that it cannot be attached makes the right of habitation (Wohnungsrecht) attractive for estate planning purposes.

The interests of a holder (B) in a permanent right of habitation

(Dauerwohnrecht) and a hereditary building lease (Erbbaurecht) can be attached and sold in execution.

The considerations applying in execution proceedings against B will apply equally to B’s bankruptcy. The equity in a hereditary building lease

(Erbbaurecht), a permanent right of habitation (Dauerwohnrecht) and a usufruct

(Nie§brauch)98 will be included in B’s insolvency assets whereas the equity in a right of habitation (Wohnungsrecht) and other limited personal servitudes (beschra¬nkte perso¬nliche Dienstbarkeiten)99 will not be included without the permission of the landowner.

Greece

The Greek legislator gives the tenant under a lease the power, in the absence of contrary agreement, to grant to another the use of the leased property, and in particular to sub-lease the property (Civil Code, art. 593), which means that the use of the property can be granted to another by the tenant even without remuneration. In agricultural leases, however, the opposite rule applies. In the absence of contrary agreement or contrary local usage, the tenant-farmer is not entitled to grant the use of the leased land (with or without remuneration) to a third party without the consent of the landlord (Civil Code, art. 624).

Only immovable property capable of alienation or a usufruct over such property may be the subject matter of a mortgage (Civil Code, art. 1259). What is actually mortgaged is not the immovable property but the real right on that property, namely ownership or usufruct.100 The Civil Code only mentions the right of usufruct. It will not be possible to create a mortgage over the equity of the tenant under a lease of immovable property because it only gives rise to personal rights. The right of lease is therefore not considered to be mortgageable.

The tenant is expressly given the right, in the absence of contrary agreement, to sub-lease the property to another. In such a case the tenant will be liable to the landlord for any damage caused through the fault of the sub-tenant. Consent of the landlord to the sub-lease does not

100 Doris, Real Security, pp. 49, 50.

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

exonerate the tenant from such liability (Civil Code, art. 593). In the case of an agricultural lease, subject to any contrary agreement or local usage, the tenant-farmer is not entitled to grant to another the use of the leased land without the consent of the landlord (Civil Code, art. 624).

Since a lease is not a real right, B’s right to use the property cannot be attached by his/her creditors. It will, however, be possible for his/her creditors to attach possible pecuniary claims against the landlord arising from the lease (for example, claims of the tenant for expenses owing to repairs necessitated by an existing defect in the property) as well as from the stream of rental income flowing from the sub-lease. The Greek Code of Civil Procedure contains special provisions on the attachment of pecuniary claims (garnishment, see Code of Civil Procedure, arts. 982 ff.).

The same considerations apply in the case of insolvency proceedings as in the case of execution proceedings against B.

Unless otherwise agreed, a usufruct as such is not transferable owing to its highly personal nature (Civil Code, art. 116).101 Under reservation of the provision in Civil Code, art. 1164, however, transfer of the rights and benefits under a usufruct is possible for a period not exceeding the life of the usufruct. This means that although the usufruct as such may not be transferable, the right to exploit the property and to collect its produce and income can be sold or donated by the usufructuary, subject to the proviso that such right will terminate upon expiry of the usufruct.102

Since the right of habitation is even more closely linked to the person of the beneficiary, neither the right of habitation nor the rights flowing from it may be transferred.103 The right of habitation expires on the death of the holder (Civil Code, art. 1185).

We have already seen that a mortgage can only be established on immovable property that can be alienated or on a usufruct on such property (Civil Code, art. 1259). It is not the immovable property but the real right on the property that is mortgaged.

Owing to the fact that a usufructuary may transfer the exercise of his/ her right to another for a period not exceeding the life of the usufruct

101Balis, Property, p. 376; Roussos, in Georgiades and Stathopoulos, GCC, Collective Analysis, art. 1166, no. 1 (125).

102Balis, Property, p. 377; Roussos, in Georgiades and Stathopoulos, GCC, Collective Analysis, art. 1166, no. 24 ff. (130–3).

103Balis, Property, pp. 394, 395; Papadopoulou, in Georgiades and Stathopoulos, GCC, Collective Analysis, art. 1185, no. 1 (196).

under reservation of the provision in Civil Code, art. 1164, he/she may lease out the exercise of his/her right or lend it for use. Since these transactions only give rise to personal rights, they do not create a separate limited real right with regard to the property.

The prevailing view in Greece is that only the rights flowing from the usufruct can be attached and not the real right of usufruct as such.104 What can be attached is merely the right to exercise the usufruct as a transferable personal right. Owing to the non-transferability of the real right of the usufruct, only the rights flowing from the usufruct can be included in B’s insolvency assets.105

Hungary

Since a lease only gives rise to personal rights, it cannot be sold, donated, assigned or mortgaged, at least not without the consent of the landlord.

The permission of the owner is always required for the sub-lease of the property, except in the case of leases of land (Civil Code, § 426 (1)). The significance of this exception is, however, limited since the Law on Residential Lease provides that the tenant of residential or nonresidential property can sub-lease the property only with the permission of the landlord (Law on Residential Lease, §§ 33, 38(3) and 42) and if the sub-lease is reduced to writing (Law on Residential Lease, § 33(2)). The same rules apply to income-producing leases (Civil Code, § 461 (1)),106 with the exception of an agricultural lease.

A sub-lease of agricultural property is null and void (Civil Code 452(3)). The Law on Agricultural Land, § 12/A, however, provides for an exception. The tenant of an income-producing lease can, with the permission of the landlord, transfer the use of the land to a person experienced in the cultivation of agricultural land. The agreement and the permission of the landlord must be reduced to writing.

104See Roussos, in Georgiades and Stathopoulos, GCC, Collective Analysis, art. 1166, nos. 4 and 5 (126); Athens Court of First Instance 14507/1981; NoV (1981), p. 1583. Contra Yessiou-Faltsi, Forced Execution, p. 115.

105Roussos, in Georgiades and Stathopoulos, GCC, Collective Analysis, art. 1166, no. 6 (126); Spyridakis and Perakis, ‘Interpretation of the GCC’, art. 1166, no. 3 (11); Rokas,

Bankruptcy, p. 127.

106If the tenant sub-leases the property with the permission of the landlord, he/she will be liable for the conduct of the sub-tenant. If the tenant sub-leases the property without the permission of the landlord, he/she is liable for loss that would not have occurred in the absence of the sub-lease (Civil Code, § 426(2)–(3)).

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

No sources could be found dealing with the question whether a lease can be attached for the purposes of execution against the tenant or whether a lease forms part of the insolvency assets of the tenant.

The usufructuary cannot transfer the usufruct as such but can transfer the rights under the usufruct to someone else (Civil Code, § 159(2)). In other words, the right of usufruct as an in rem right cannot be conveyed as such but the usufructuary may, for example, cede the right to use the property and collect its fruits without affecting the usufruct or the person of the usufructuary as the holder of the right in rem.107 The rights under the usufruct can be transferred to a third person for consideration only if the owner is not interested in exercising the usufruct subject to the same conditions (Civil Code, § 159(2)).

In contrast, the right to use is highly personal in the sense that it can only be used to satisfy the needs of the usuary and family members living with him/her. Consequently, neither the usus as such, nor the rights under the usus, can be transferred to third persons (Civil Code, § 165(1)).

Since the usufruct as a right in rem is not transferable, it cannot be mortgaged as such. However, since the rights of use and enjoyment of the fruits under the usufruct are transferable, these rights can be mortgaged. Because of its highly personal character, neither the right in rem of use nor the rights under the right of use can be mortgaged (Civil Code, § 252(1)).

The holder of the usufruct in rem or the right to use in rem cannot create a separate limited right. The usufructuary, through transferring the rights under the usufruct to a third person, can create a separate right in personam with regard to the object of the usufruct. Nevertheless, the latter arrangement may have contractual implications not only as regards the relationship between the usufructuary and the third person108 but also concerning the relationship between the owner and the third person.109

Because of difficulty experienced in practice to levy execution against a usufruct for the debt of the usufructuary, a usufruct can neither be attached in execution nor does it form part of the usufructuary’s insolvent estate.

107Gelle´rt, A Polga«ri To¬rve«nyko¬nyv magyara«zata, vol. 1, p. 539; Benedek and Vila´ghy, A Polga«ri to¬rve«nyko¬nyv a gyakorlatban, pp. 108–11.

108Gelle´rt, A Polga«ri To¬rve«nyko¬nyv magyara«zata, vol. 1, p. 539.

109Benedek and Vila´ghy, A Polga«ri to¬rve«nyko¬nyv a gyakorlatban, pp. 108–11.