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

obligation and, ideally, secure that obligation and the obligation to maintain the gardens by means of a standard security.

South Africa

South African law draws a distinction between an option to purchase and a right of pre-emption in favour of B. In the case of an option to purchase, A’s right will be regarded as a mere contractual right which cannot be enforced against a third-party acquirer. B will thus be restricted to a claim for damages against A for breach of contract. If, however, the arrangement between A and B can be construed as the grant of a right of pre-emption (first refusal) there is authority for the view that this arrangement can operate like an ex lege right of retraction harking back to its Germanic predecessor, which allowed the holder to retract the consequences of the sale of the land in breach of the right.55

The crucial issue regarding A’s maintenance obligation is whether A’s contractual undertaking that he/she and his/her successors-in-title will maintain the gardens surrounding the development is enforceable against the acquirer of A’s land. This will only be the case if the right concerned is a real right and is registered as such. Under South African law, rights which do not form a ‘subtraction from the dominium of the land’ are not registrable. Since the right to claim performance of another party is traditionally considered a mere personal right, it will not be capable of registration. Furthermore, owing to the fact that it involves a positive duty on the part of the ‘servient’ owner, the passivity principle which prevents positive obligations being placed on an owner of servient land will also prevent the registration of this right as a praedial servitude. The successors-in-title will only be bound if the original contracting party has created a chain of conditions fortified by a penalty clause to bind his/her successors-in-title in similar fashion.56

55This proprietary remedy developed from the notion that the holder had incomplete ownership that automatically expanded to full ownership on breach of his/her rights. See Associated South African Bakeries (Pty) Ltd. v. Oryx and Vereinigte Ba¬ckereien (Pty) Ltd. 1982 3 SA 893 (A) 905. Contra Owsianick v. African Consolidated Theatres 1967 3 SA 310 (A). For a detailed appraisal, see Naude´, ‘Rights of First Refusal’, pp. 66–90.

56See Van der Merwe, De Waal and Carey Miller, ‘Property and Trust Law’, ss. 117–19 and 684–5.

Spain

The option to purchase is enforceable against C if it is registered in the Land Register, which is permitted in the Regulations on Hypothecs, art. 14 (Reglamento Hipotecario).57

There is no definitive answer with regard to the maintenance obligation. Where the obligation on the part of A is registered as a material provision of the limited right that has been established between A and B, the third party is probably also bound by such obligation. If it is not registered, B retains the right to sue A and his/her successors for specific performance. Such obligation is, however, not enforceable against the third party, as the obligation to maintain the gardens is a mere personal obligation between A and B.

57Dı´ez-Picazo, Fundamentos, vol. 1, p. 319. He adds that, if one of the main characteristics of rights in rem is their enforceability against third parties, the right of an option to purchase can be considered a right in rem, even when it does not grant its holder a direct and immediate power over the property. In his opinion, only the right of option to purchase immovables/real estate, which is registered in the Land Register, can be considered a limited right in rem.

The Danish report suggests that the sale and purchase back device can be utilised to achieve this goal. A will sell the land with the existing building, subject to a proviso that A may buy it back from B at a later stage. This option can be created as a right of first refusal, an obligation on B to sell to A on demand or an obligation on A to purchase the land back on a fixed later date.

The institutions of a hereditary building lease (superÞcies) and a hereditary land lease (emphyteusis) were originally designed to help the State and other public institutions like local governments and city councils to conclude arrangements with developers to develop unimproved land in the public interest, subject to the proviso that the land and the improvements had to be returned to the State or other public institution after a fixed term.7

Presently, public institutions in Germany and Poland, for example, frequently make use of these institutions to promote the public interest.

A special Italian law of 1971 gives municipalities the authority to expropriate urban land and grant hereditary building leases (rights of superÞcies) to developers for a fixed term of between sixty and ninetynine years for the purpose of constructing affordable housing units on the expropriated land. The town council must approve the building lease and a separate agreement between the municipality and the concessionaire must regulate their relationship. The agreement may organise the sale of the residences or apartments, determine their price or rent and must stipulate the design and characteristics of the construction, the time schedule for the erection of the building, the sanctions for violation of the agreement and the right to terminate the building lease in cases of serious violations. The use of these institutions has in the course of time been extended to private developers.

Apart from the fact that public institutions must comply with national and European Union public procurement provisions,8 hereditary building leases granted by a public institution in Portugal must last at least seventy years, the grant must contain provisions against speculative transactions but need not adhere to time limits for the completion of constructions, and transfer may be made subject to prior authorisation or a right of pre-emption in favour of the public authority.

usually for a fixed term. On expiry of the term, the owner will become the unburdened owner of the structure.

7Before 1999, a hereditary building right could only be created in Austria in favour of the State or the church.

8E.g. public tender provisions.