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The default position in several European jurisdictions is that the holder of a hereditary building lease (superÞciarius) has the same rights as an owner with regard to structures on the land, subject to restrictions in the constitutive deed. The holder is regarded as an owner ad tempus and therefore not subject to the same limits on the use of the land as a usufructuary. He may exploit the property to its fullest economic potential, even if this involves changing the property’s economic purpose.18 Some jurisdictions will restrict this power to the construction of new structures, without allowing the holder radically to change existing structures on the land. A portion of Italian academic literature supports this idea by applying rules pertaining to usufruct by analogy to superÞcies.19 The superÞciarius will therefore not be entitled to convert an existing house into a warehouse or an existing farmhouse into a hotel. Parties may, however, agree in the constitutive deed that the holder may alter the physical condition of structures on the land, or their purpose, with the landowner’s consent.20

In principle, the holder of a hereditary land lease (emphyteusis) can alter the intended purpose (destination) of the property when the character of the neighbourhood changes, provided that this would enhance the value of the land.21 In some jurisdictions such alterations are allowed only with the consent of the landowner on the ground that the landowner still owns the land and any improvements, while the holder of the emphyteusis is only entitled to share in the use and enjoyment of the land.22 In Poland, the matter is primarily regulated by provisions in the constitutive grant which usually contains provisions on the erection of new, and the alteration of existing structures on the land, sometimes even including dates of commencement and completion of building operations.

Austria

In principle, the use and the purpose of the leased object are defined in the lease and may not be changed by the tenant without the permission of the landlord (Civil Code, § 1098). If the lease is, for example, restricted to a certain branch of business, the landlord may apply to court for an injunction prohibiting action by the tenant in conflict with such

18See e.g. the Austrian, Spanish and Dutch reports.

19See e.g. the Belgian, Italian and Portuguese reports. 20 See the German report.

21See e.g. the Belgian report. 22 See e.g. the Dutch report.

restriction. Furthermore, unlawful change of the purpose and use of the leased object constitute a compelling reason for termination of the contract without notice (Law on Tenancy, § 30, para. 1, no. 7). This applies irrespective of whether the change of use is an improvement or not. B is therefore not entitled to convert the house into a warehouse (store) or the farm into a hotel without the permission of A, unless the contract allows him to do so.

Under a usufruct, the usufructuary is not entitled to change the use, purpose or type of cultivation of the land without the permission of the landowner,23 even if the property is improved by such change. If the usufructuary acts in conflict with this restraint, the landowner can claim for restoration to the former condition. If unlawful changes are imminent, the landowner can ask the court for an injunction prohibiting such change and for security against future damage under Civil Code, § 520. As a usufructuary, B is not entitled to change the farm into a hotel and neither is the holder of a right of use or habitation (which is even less extensive than a usufruct) entitled to change the purpose of the land without the permission of the owner.

As stated in Case 1, the holder of a hereditary building lease owns the building and has a right of use with regard to the land (Law on Building Rights, § 6).24 The holder of this right is therefore allowed to do anything with the building and may even demolish it.25 As to the land, he/she is subject to the same restraints as the usufructuary. This means that he/she cannot change the purpose for which the land is used without the permission of the owner. Normally, however, these matters are arranged either expressly or implicitly in the contract which establishes the building right.

Belgium

If the parties have not made special contractual arrangements in this regard, the following default rules will apply: The conversion of the house into a warehouse/store and the farm into a hotel is not allowed under a residential or agricultural lease since the tenant is obliged to use the leased property according to its intended purpose which is determined by the provisions of the contract or the surrounding circumstances

231 Ob 502/88; JBl (1989), p. 103; 5 Ob 569/78; MietSlg 30.057; 7 Ob 142/02m; NZ (2004), p. 73; Hofmann, in Rummel, Kommentar, vol. 1, § 519, para. 1.

24Spruzina, in Schwimann, Praxiskommentar, vol. 3, § 6; BauRG, paras. 11 ff.

25BauRG, para. 11.

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(Civil Code, art. 1728 1). An enhancement in the value of the property is not in itself sufficient to justify the proposed change in the intended purpose of the property. Even if the neighbourhood loses its residential character or the farm becomes incorporated within the city limits, the tenant is not entitled to effect the proposed change in purpose. The fact that the warehouse or hotel can be changed back to a house or a farm at low cost is again not in itself sufficient to justify the change of purpose.

Under a usufruct, the conversion of the house into a warehouse/store and the farm into a hotel is not allowed since the property must be used in accordance with its intended purpose as determined by the owner or in the manner of a bonus paterfamilias. In two exceptional cases the usufructuary is allowed to change the destination of the property, namely on account of socio-economical factors outside his/her control requiring adaptation of the property to the new situation, and where the previous owner had exploited the property in an abnormal way. In the latter case, the usufructuary (B) is obliged to manage and exploit the property as a bonus paterfamilias, even if this effects a change of purpose.

An enhancement in the value of the property will not in itself be sufficient to justify the proposed change in purpose of the property. However, the loss of the residential character of the neighbourhood or the incorporation of the farm within the city limits may qualify as an objective and external socio-economic factor which might justify the change in purpose. The fact that the warehouse or hotel can be reverted at a low cost to a house/a farm will again not in itself justify the change of destination.

The holder of a hereditary land lease (emphyteusis) can in principle alter the intended purpose of the property, provided this does not result in the reduction of the value of the land (Law on Hereditary Land Leases, art. 3). Consequently, if the alteration enhances the value of the property, the change in purpose would certainly be allowed. The same will apply in the case where the neighbourhood loses its residential character or the farm is incorporated within the city limits or where the warehouse or hotel can be reverted to a house or a farm at a low cost, on condition that the value of the land is not reduced by such alteration.

The holder of a hereditary building lease (superÞcies) may in principle change the intended purpose of the constructions on the land if he/she has paid for the existing structures on the land or where he/she has built them. The holder may exploit these structures in any way he/she sees fit and may even destroy them upon termination of the building lease. If the holder has not paid for the existing buildings on the land, he/she may not destroy them. The holder may obtain compensation for

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used for certain specified purposes. Further, or alternatively, it may be provided that alterations to the premises are impermissible. The court may also restrain alterations in so far as they amount to waste. If the landlord’s covenant against alterations is qualified (that is, requires his/ her consent), the statute provides that consent cannot be unreasonably withheld if the proposed work is an improvement (Landlord and Tenant Act, s. 19(2)).27 Thus it may be that, in a qualified alterations covenant, the mere fact that there has been an increase in value indicates that it is an improvement, thereby triggering the statutory mechanism for reasonableness in respect of consent.

A tenant is, however, free to engage in any changes which fall short of an ‘alteration’. It has been held that the term ‘alteration’ means structural alteration.28 Whether given works amount to this is a question of fact and degree. Cosmetic changes (which are easily reversible) or the installation of new wiring will, for example, not count as alterations.29 The conversion of a house into business premises or a block of flats is, however, thought to constitute alteration and therefore a breach of covenant.30 It is, of course, possible for the landlord to draft his/her covenant in such a way as to ensure that even cosmetic or slight changes are prohibited.

Alternatively, the landlord may choose to regulate the use to which premises can be put by means of a ‘user covenant’. These are frequently encountered in leases, and often enumerate the permissible uses or list excluded uses, sometimes in extreme detail.31 Further, public policy grounds may be invoked to prevent certain uses. In construing such covenants (in so far as they are open to construction), the character of the premises can be taken into account.32 In cases where the lease imposes a consent requirement for change of use, the landlord may not demand money as compensation for change of use, unless the change of use also entails an alteration of the premises (Landlord and Tenant Act, s. 19(3)). It is highly probable that the alteration of, say, a house or farm to non-residential use will be caught and excluded by user covenants, if it is not already caught by any alterations covenants.

27See Lewison, WoodfallÕs Law of Landlord and Tenant, para. 11–261.

28Bickmore v. Dimmer [1903] 1 Ch 158.

29For a list of examples, see Lewison, WoodfallÕs Law of Landlord and Tenant, para. 11–258.

30Bonnett v. Sadler (1808) 14 Ves 526; Duke of Westminster v. Swinton [1948] 1 KB 524.

31It is often the case that residential leases specify use of the leased premises as a single dwelling, for instance.

32City and Westminster Properties (1934) Ltd. v. Mudd [1959] Ch 129.