transcription of the attachment documents), and in the case of insolvency/ bankruptcy the time-limited rights have been recorded in the Mortgage Register before the bankruptcy is declared.

In general, rights in personam, such as a loan for use and precarium, are included in the attachment or insolvency/bankruptcy assets. An agricultural lease is, however, excluded (Law on Agricultural Leases, art. 55).24 A residential lease with a certified date prior to the attachment or bankruptcy is also excluded (Code of Civil Procedure, art. 1575). Although contested, it is usually accepted that this also holds for a residential lease without a certified date but with a minimum period of six months’ occupation by the tenant.25 Exceptionally, however, the curator/administrator can terminate a residential or agricultural lease if this is necessary for the effective management of the estate under bankruptcy (Law on Bankruptcy of 8 August 1997, art. 46).26

If B concluded the contract creating a time-limited right in the socalled suspect period (namely, from the moment as determined by the court that A stopped paying his/her debts), and B knew that A was insolvent, the administrator in insolvency may decide that the

23See e.g. 2 Ob 212/98k; NZ (2000), p. 138.

24See e.g. Supreme Court of 28 Nov. 2008, ARC 07.0358.N, available at www.cass.be.

25See e.g. Dambre and Hubeau, Woninghuur, nos. 1232 ff.

26Supreme Court of 10 Apr. 2008, C.05.0527.N, available at www.cass.be.

time-limited right is not excluded from the insolvency assets of A (Law on Bankruptcy, art. 18). The time-limited right is automatically included if it was granted gratuitously during the suspect period (art. 17). The position is the same if the time-limited right is deemed to have been concluded in order to defraud A’s creditor (art. 20).

If A created a mortgage prior to the time-limited right, the mortgage creditor is in general entitled to demand immediate payment from the debtor if his/her security is diminished (Civil Code, art. 1188 and Law on Mortgage, art. 79). If the mortgage creditor has made his/her right public by recording the mortgage in the Mortgage Register, then the right cannot be frustrated by a later time-limited real right, since such right will not rank higher than the prior mortgage. The later time-limited right is therefore not enforceable against the mortgage creditor. If, however, the prior contract to mortgage was not recorded in the Mortgage Register prior to the recording or transcription of the time-limited right, the mortgage creditor can claim the debt from A, but may not enforce the mortgage against B, except if he/she can prove that B was not in good faith and had actual notice of the mortgage at the time of the acquisition of his/her timelimited real right. Moreover, if the time-limited right was granted with a fraudulant intention, the mortgage creditor can use the actio Pauliana to render the time-limited right unenforceable (Civil Code, art. 1167).

The mortgage creditor must respect a residential or agricultural lease concluded by A in good faith. Where the lease is concluded for more than nine years, then only the nine-year period already started must be respected (Law on Mortgage, art. 45 in Þne). This is so even if the mortgage was registered prior to the lease.

Denmark

As a starting point, the rights of B are included, but a creditor as well as the administrator in bankruptcy must respect B’s rights to land and buildings in exactly the same way as A must respect them (Law on Registration of Property, s. 1). The protective provisions of the Law on Registration of Property, s. 3, the Law on Private Housing, s. 7 and the Law on Commercial Premises Rent, s. 6 also ensure B’s rights against A’s creditors and A’s estate in bankruptcy.

There are two exceptions to this. First, extraordinary rights under a contract of lease can be extinguished, but only if the creditor or the estate in bankruptcy registers the right before B. Under these circumstances creditors may extinguish the rights even if in bad faith (Law on