The borrower under a loan for use cannot temporarily donate or lend out the use of the property or transfer the right to use the property under a lease to a third person without the permission of the lender.110

Italy

Under a lease, the tenant has the power to sub-let the property leased, but cannot assign the contract to third persons without the consent of the landlord (Civil Code, art. 1594). Since the prevailing view is that a lease does not give rise to a real right, a tenant cannot mortgage his/her right, the lease cannot be attached by the tenant’s creditors and it is not included in his/her insolvency and bankruptcy assets.

The usufructuary can assign his/her right either for a fixed term or for its entire duration (Civil Code, art. 980). He is therefore entitled to sell or donate his/her right of usufruct. The owner must, however, be informed of the assignment and failure to do so will leave both the usufructuary and the assignee liable in solidum to the owner. The purchaser or donee acquires the same right as the original usufructuary and thus the duration of the right assigned will be limited to the life of the original usufructuary. The alienation of the rights under the usufruct can be forbidden in the constitutive deed (Civil Code, art. 980). Contrary to the general rule (Civil Code, art. 1379), such prohibition is effective against third parties and any alienation of the usufruct in contravention thereof will be void.

The usufruct of immovables can be mortgaged (Civil Code, art. 2810). Mortgages over a usufruct normally come to an end when the usufruct expires. However, if the extinction is due to renunciation or abuse by the usufructuary, or to acquisition of the nude ownership by him/her, the mortgage continues until an event occurs that will otherwise extinguish the usufruct (Civil Code, art. 2814).

The right of use or habitation cannot be transferred (Civil Code, art.

1024). It cannot be mortgaged either, because this can lead to the transfer of the right.111

According to the prevailing opinion, the usufructuary cannot constitute praedial servitudes over the object of the usufruct. This is inferred

110If the borrower does not comply with this prohibition, he/she will be liable for all loss that will not have occurred if the use of the property has not been abandoned to a third person (Civil Code, § 584(2)).

111See e.g. de Martino, ‘Dell’usufrutto’, p. 357.

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from Civil Code, arts. 1077–8, which expressly states that servitudes can be constituted by the holder of a hereditary land lease (emphyteusis) without mentioning a usufructuary in this regard, while it expressly mentions that a usufructuary may constitute a servitude in favour of the land over which he has a usufruct (art. 1078). Some authors rely on art. 1077 as implicitly denying that a usufruct may be constituted over the land subject to the usufruct.112 Other authors disagree, for they see no reason, in principle, for denying the usufructuary the right of constituting praedial servitudes in favour of the land, with such servitudes being extinguished when the usufruct expires.113

It is generally understood that a usufructuary can create a usufruct, a right of use or habitation on his/her usufruct.114 The effect is different from that of transferring a usufruct. In the first case, the second usufructuary does not succeed the first one in respect of his/her rights and duties towards the owner. There is no direct relationship between the owner and the second usufructuary. As such, the first usufructuary remains liable to the owner if the property is damaged or its intended economic purpose is changed. In addition, if the second usufructuary renounces his/her right, it does not imply extinction of the first usufruct. On the other hand, where there is a transfer of the usufruct, the transferee succeeds the original usufructuary in his/her rights and duties towards the owner, and enters into a direct relationship with him. The original usufructuary loses all his/her rights and duties (even if the duration of the usufruct is still determined by reference to his/her life).

The holder of a right of use or habitation cannot create another right of use or habitation on his/her right. The content of the right is limited by the needs of the original holder.

The usufruct can be attached in execution proceedings against the usufructuary and is included in the usufructuary’s insolvency or bankruptcy assets. Although there are no authorities on the point, the fact that the right of use or habitation cannot be transferred means that it cannot be attached or be part of the assets of the insolvent estate.

The holder of a hereditary building right (proprietario superÞciario), as an owner ad tempus, can freely sell or donate his/her time-limited ownership. He/she can also mortgage it with the mortgage terminating on the expiration of the term of the holder. If for some reason (for example,

112See e.g. Pugliese, ‘Usufrutto’, p. 438; Bigliazzi, ‘Usufrutto’, p. 144.

113See e.g. Gallo, ‘Usufrutto’, p. 59. 114 See e.g. Pugliese, ‘Usufrutto’, pp. 436–7.

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The right of use or habitation is a purely personal right which cannot be transferred or mortgaged.

A distinction must be made between a hereditary building lease (superÞcies) and a dependent building lease which is attached to a residential lease or an agricultural lease. Only the independent building lease can be transferred.116

An independent building lease may be sold, donated or sub-let. On expiration of B’s building lease, the right of the third party will terminate as B cannot transfer more than he is entitled to (Civil Code, art. 5:96 and 5:104 II). B can also encumber his/her building right with a mortgage. Since B’s building right is part of his/her assets, it can be attached in execution proceedings against B and is part of his/her assets in bankruptcy proceedings.117

A dependent building lease is mostly dependent on a right of hereditary land lease (emphyteusis). On transfer of the hereditary land lease to a third party or on transfer of the holder’s death to his/her heirs, the building lease automatically follows.

The hereditary land lease (emphyteusis) is an independent limited real right and can be transferred to someone by a contract of sale or a donation. The possibility of transferring the hereditary land lease can, however, be restricted in the deed of creation (Civil Code, art. 5:91).118 The hereditary land lease may be encumbered with other limited real rights, for example, a mortgage, which entitlement cannot be restricted.119 B’s hereditary land lease can also be attached in execution and will become part of the bankruptcy estate in case B becomes

insolvent.120

Poland

Under Polish law, it is impossible for either party to a lease to assign (gratuitously or for value) his/her entire legal entitlements (consisting of rights and obligations) to a third party. Each party would have to assign his/her rights (Civil Code, arts. 509–18, which states that as a rule consent of the debtor is not needed) and obligations separately (Civil Code, arts. 519–25, which states that consent of the creditor is a requirement). One may argue that a lease could be assigned (cessio) according to

116 Pitlo, ‘Goederenrecht’, no. 674. 117 Wessels, Insolvensierecht, nos. 2059, 2060. 118 Pitlo, ‘Goederenrecht’, no. 653. 119 Ibid.

120 Wessels, Insolvensierecht, nos. 2059, 2060.

Civil Code, arts. 509 and 519, provided that the lease has a market value. In practice, however, it may be difficult to obtain the consent of the other party if it is needed.

Since a lease is a contract which gives rise to a personal right, it cannot be mortgaged (Law on Management of Real Property, art. 65).

If B has an income-producing (fruendi) lease, he/she may sub-let the property, but only with the landlord’s consent (Civil Code, art. 698, § 1). B also needs the consent of the landlord to sub-let residential premises, except if the sub-tenant is a person to whom the tenant is obliged to pay alimony (Civil Code, art. 688, § 2). In other leases, B may sub-let without A’s consent, unless the contract stipulates otherwise (Civil Code, art. 668, § 1). The sub-lease may not last longer than the main lease and will expire, at the latest, on termination of the lease.

In execution proceedings, a lease will fall into the category of executable (or receivable) debts and other non-personal rights (Code of Civil Procedure, arts. 895–912). Since the attachment will cover the rights of the tenant under the lease and not the rent due under the contract (Code of Civil Procedure, art. 900, § 2) it will be difficult to place a value on such rights. In bankruptcy proceedings, a lease will be included in B’s bankruptcy assets on the assumption that the rights of the tenant under the lease will have monetary value. It does not apply to the rent due under the lease (Law on Bankruptcy, art. 331), which falls into the estate of the landlord.

Usufruct as such is neither transferable nor transmissible on death (Civil Code, art. 254). The usufructuary may, however, transfer the right to exercise the usufruct to another person by lease or another contract. Such right may not last longer than the usufruct. A usufruct cannot be mortgaged (Law on Land Register and Mortgages, art. 65). In execution or bankruptcy proceedings, the usufruct will form part of B’s executable or bankruptcy assets if it has been established as a nongratuitous right and was therefore a source of income to B. Since a usufruct is non-transferable, the usufruct as such cannot be sold in execution. However, the rights flowing from the usufruct may be sold in execution subject to expiry when the usufruct comes to an end.

Personal servitudes in the form of a right of habitation may not be transferred or even exercised by a person other than the beneficiary (Civil Code, art. 300) and cannot be mortgaged (Law on Management of Real Property, art. 65). Because personal servitudes in the form of a right of habitation is so closely linked to the person of the habitant, it cannot be attached in execution of B’s debt and does not form an asset in his/her estate or part of his/her executable or bankruptcy assets.