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incapable of large-scale production. These points will require clarification from the Hungarian courts.

Italy

As a general rule, the tenant under a lease must use the property for the purpose specified in the contract or for purposes which can otherwise be inferred from the circumstances (Civil Code, art. 1587). Normally, a tenant converting a house into a warehouse or a farm into a hotel will be violating the contract. The fact that the alteration enhances the value of the property or that the property can at low cost be reverted to its original condition does not make a difference.42 Under Italian law, a contract cannot, however, be terminated if the non-performance by one party only slightly affects the interests of the other party (Civil Code, art. 1455). This provision should thus be borne in mind when considering the rights of the landlord to demand termination of the contract.

While the Civil Code and several special statutes43 expect dynamic management from the tenant of the income-producing property, and particularly from the tenant of rural lands, and encourage him/her to take measures to increase the profitability of the leased property, the tenant must always respect the intended agricultural purpose of the land.

If a radical and unforeseeable change of circumstances were to render the original use of the property absurd, the tenant can probably demand dissolution of the contract, but cannot alter the intended purpose of the property. There is, however, no direct authority on this point. It must also be kept in mind that the rules applicable to the lease differ according to the nature and purpose of the property leased.

Under a usufruct, the usufructuary has the right to enjoy the property in accordance with its nature and intended purpose (Civil Code, art. 981). In principle, the usufructuary is not entitled to convert a house into a warehouse or a farm into a hotel. The fact that the alteration enhances the value of the property is irrelevant.44 Circumstances which radically change the original use of the property may influence this rule, but there is no direct authority on the point. The fact that it is possible to revert the warehouse to a dwelling house or the hotel to a farm at a low cost is apparently irrelevant.

42See Cass. civ. 20/06/1961 n. 1460.

43Civil Code, art. 1620; Law of 11/02/1971; Law of 03/05/1982 n 203.

44See Pugliese, Usufrutto, p. 297.

Once again, there is no case law and little literature on the conversion of land subject to a hereditary building lease (superÞcies). If it involves the right to erect a new building, the holder will be free, in the absence of contrary provisions in the constitutive agreement, to use the building as he/she pleases, as there is no previous intended purpose to respect. The rules may, however, differ for the conversion of an already existing building. Some scholars emphasise the fact that the proprietario superÞciario is an owner ad tempus, and not the holder of a limited right. As such, his/her right to enjoy the property should not be subjected to the same limits as those of a usufructuary and in particular, he should be free to alter the intended economic purpose of the property.45 Others suggest that the rules pertaining to usufruct should apply by analogy to holders of hereditary building leases.46

The Netherlands

The alterations are not allowed under a residential or agricultural lease unless the landlord agrees. In the case of an agricultural lease, converting the farm into a hotel will take the lease out of the category of agricultural leases. The Law on Agricultural Leases (Pachtwet) will no longer apply. The contract will henceforth be regarded as a commercial lease. Similarly, converting the residence to a warehouse will require the landlord’s permission and will turn the contract into a commercial lease.

In the case of a usufruct, the usufructuary cannot change the intended purpose of the property, unless either the owner consents or there is an authorisation by the Kantonrechter (Circuit Court judge) (Civil Code, art. 3:208 I). This rule applies if the purported change is to the benefit of the owner, for example, if his/her wealth is increased.47 The rule will also apply where the neighbourhood loses its residential character or the farm is incorporated into a town. It may, however, be possible to obtain authorisation from the court for such a conversion. Some authors argue that where a prospective change of destination will be temporary and can be reversed at a low cost, such a change will be allowed.48 This rule does not apply where the usufructuary is entitled to dispose of the goods which are encumbered with the right of usufruct (Civil Code, art. 3:212 II).

45 See e.g. Natoli, La proprieta`, p. 208. 46 See Caterina, I diritti, pp. 83 ff. 47 Pitlo, ‘Goederenrecht’, no. 697. 48 Ibid.

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

In the case of a hereditary building lease (superÞcies), the holder is the owner of buildings and structures on the surface of someone else’s land (Civil Code, art. 5:101). The right of the holder with regard to the use, construction and demolition of buildings, structures and plants may be restricted in the constitutive deed by which the hereditary building lease is established (Civil Code, art. 5:102). If there are no restrictions in the constitutive deed, the holder seems to be allowed to do whatever he/she pleases with the buildings on the land. There is no obligation on the holder to uphold the intended purpose of the land subject to the building lease.49

Without the consent of the landowner, the holder of a hereditary land lease (emphyteusis) cannot change the intended purpose of the land or effect changes to the land which will be in conflict with such a purpose (Civil Code, art. 5:89 II).50 This is a mandatory rule.

Poland

Under both an ordinary lease and an income-producing lease, the tenant may only change the use of the property with the landlord’s consent (Civil Code, arts. 667, § 1 and 696). If no such consent is granted, changes may not be made, regardless of their cost, added value, changes in land use or in the neighbourhood.

Under usufruct, the usufructuary (B) is obliged to preserve the substance and the existing use of the land (Civil Code, art. 267, § 1). The only exception concerns the right to mine (Civil Code, art. 267, § 2 and 3). Theoretically, if the usufructuary is an agricultural production co-operative, it may change the substance and use of State Treasury land if such change does not contravene the provisions of the contract with the state (Civil Code, art. 275). This provision is rarely employed in practice, as there are not many agricultural production co-operatives left and income-producing (fruendi) leases are more popular.

The content of a hereditary land lease (perpetual usufruct, emphyteusis) is to a large extent shaped by contractual provisions. Land is generally given in hereditary land lease for residential, recreational, industrial or cultural purposes (Civil Code, arts. 236 and 239; Law on Management of Real Property, art. 29). The contract furthermore contains provisions on the erection of new buildings or the alteration of existing ones, even

49Asser, Mijnssen, van Dam and van Velten, ‘Zakelijke Rechten’, no. 252.

50Ibid.; Pitlo, ‘Goederenrecht’, no. 647.

including the dates of commencement and completion of building works (art. 62). Consequently, the holder will be able to make alterations which are in conformity with the contractual provisions.

Portugal

Under a lease, the tenant is not allowed to exploit the property in a manner contrary to its intended purpose (Civil Code, art. 1038 c), which means that he/she will not be entitled to effect the conversions referred to. In fact, such action would entitle the landlord to terminate an urban or agricultural lease (Civil Code, art. 1083 c; Decree-Law 294/2009, art. 17 no 2(c)). The tenant is not entitled to convert the house into a warehouse or the farm into a hotel, even when the alteration would enhance the value of the property, the area is zoned as an industrial area, the farm is incorporated witin the city limits or the intended purpose of the property can be restored later at a low cost.

Under a usufruct, the usufructuary has the right to use and administer the property and to enjoy its fruits. He/she must, however, exercise his/ her right according to the standards of a bonus paterfamilias in accordance with the intended purpose of the property and without impairing its form and substance (Civil Code, art. 1446). Therefore, even if a certain degree of freedom is allowed in the exploitation of the property, the usufructuary’s power to alter the property is restricted according to traditional academic opinion to improvements which do not transform the intended purpose of the property.51 B would therefore not be entitled to convert the house into a warehouse or the farm into a hotel.

Recently, Menezes Cordeiro52 provided a novel interpretation of the provision by suggesting that the usufructuary has to respect the intended purpose of the property, but does not necessarily have to maintain it if it is possible to restore the property to its intended purpose on termination of the usufruct. Therefore, the usufructuary is entitled to transform a garage into a restaurant, if it was possible to restore the status quo ante (economically speaking). Only if restoration of the economic destination is not possible would the usufructuary have disrespected the intended purpose of the property. Again, Oliveira Ascensa˜ o53 regards Civil Code, art. 1446 as a default rule which can be

51 Carvalho Fernandes, Licüo÷es de Direitos Reais, p. 345

52 Menezes Cordeiro, Direitos Reais, p. 654. 53 Oliveira Ascensa˜ o, Direito Civil, p. 475.