for any loss suffered by reason of the non-performance of the terms of the lease. Termination of the lease also deprives the insolvent estate of any right to compensation for improvements to the leased property effected without the consent of the landlord. Although a stipulation in a lease that the lease will terminate upon the sequestration of the tenant is void, a stipulation which restricts or prohibits the transfer of any right under the lease binds the insolvency administrator. The administrator must inform creditors at their second meeting inter alia of any lease entered into by the insolvent as tenant. The creditors may direct the action to be undertaken by the administrator with regard to the lease.195 Subject to these qualifications, the lease is included in the insolvency assets of the tenant.

A usufruct may be attached in execution proceedings against B.196 The purchaser in execution will only acquire a contingent right which will expire on the usufructuary’s death. Since the holder of a right of habitation can sub-let and mortgage his/her interest, this fairly insignificant right may also be subjected to execution and sale in execution.

Both at common law and in terms of the Insolvency Act, all property of an insolvent at the date of sequestration belongs to his/her estate.197 Since a personal servitude over immovable property is regarded as incorporeal immovable property, the right of a usufructuary or habitator will also form part of his/her insolvent estate. This view is supported by the decisions that such rights are subject to execution and sale in execution. The insolvency administrator may therefore sell these rights as part of the process of realisation of assets. Since the entitlements in terms of a right of use are not subject to execution and sale in execution, it is submitted that a right of use does not form part of the insolvency assets.

Spain

Under Spanish law, the tenant can cede198 an urban lease to a third party with the landlord’s written consent (Law on Urban Leases, art. 8.1). If the landlord refuses to give his/her consent, the lease contract can be

195See Insolvency Act 24 of 1936, s. 37(1)–(5); Cooper, Landlord and Tenant, pp. 323–5; Smith, Insolvency, para. 175.

196High Court Rules r 45(8); Voet, Commentarius, 7.1.32; Ex parte BarnadoÕs Trustees 1910 CPD 78.

197Insolvency Act 24 of 1936, s. 20(2)(b); Smith, Insolvency, paras. 149, 153, 159.

198The term ‘cession’ in both the Law on Urban Leases and the Law on Agricultural Leases encompasses both sale and donation.

The usufructuary may cede his/her right of usufruct. He/she can therefore sell or donate it (Civil Code, art. 480). The cessionary will then be treated as the new usufructuary,202 liable to the nude owner (Civil Code, art. 498). The right of the cessionary will continue for the term of the usufruct or for a shorter period agreed between cedent and cessionary.203

The usufructuary may also mortgage his/her right (Law on Hypothecs, art. 107–1).204 The same article provides that the mortgage will expire when the usufruct is terminated by an act unrelated to the will of the usufructuary. It will, however, continue where the usufruct is terminated early by a voluntary act of the usufructuary. In the latter case, the mortgage will expire when the secured claim is satisfied or when the usufruct should have expired.

A right of use or a right of habitation is an extremely personal real right which is granted to a specific person as income to cater for his/her daily needs or as a place to live in during his/her lifetime. Such a right can therefore not be leased, transferred (Civil Code, art. 525) or mortgaged (Law on Hypothec, art. 108.3).

The holder of a hereditary building lease (superÞcies) may cede (sell), donate205 and also mortgage his/her right (Law on Land, art. 41; Law on Hypothecs, art. 107.5), because it is a right in rem. The Law on Land, art. 41.1 also considers the possibility of creating other personal rights or rights in rem over the hereditary building lease. The right of the new holder will last until the expiration of the term of the building lease as agreed between the parties when the right was constituted (Law on Land, art. 41.4, para. 3), or until the expiration of a shorter period agreed between assignor (cedent) and assignee (cessionary). This is not established by any rule, but it can be inferred from the general rules on rights in rem.

Under the Code of Civil Procedure, it is possible to attach any object or right with a patrimonial content (Code of Civil Procedure, art. 605–3 a contrario). This means, at least in theory, that it is possible to attach B’s right. This is quite clear and unproblematic in the case of a usufruct and a hereditary building lease (superÞcies). The rights of use and habitation,

202 Lacruz Berdejo, Elementos de Derecho civil, vol. 3.2, p. 23. 203 Ibid.

204But the Law on Hypothecs, art. 108.2 forbids the mortgage of a legal usufruct, except when it is granted to the widow/widower.

205Gonza´lez Pe´rez, Comentarios, p. 2211, includes the possibility to donate the right of superÞcies with regard to the Law on Land 1992, art. 287–3. In my opinion, it is also possible to donate the right of superÞcies under the Law on Land 2008. Art 41.1 is quite flexible, as it states that ‘the right of superÞcies can be transferred and burdened subject to the limits established in the constitutive agreement’.

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however, cannot be attached, as they are so highly personal that they cannot be transferred. In respect of a lease, B’s right can be attached, at least in principle, but if it is sold in execution proceedings, a problem arises, as the rules regarding the cession of leases generally require the landlord’s consent for the cession of B’s right.206

The answer is the same as for the previous question. It might be added that the Law on Insolvency, art. 76 considers all property and rights included in the debtor’s estate when the insolvency is declared as part of the insolvency assets. Only the right of use or habitation will be excluded.207

206 See also Case 3. 207 Ibid.