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

All the jurisdictions that recognise hereditary building rights38 and hereditary land leases39 regard them as valuable limited real rights which can be attached.

The considerations applicable to execution proceedings against B apply equally to B’s bankruptcy. A usufruct, the German permanent right of habitation (Dauerwohnrecht), the hereditary building lease (superÞcies, Erbbaurecht), and the hereditary land lease (emphyteusis) will be included in BÕs insolvency assets. Spain’s insolvency law, for example, provides that all goods and rights included in the debtor’s estate at the date of insolvency are part of the insolvency assets, which would include a lease. By contrast, a right of use or habitation (Wohnungsrecht) will in principle not be included, except in Germany where the habitator has obtained permission to alienate the entitlements of the right of habitation.

In England and Scotland, property in a lease is included in the insolvency or bankruptcy assets of the tenant. As in the case of attachment, insolvency or bankruptcy is, however, frequently an event which triggers forfeiture of the lease and permits re-entry by the landlord, although this must now be sanctioned by the court. Apart from this qualification, a lease forms part of the bankrupt tenant’s estate and may be disclaimed or sold by the trustee in bankruptcy or other relevant entity.

Under South African insolvency legislation, which generally includes a lease in the insolvency assets of the lessee, the administrator has discretion to continue or to terminate the lease. If the administrator elects to continue, all the benefits and liabilities under the lease accrue to the insolvent estate. A similar situation exists under Danish and Belgian insolvency law where the administrator may adopt any synallagmatic contract if justified in view of the estate’s financial interest. If not adopted, the landlord is entitled to terminate the lease and evict the tenant.

Austria

Generally, a party to a contract may transfer his/her rights and obligations under the contract or only assign such rights. The transfer of all contractual rights and obligations to a third party results in the third party succeeding to the position of the original party and normally

38See the German, Austrian, Belgian, Dutch, Portuguese, Spanish and Italian reports.

39See the Belgian, Dutch and Polish reports.

requires the consent of both original parties.40 According to these general rules, the tenant cannot transfer a lease without the consent of the landlord. However, there are some rules which facilitate the transfer of leases for buildings and residential premises.

The Law on Tenancy, § 12(a) provides that if someone acquires the business which is operated on leased premises, that person automatically succeeds to the lease without the consent of the landlord. However, the landlord is entitled to increase the rent to the statutory maximum. If the lease is not subject to the Law on Tenancy, the transfer of a lease in case of the acquisition of a business on the leased premises is governed by the Commercial Code, §§ 38 ff.41 Farmers are subject to the Commercial Code if they are registered with the Companies Register (Commercial Code, § 4, para. 3). According to Commercial Code, §§ 38 and 39, the person who acquires an enterprise succeeds to any contracts of the entrepreneur with the exception of nontransferable personal rights. Therefore, the third party also succeeds to leases.42 However, the landlord is entitled to protest against such succession within three months of receiving notice thereof (Commercial Code, § 38, para. 2). In this case, the only possibility for the entrepreneur is to create a ‘split-lease contract’ as described below. The Law on Tenancy, § 12 allows the tenant to transfer his/her rights and duties to certain family members who have been living with him in the leased property for a certain minimum period of time. If the tenant does so, the landlord is entitled to increase the rent up to the statutory maximum.

In contrast, by assignment,43 the third party does not become a party to the contract to the extent that he/she succeeds to the position of the assignor because he/she only acquires the rights of the assignor. In principle, rights can be assigned without the consent of the debtor (Civil Code, §§ 1392 ff.). It is disputed whether and under which conditions the tenant is allowed to assign his/her right to use the leased property.44 According to the Supreme Court, such assignment is only binding with

40Welser, in Koziol and Welser, Bu¬rgerliches Recht, vol. 2, p. 135.

41As to the relationship between s. 12a of the Law on Tenancy and s. 38 of the Commercial Code, see Beig, ‘Wohnrechtliche Aspekte’, p. 40.

42Beig, ‘Wohnrechtliche Aspekte’, p. 37.

43The term ‘cession’ is used in other jurisdictions to effect such a relationship.

44Bydlinski, ‘OGH Anmerkung’ 90 (with further references); Mayrhofer, ‘Abtretung’, pp. 146 and 169 (with further references); p. Bydlinski, ‘Zur Abtretbarkeit’, p. 728; Ertl, in Rummel, Kommentar, vol. 1, § 1393, para. 6; 2 Ob 553/76; SZ 49/159; 1 Ob 13/73.

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

the express or implicit45 consent of the landlord.46 Thus, no direct legal relationship between the assignee and the landlord arises. The assignment is only valid between assignor and assignee. Hence, similar to a sub-lease, the assignee is entitled to use the object, but does not assume the duties of the original tenant. The Supreme Court identifies this legal relationship as a ‘split lease’47 or a ‘moderated assignment’.48 However, many law professors criticise this concept as incoherent.49 In any case, a contractual prohibition of a sub-lease also prohibits the assignment of the right to use the object.50

According to Civil Code, § 1098, the tenant is entitled to sub-let the leased object unless the sub-lease is to the disadvantage of the owner or the lease contract stipulates otherwise. Under the Law on Tenancy, § 11, the landlord may rely on such prohibition only if he/she can put forth a compelling reason why the sub-lease shall not be allowed. The legal relationship between tenant and sub-tenant is subject to the rules governing ‘normal’ lease contracts. Thus, the sub-tenant, in principle, has the same rights towards the tenant as the tenant towards the landlord51 and the tenant is entitled to be paid rent. The sub-tenant has no direct claims against the landlord. Hence, any decision of a court which terminates the principal contract of lease is binding and may be enforced against the sub-tenant as well.52

In principle, personal servitudes are not transferable (Civil Code, § 485). Special rules apply to a usufruct. Although some decisions of the Austrian Supreme Court hold that the usufruct as such is alienable,53 the majority of academic writers and older decisions of the Supreme

456 Ob 177/98t; wobl (2000), p. 13.

46OGH 21.2.1973; 1 Ob 13/73; Bydlinski, ‘OGH Anmerkung’, 90; 2 Ob 553/76; SZ 49/159; 5 Ob 199/01b; Hausmann; wobl (2003), p. 22.

476 Ob 177/98t; wobl (2000), p. 13; 1 Ob 519/91; ecolex (1991), p. 455; Pittl, ‘Das “gespaltene Mietverha¨ltnis”’; wobl 123; Ertl, in Rummel, Kommentar, vol. 1, § 1393, para. 6.

482 Ob 553/76; SZ 49/159; Mayrhofer, ‘Abtretung’, pp. 146, 149.

49Bydlinski, ‘OGH Anmerkung’, p. 90; Bydlinski, ‘Zur Abtretbarkeit’, pp. 730 ff.; Mayrhofer, ‘Abtretung’, pp. 146, 148.

50Ertl, in Rummel, Kommentar, vol. 1, § 1393, para. 6; Neumayr, in Koziol, Bydlinski and Bollenberger, Kommentar, § 1393, para. 5; p. Bydlinski, ‘Zur Abtretbarkeit’, p. 735; OGH 17.12.1976; 2 Ob 553/76; SZ 49/159.

51Iro, in Koziol, Bydlinski and Bollenberger, Kommentar, § 1098, para. 6. 52 Ibid.

533 Ob 268/03y; JBl (2004), p. 637; similarly, 1 Ob 453/50; SZ 23/280 and OGH 16.6.1908; R. VIII, 66/8; GlUNF 4271.

Court only entitle the usufructuary to transfer the right to exercise the

¬ 54

usufruct (Ubertragung ‘der Ausu¬bung nach’) but not the usufruct itself. The transfer of the right to exercise the usufruct can be registered in

the Land Register, which will protect the transferee against third persons.55 Without registration, the transfer only has obligationary effects between the transferee and the transferor.56 In any case, the right of the original usufructuary remains registered57 and he/she must still fulfil his/her duties towards the landowner.58 The rights of the transferee terminate at the latest with the death of the original usufructuary.59 Before that, the original usufruct may be terminated only with the consent of the original usufructuary and the transferee. The original usufructuary is not entitled to renounce the usufruct unilaterally.60

Furthermore, the usufructuary is entitled to conclude both a tenancy and an income-producing lease with regard to the land.61 In such a case, the tenant is deemed to be the primary tenant and not only a sub-tenant (Law on Tenancy, § 2, para. 1)62 and the usufructuary is entitled to receive the rent (Civil Code, § 511). The rights of the tenant are not terminated automatically when the usufruct expires because, analogous to Civil Code, § 1120 and Law on Tenancy, § 2, para. 1, the landowner is bound to take over the contract.63

The holder of a right of use can neither transfer his/her right nor lease the property subject to his/her right.64 The right of habitation is either subject to the rules of usufruct or those of the right of usage.

541 Ob 453/50; SZ 23/280; 5 Ob 114/91; NZ (1992), p. 155 (Hofmeister); 7 Ob 603/94; wobl (1995), p. 242; 2 Ob 99/97s; Kletecka, in Koziol and Welser, Bu¬rgerliches Recht, vol. 1, p. 426; Hofmann, in Rummel, Kommentar, vol. 1, § 509, para. 1; Iro, Sachenrecht, para. 15/37.

551 Ob 453/50; SZ 23/280; 5 Ob 114/91; NZ (1992), p. 155 (Hofmeister); Kletecka, in Koziol and Welser, Bu¬rgerliches Recht, vol. 1, p. 426.

567 Ob 603/94; wobl (1995), p. 242; 8 Ob 534/94; NZ (1995), p. 153 (transfer of a nonregistered ususfructus).

577 Ob 603/94; wobl (1995), p. 242.

581 Ob 453/50; SZ 23/280; OGH 29.11.1995, 7 Ob 603/94; wobl (1995), p. 242; Hofmann, in Rummel, Kommentar, vol. 1, § 509, para. 1; Kletecka, in Koziol and Welser, Bu¬rgerliches Recht, vol. 1, p. 426.

591 Ob 453/50; SZ 23/280; OGH 29.11.1995; 7 Ob 603/94; wobl (1995), p. 242; Hofmann, in Rummel, Kommentar, vol. 1, § 509, para. 1.

605 Ob 114/91; NZ (1992), p. 155 (Hofmeister).

611 Ob 453/50; SZ 23/280; 4 Ob 506/89; JBl (1989), p. 442; 2 Ob 99/97s; 7 Ob 142/02m; NZ (2004), p. 737; Ob 66/01h; JBl (2001), p. 585.

627 Ob 142/02m; NZ (2004), p. 73.

634 Ob 3/29; JBl (1928), p. 392; Kletecka, in Koziol and Welser, Bu¬rgerliches Recht, vol. 1, pp. 425 ff. For details as to Civil Code, § 1120, see Case 2.

64Kletecka, in Koziol and Welser, Bu¬rgerliches Recht, vol. 1, p. 427.

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

According to Civil Code, § 448, all property which can be subject to legal relations and transfers can also be mortgaged. The term ‘property’ includes intangible property such as leases.65 Thus, except for nontransferable personal rights, rights can be mortgaged, provided that it is possible to liquidate them by enforcement.

In principle, the rights of a tenant under a lease can thus be mortgaged,66 provided that it is possible to attach them.67 However, even if the lease is registered in the Land Register, the law does not allow the mortgage of such a lease to be registered.68 The attachment of rights under a lease is subject to the Law on Execution, §§ 331 ff. An attachment is prohibited if the lease concerns residential premises which are subject to the Law on Tenancy and which provide essential accommodation for the tenant and his/her family (Law on Tenancy, § 42, para. 4). The liquidation of attached lease rights may be effected by means of forced administration and forced sub-lease.69 If sub-lease is not possible (for example, because of a contractual prohibition) or economically inexpedient, the enforcement proceedings must be closed and no attachment will be effected.70

A personal servitude can be mortgaged and attached, provided it is not inseparable from a certain plot of land (real servitude) or dedicated to the personal needs of the holder.71 Hence, the right of use can neither be mortgaged nor be attached.72 By contrast, it is possible to mortgage a usufructuary right,73 even if it concerns residential premises.74 The mortgage of a usufruct must be registered in the Land Register and will expire at the latest with the death of the usufructuary. If the usufructuary renounces his/her rights, the usufruct cannot be cancelled in the Land Register without the consent of the mortgagee.75 In

65Civil Code, § 285; Hofmann, in Rummel, Kommentar, vol. 1, § 448, para. 1.

665 Ob 47/94; NZ (1995), p. 92 (Hoyer); Kletecka, in Koziol and Welser, Bu¬rgerliches Recht, vol. 1, p. 375.

675Ob47/94;NZ(1995),p.92(Hoyer);Hofmann,inRummel,Kommentar,vol.1,§448,para.8.

685 Ob 47/94; NZ (1995), p. 92 (Hoyer).

69Oberhammer, in Angst, Kommentar, § 331, para. 39.

703 Ob 90/70; SZ 43/135; 3 Ob 82/73; JBl (1974), p. 374; 3 Ob 12/78; EvBl (1978), p. 150; Oberhammer, in Angst, Kommentar, § 331, para. 43.

71Hofmann, in Rummel, Kommentar, vol. 1, § 448, para. 8; Koch, in Koziol et al., Kommentar, § 448, para. 9.

72Hinteregger, in Schwimann, Praxiskommentar, vol. 5, § 448, para. 11.

735 Ob 74/98p; NZ (1998), p. 408 (Hoyer); OGH 16.6.908; R. VIII, 66/8; GlUNF 4271; Kletecka, in Koziol and Welser, Bu¬rgerliches Recht, vol. 1, p. 375; Hofmann, in Rummel, Kommentar, vol. 1, § 448, para. 8.

74Hofmann, in Rummel, Kommentar, vol. 1, § 448, para. 8.

755 Ob 74/98p; NZ (1998), p. 408 (Hoyer).