Hungary

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

court or administrative decisions, they will prevail even where they are not registered.38

In the case of A’s insolvency or bankruptcy, rights in rem such as usufruct, use and residential lease contracts concluded with natural persons will not be included in the insolvency or bankruptcy assets. In all other instances the time-limited rights of B are included in the insolvency or bankruptcy assets. In the event that the time-limited right is based on a right in rem, the administrator in insolvency will not gain access to it. The property can only be disposed of still encumbered by the right in rem. As regards the different contracts of lease, including an income-producing lease, the administrator can exercise only the rights that the initial insolvent landlord was entitled to. The administrator can normally terminate or cancel the contracts of the insolvent debtor with immediate effect. This is, however, not possible in relation to residential lease contracts concluded with natural persons, save where the object of the lease is an official residence or a garage (Law on Reorganisation, Bankruptcy and Winding-up Procedures, § 47(3)).

If A has created a prior mortgage on the property, the subsequent time-limited right cannot be enforced against the mortgage creditor. The latter’s right to satisfy his/her claim is not affected by the rights relating to the property that were acquired following the establishment of the mortgage (Civil Code, § 256(1)). The buyer at the sale in execution acquires the property unencumbered by the subsequent usufruct or right of use (Law on Court Enforcement, § 137). However, a lease may remain enforceable against the buyer at the sale in execution if it is occupied by a tenant on the basis of a lease contract concluded before institution of the court enforcement procedure,39 save where the debtor and the mortgage creditor agreed that the sale of the property would be with immediate possession and the lease contract was concluded despite this agreement (Law on Court Enforcement, § 141 (1), (2) and (3)(a)).

38Notwithstanding the preceding provision, the usufruct and the right to use do not restrict the ownership of the auction purchaser, irrespective of whether it is registered or not, if the usufructuary is responsible for satisfying the claim of the

person initiating the enforcement procedure or if the usufruct was created by contract after establishing the mortgage (Law on Court Enforcement, § 137 and § 141(3)(b)).

39The residential lease can be terminated with three months’ notice.

Italy

Where there is attachment of A’s property followed by a sale in execution (forced sale), a lease consented to by A is enforceable against the purchaser if it was created with a certified date40 prior to the attachment. A lease of land in excess of nine years, which has not been registered prior to the attachment, can only be enforced against the purchaser for nine years from the commencement of the lease. In any case, the purchaser is not bound to honour the lease when the stipulated rent is less than one-third of a fair rental or the rental stipulated in previous leases. If the lease does not have a certified date but occupancy by the tenant occurred prior to the attachment of the property leased, the purchaser in a forced sale is only bound to honour the lease for a period corresponding to the term stipulated for leases for indefinite terms, which depends on the nature of the property (Civil Code, art. 2923).

In the case of bankruptcy of the landlord, the lease is not automatically terminated. If the lease is going to outlast the bankruptcy by more than four years, the liquidator can notify, within one year from the filing of bankruptcy, his/her intention to terminate the lease after four years (art. 80, Regio decreto, 16 Mar. 1942 n. 267).

In the case of a prior registered mortgage, the situation concerning leases is not clear. According to the prevailing opinion, a lease is enforceable against the purchaser if the lease was created with a certified date prior to the attachment by the mortgagor (even if it was only registered after registration of the mortgage).41 According to a minority opinion, a lease is only enforceable against the purchaser if the lease was created with a certified date prior to registration of the mortgage.42 A lease of immovables in excess of nine years, which has not been registered prior to the attachment by the mortgagor (or prior to registration of the mortgage), can only be enforced against the mortgage creditor for the nine-year period from the commencement of the lease. In any case, the purchaser is not bound to honour the lease when the

40Civil Code, art. 2704 stipulates that the date of a private written contract is fixed (certified) from the date on which the contract was registered, or from the date of death, or supervening physical incapacity to sign of the person who signed it, or from the date on which other circumstances occur which establish with equal certainty that a written contract was drawn up previously.

41See Gorla and Zanelli, ‘Del pegno’, p. 254; Chianale, ‘L’Ipoteca’, pp. 353–4.

42See Rubino, ‘L’ipoteca’, p. 375.

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

stipulated rent is less than one-third of a fair rental or the rental stipulated in previous leases (Civil Code, art. 2923).

The interests of a holder of a usufruct, use, habitation or hereditary building right (superÞcie), are protected if they have been registered before attachment by creditors. A creation of a usufruct, use, habitation or transfer of the building, which has been registered after the attachment, has no prejudicial effect on A’s creditors, even where it was created (without registration) prior to the attachment (Civil Code, art. 2914). The same principles apply in case of bankruptcy.

If the constitution of a usufruct, use or habitation is registered after a prior registered mortgage, it cannot be enforced against the mortgage creditor who can cause the property to be sold free of the limited real right. Such a right is extinguished by the foreclosure and sale of the property. The holder will only be able to claim the value of his/her respective right if there is a surplus after the claim of the prior mortgage creditor has been satisfied (Civil Code, art. 2812). If the mortgage is registered after the registration of the usufruct or other real rights, the land must be sold subject to these real rights.

If B’s hereditary building lease (superÞcie) is registered after the registration of the mortgage, he/she has the option (Civil Code, arts. 2812 and 2858 ff.) to release the property, to pay off the mortgage creditor, or to free the property from the mortgage, pursuant to the procedure designed for any third person transferee who has registered the instrument effecting the transfer after the registration of the mortgage (Civil Code, arts. 2889 ff.). If none of these options is exercised, the mortgage may be foreclosed against B.

The right of the comodatario is never protected against attachment by A’s creditors.

The Netherlands

Leases are protected in the case of attachment by the landlord’s creditor and in the case of the landlord’s insolvency. Upon a forced sale (by a creditor or the receiver in bankruptcy), the buyer takes subject to the lease in the same way as in a normal sale (Civil Code, art. 7:226). The same provisions apply to agricultural leases (Law on Agricultural Leases (Pachtwet), art. 34, in future Civil Code, art. 7:361).

In principle, a mortgagee is bound by any lease contract whether the contract is concluded prior to or after the registration of the mortgage. The reason is that leases work against third parties. In practice,

however, almost all mortgagees stipulate a so-called lease prohibition in their mortgage terms (Civil Code, art. 3:264). According to Civil Code, art. 3:264, this means that after the creation of the mortgage, the owner is either unable to enter into a new contract of lease or he/she is restricted in his/her ability to do so. The prohibition also works against third parties such as the tenant. If a new lease is made contrary to the lease prohibition, the tenant has to leave the premises after execution, although there are some protective measures to protect the tenant’s interests. This rule also applies to agricultural leases, though under different conditions.

The effect of a limited real right is that it can be enforced against any third party. Regardless of whether it is a right of usufruct, a hereditary building lease (superÞcies), or a hereditary land lease (emphyteusis), B is protected against creditors and he can continue enjoying his/her right as if no bankruptcy proceedings have taken place.43

In the case of bankruptcy proceedings, the creditors can do nothing. Only the receiver in bankruptcy can act on behalf of the creditors (Law on Bankruptcy (Faillissementswet), art. 25). If the property is sold by the receiver in bankruptcy, the new owner will obtain the property encumbered with a limited real right. This is a consequence of the droit de suite of a real right, which is discussed in detail in legal literature.44

If A has created a prior mortgage over the property, it does not matter whether A has become insolvent, since the mortgage creditor can enforce his/her right of mortgage as if there is no bankruptcy. If the mortgagor does not perform his/her obligations, the mortgagee may call up the mortgages and sell the property on which the mortgage is registered (Civil Code, art. 3:268).

If a prior mortgage has been registered before the usufruct, hereditary building lease (superÞcies), or hereditary land lease (emphyteusis) is registered, these limited real rights will not be enforceable against the mortgage creditor owing to the fact that the right of the mortgage creditor is stronger because it was first in time (Civil Code, art. 3:21). In this case, it implies that the mortgage creditor can enforce his/her right against B (Civil Code, art. 3:273). B does, however, have a claim for damages due to the loss of his/her right, which has a very high ranking (Civil Code, art.

43Pitlo, ‘Goederenrecht’, no. 24.

44Asser, Mijnssen and de Haan, ‘Algemeen Goederenrecht’, no. 28; Pitlo, ‘Goederenrecht’, no. 24; Snijders and Rank-Berenschot, Goederenrecht, no 67. As to the right of usufruct, see Kleijn, Vruchtgebruik, no. 1.