Comparative observations

the landlord,11 subject to local custom (Greece) and special legislation (Portugal). In Poland, residential premises may be sub-let without the landlord’s consent if the tenant is obliged to pay alimony to the prospective sub-tenant. Under Belgian law, a sub-lease of agricultural property as a whole to specific relatives is possible without the consent of the landlord. Under special Danish legislation, the tenant is in special circumstances allowed to sub-let the whole of the apartment for a period not exceeding two years in the temporary absence of the tenant owing to illness, business, studies or job placement. Hungarian law prohibits the sub-lease of agricultural land except where a written sub-tenancy is concluded with the written permission of the landlord, for the sake of integrated cultivation of the land.

Some jurisdictions prohibit the sub-lease of a part of agricultural land and the whole of residential premises but allow the sub-lease of only part of residential property with the consent of the landlord, provided the tenant continues to occupy the other part of the premises.12 South African case law, however, suggests that a tenant may not sub-let if the sub-tenant is more likely to damage the property or to use it for purposes other than those contemplated in the lease.

When authorised by the landlord or permitted by law, the tenant in Portugal is under an obligation to inform the landlord of the sub-lease, on pain of cancellation thereof. The rent charged for the sub-lease must be the same as, or not higher than 20 per cent of, the rent charged under the principal lease in Spain and Portugal respectively.

Although no contractual relationship exists between the original landlord and the sub-tenant, the sub-tenant’s title is dependent on the title of the principal tenant. In England, a sub-lease is carved out of the principal lease and must therefore be for a term shorter than the principal lease.13 In the other jurisdictions, the sub-lease will expire on termination of the principal lease14 and the landlord can evict the subtenant. The tenant is liable for any damage caused by the fault of the sub-tenant, and the fact that the landlord agreed to the sub-lease will not exonerate the tenant.15 Under special Dutch legislation, an

11See e.g. the German, Austrian, Greek, Portuguese, Spanish, Dutch, Italian, English, South African, Danish and Hungarian reports.

12See e.g. the Belgian, Dutch and Hungarian reports.

13If it is for an equivalent term, it counts as an out-and-out assignment.

14See the German, Belgian, Portuguese, Spanish and Danish reports.

15See the Greek and Belgian reports.

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agricultural sub-lease does not terminate with the death of the tenant but may be continued by his/her heirs.

The majority of jurisdictions hold that a usufruct as such is not transferable on account of its highly personal character, but that the rights arising from a usufruct are transferable.16 Consequently, the right to exploit the property and to collect its produce and income can be sold or donated until the expiry of the usufruct. The usufructuary, however, remains liable to the nude owner if the transferee causes damage to the property.17 Other jurisdictions hold that a usufruct as such is transferable but that its highly personal character causes the rights transferred to expire on termination of the usufruct.18 In Italy, any transfer of the usufruct must be intimated to the owner: if not, the usufructuary and the new holder will be liable in solidum to the nude owner for damage caused to the property. A usufruct or the entitlements under a usufruct can be transferred for a fixed term or for the duration of the usufruct.19 If the constitutive transaction contains a prohibition against transfer, any alienation is null and void and the prohibition can also be enforced against the transferee.20

Owing to their highly personal nature (intuitus personae), most jurisdictions do not allow sale or donation of the servitudes of use and habitation.21 These rights are established to fulfil the basic needs of the beneficiaries: a roof over their heads and the possibility to obtain food to cover their daily needs. They are so intertwined with the person of the holder that they cannot be alienated or transferred.

German and Polish law accept that a usufruct cannot be mortgaged because it cannot be transferred as such. However, Greece, Spain, Austria, Belgium, France and Portugal expressly sanction the mortgage of a usufruct or at least the rights under it with some stipulating that the mortgage will not be terminated if the usufruct is terminated early by a voluntary act of the usufructuary or when the secured claim is discharged.22

16See e.g. the German, Austrian, Greek, Portuguese, Italian, Hungarian, Polish, Scottish and South African reports.

17See e.g. the Portuguese report.

18See e.g. the French, Belgian, Spanish, Italian and Dutch reports.

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

21See e.g. the German, Austrian, Greek, Belgian, Dutch, Portuguese, Italian, Hungarian, Polish and South African reports.

22See e.g. the Austrian, Portuguese, Spanish, Scottish and Italian reports.

Owing to their highly personal character, it is generally accepted that the personal servitudes of use and habitation can neither be transferred nor mortgaged.23 Curiously, South African legislation allows the holder of a right of habitation to mortgage his/her interest in the property.

In most jurisdictions, the holder of a usufruct is not entitled to create a separate real right, for instance, a right of habitation over his/her interest in the property, but he/she is entitled to create a personal right, such as a lease or a loan.24 In Portugal, the nude owner is only allowed to claim the return of the leased or loaned residential property three months after the expiry of the lease or loan or at the end of the harvest period in the case of the expiry of an agricultural lease. In Austria, the rights of the tenant are not terminated automatically on expiry of the usufruct and the nude owner is bound to take over the sub-lease. Similarly, in Belgium, the owner must respect a lease with a certified date concluded for a term of less than nine years and leases concluded for a longer term for a period of nine years if the term has already started on termination of the usufruct.

Only South African and Italian law allow the holder of a usufruct to create a separate real right over his/her interest in the property, namely a long lease and a second usufruct, right of use or right of habitation respectively. The second usufructuary is not bound by the first usufructuary’s rights and obligations vis-a`-vis the nude owner and the first usufructuary remains liable if the property is damaged or its intended economic purpose changed. Furthermore, renunciation of the usufruct by the second usufructuary does not extinguish the first usufruct.

In Germany, the holder of a right of habitation (Wohnungsrecht) is in principle only allowed to use the property for himself, his/her family and for persons required for his/her service and care and may only let his/her interest in the property to someone else with the consent of the landowner. In Spain, Belgium and Italy, the holder of a right of use or habitation cannot create a second use or right of habitation over his/her interest in the property owing to its highly personal character. Interestingly, South African case law allows the holder of a right of use to let out rooms which he/she does not occupy and a habitator to let out the whole dwelling-house. A habitator may not, however, allow a

23See e.g. the French, Belgian, Dutch, Portuguese, Spanish, Italian, Hungarian and Polish reports.

24See e.g. the German, Austrian, Greek, French, Belgian, Portuguese, Spanish and Hungarian reports.

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third party to live gratuitously in the house in his/her place. In France, the habitator is allowed to lease out the use of the house to his/her spouse, civil partner or descendants. Note that, by contrast, the German permanent right of habitation (Dauerwohnrecht) is freely transferable and transmissible and can therefore be sold or donated subject to restriction in the constitutive deed. Although the right cannot be mortgaged, the holder is allowed to create separate real rights such as a usufruct with regard to it and lease out his/her interest under the right.25

Since the holder of a hereditary building right under a hereditary building lease (superÞcies) acquires a right akin to ownership,26 the holder can sell or donate his/her interest in the land and transfer the right to another27 by registration in the Land or Special Register.28

Certain jurisdictions29 also allow the holder of a hereditary building right to mortgage the right. If title to the building right and the land merge, the Italian Civil Code provides that mortgages over the land and the building right continue to burden each of them separately. Under Austrian law, a mortgage over a building right continues to exist as a mortgage over the land when the building right expires and ownership of the building passes to the landowner. If the constitutive agreement allows compensation for improvements when the right expires, Austrian and Italian law provide that such proceeds will be subject to a mortgage registered over the building right.

Moreover, the holder of a hereditary building right is entitled to burden the right with all kinds of separate limited real rights or to create a lease over the right.30 Examples are a praedial servitude,31 a usufruct, a second hereditary building right but not a hereditary land lease. Such interests are dependent on the title of the original holder of the right and expiry of the building right will extinguish the real or personal rights. In German practice, frequent use is made of the provision in the Building Rights Regulations which allows stipulations in constitutive agreements to transfer or burden the building rights with the approval of the landowner.

Since a hereditary land lease (emphyteusis, erfpacht) is recognised in Belgium, the Netherlands and Poland as heritable and alienable, the

25 See the German report for further details. 26 See the Italian report.

27See the German, Belgian, Dutch, Portuguese, Spanish and Italian reports.

28In the Erbbaugrundbuch in Germany.

29See the German, Belgian, Dutch, Portuguese, Spanish and Italian reports.

30See the Portuguese and Spanish reports. 31 See the Italian report.

holder may sell or donate it if not restricted in the constitutive grant. In these three jurisdictions, the hereditary land lease can also be mortgaged and the holder is allowed to create separate real rights over the hereditary lease, such as a usufruct32 and a hereditary building right, but not another hereditary land lease.

In most jurisdictions, the rights under a lease are considered personal, which cannot be attached in execution proceedings by the tenant’s creditors. Rights flowing from the lease, such as claims against the landlord for improvements or repairs, or the rental income flowing from a sublease, may, however, be attached.33

The interest of the tenant can be attached in jurisdictions such as Austria, Scotland and South Africa, which regard a registered lease as a real right, and in Spain, England34 and Poland, which regard the lease as an executable receivable.35 In Austria, however, this is not allowed in the case of a residential lease, which is essential for the tenant and his/ her family.

In most jurisdictions, a usufruct is regarded as an economic asset in the usufructuary’s patrimony that can be attached in execution proceedings against the holder. Note, however, that the purchaser in execution will only acquire a contingent right which will expire on the usufructuary’s death.36

The interests inherent in the right of use and of habitation are so intertwined with the person of the holder that they can neither be transferred nor attached.37 This makes the right of habitation attractive for estate planning purposes. Nevertheless, German law provides for attachment of personal servitudes where the holder has obtained permission from the nude owner to alienate the entitlements of the particular servitude. The South African report suggests that since the habitator is allowed to sub-let the dwelling his/her interest can also be attached.

32The prevailing Belgian academic view is that only a usufruct may be created by the holder.

33See e.g. the German, Greek, Italian, Belgian, Dutch and Danish reports.

34In England, a creditor’s acquisition of a lease is, however, frequently an event which triggers forfeiture of the lease and re-entry by the landlord.

35See e.g. the South African report which states that the Land Register must be notified of the attachment.

36See e.g. the German, Austrian, Greek, Belgian, Dutch, Portuguese, Spanish, Scottish and Italian reports.

37See e.g. the Belgian, Dutch, Portuguese, Spanish and Italian reports.