Essentials of Property Law: Concepts, Rights, Transfers, and Security

Property Law Week 1 – Basics Lex Rei Sitae Property law Characteristics of property law Personal rights Absolute rights Contract v Property Ground Rules of Property Law 2 main principles Claim Revindication (Rei Vindicatio) Ownership Possession v Detentorship Droit de suite Droit de preference The law where the property is situated Legal relations between a subject and a substantial group of other subjects regarding an object Erga Omnes Droit de suite Enforceable immediately Inviolable rights between inter parties Rights inviolable against everyone (Erga Omnes) Rights contract: personal rights Property: erga omnes 1) Nemo Dat Rule: one cannot transfer more than one has 2) Prior Tempore Rule: older property rights have priority over younger ones 3) Accessority Rule: existence of security rights depends on an existing underlying debt 4) Limited rights priority over fuller rights Principle of Numerus Clausus: Concept that limits the number of types of right that the courts will acknowledge as having the character of property. Principle of Transparency: Specificity and publicity (possession, registration…) An assertion that one is entitled to, or perceived or actual right to receive, money or property The right of the owner to assert his right of ownership and to claim the return of the object from any third party who holds the object without sufficient entitlement (requires proof of ownership) Absolute property right that provides legal entitlement to a person with regard to a specific asset/object (title = entitlement in common law) Possession: factual control between a person and an object on behalf of themselves (possession usually = ownership) Detentorship: exercises factual control over a good but not on behalf of himself, recognizing the right of the owner The right follows the object (creditor can claim asset regardless of whose hands they are in) Rights that rest on land are droit de suite Property rights are superior to personal rights (also gives creditor the right to be paid in preference to How do property rights get destroyed? Claims other creditors if the asset were to be sold) - Ceases to exist - By prescription - By accession NL Limited to corporeal objects (cannot own rights or claims, only objects) 3:2, 5:1 BW Revindication Possession v Detention 3:107 BW DE Limited to corporeal objects p. 90 p.903 BGB FR Corporeal and incorporeal Art. 544 CC UK Self help Possessory claim p. 984 BGB Possessory claim (immovables) Art. 549, 1653 CC Land: self-help; ordered from the court Goods: protected through torts p. 854(1) BGB Broad definition, possession for one self and possession for another Art. 2255 Possession, no article for detention Art. 2266 no ownership acquired through possession Week 2 – Property Law over the years Estate The effect of the French Revolution on property law and on the right of ownership Fragmented system Unitary system Duplex Dominium Dominium DIrectum Dominium Utile Nemo Dat rule Prior in Tempore - Relationship between Lord and tenant Everything that one owns Expression of equality and liberty Abolished the feudal system Period of uncertainty before the creation of a unitary system - Unitary system created = fragmentation abolished - Absolute property rights created (erga omnes) Two people can claim property rights over the same property (two different rights) One owner, erga omnes absolute right Consists of Dominium Directum an Dominium Utile Property rights that owner (usually the Lord) of the land has – possess claim on labour and harvests of the land Property rights of the vassals – the right to use the land and work on it One cannot transfer more rights than what he has The older property right has precedence over Accessority rule younger ones The existence of the security rights depends upon existence of an underlying debt (no loan, no security) Week 3 – Transfer Consensual Traditio Causal Abstract Negative v Positive rights Negative v Positive registry Civil law land transfer Common law land transfer Acquisitive prescription Extinctive prescription Priority notice Consensus about the contract is enough to pass ownership, delivery of the asset is not required Transfer of possession is required for ownership to pass: a separate legal act is needed, known as ‘real agreement’ Contract must be valid in order to pass ownership, if the contract is void then the transfer must be reverted Act of transfer is independent of the validity of the contract. However, this is reverted if leads to unjustified enrichment of the buyer Negative: right to let something happen Positive: right to actively do something Negative: does not provide all the information, certain facts are not registered (consists of formalities)  civil servant Positive: State guarantees correctness of the registry, legal status of land is always noted, with minor exceptions (consists of more details)  state is liable Buyer and seller  1 notary  deed (+ contract of sale for DE and NL)  land registry  Updated by registrar  deeds found in archives Buyer and seller  1 solicitor per person  deed + contract of sale  land registry  updates in the register, deeds in the archive - Method of acquiring property by meeting statutory requirements of continuous possession. Possession must be in the role of an owner, public, peaceful and uninterrupted. Ownership acquired after a certain period of time (depending on good/bad faith) - Detentorship does not lead to acquisitive prescription Extinction of a right/claim due to time lapse. Lodged against a Certificate of Title or Crown Lease to reserve priority for a pending transaction that will affect that land. Lease from the freeholder (sometimes called landlord) to use the land for a number of years. Usually long term (from 40 to 999 years or more) - Contractual in Civil Law (sale does not break the lease) - Property right under common law Leasehold Consensual v Traditio Causal v Abstract Registry Access to registry Transfer of ownership NL Traditio DE FR Traditio Consensual (§873(2) BGB) (art. 1196 CC, 1583 for sales) Abstract Causal Causal Movables: 3:89 BW Immovables: 3:90 BW Positive Legitimate interest §873, 925 BGB Negative Interested parties UK Mixed (C-goods) (Timmovables) Positive Open to public Acquisitive Prescription FR 2258 CC 2261 CC NL 3:118 BW (good faith) Possession for own benefit 3:107 BW 10y – Good Faith 30y – Bad Faith 2272 CC (immovables) 10y – Good Faith (3:99 BW) 20y – Bad Faith (3:306 2266 CC – detentorship is BW) not included Unequivocal (owner knows and does nothing about it) UK Pye case  adverse possession Factual possession (for own benefit) Visibility (unequivocal) DE §900 (immovables) 1) Possession own benefit 2) 30y 3) Register before §937 (movables) 1) 10y 2) Possession 3) Good faith 10y after agreement ends (no difference good/bad faith) Week 4 – Limited Property Rights LPR Servitude Usufruct Emphyteus is Superficies Right of Path (Neighbour law) Easement (UK) Property rights with real effect derived from a right of ownership of a movable or immovable thing. Subtraction model: usus, fructus, abusus. Property right created by subtraction from ownership of usus and fructus (FR, NL, UK [land law]) Limitation model: ownership remains and usus and fructus are replicated (DE). Unitary concept Right of some benefit, of beneficiary use, in, on, or above the land owned by another. RIGHT RESTS ON THE LAND Requirements: 1) Dominant (burden of the right on this land) and servient land (tolerating the act) 2) No positive rights (except if it arises from a negative right) 3) Dominant land must benefit Transfer of land = transfer of servitude Legal servitude (FR) Right of an individual to use and enjoy property of another for their benefit, provided its substance isn’t impaired nor altered RIGHT RESTS ON THE PERSON (right dies when the person dies) Both movables and immovables Agreement between an owner and a lessee for the use and enjoyment of a specific piece of land/property for a long period of time (long lease) Owner: cannot use/enjoy, has the right to transfer ownership Property right, not contractual Erga omnes, transferable Immovables only RIGHT RESTS ON LAND Enabling a superficiary to acquire for himself buildings/construction in, on, or above immovables owned by someone else NOT PROPERTY: limitation on the right of the power of an owner, forced by law, to tolerate neighbours enter his land. LEGAL SERVITUTE in FR (property right) Right of way NL and DE in civil codes Requirements: must be landlocked, no access to road without crossing neighbours land, must be a natural limitation Ellen-borough Park case Restrictive covenant 1) Dominant and Servient tenement 2) 2 owners involved 3) Dominant land benefits from servient land 4) Transparency principle (content of the right must be certain) 5) No positive obligation on the servient land 6) Right must be capable of forming the subject matter of a grant Restriction on the covenantor not to do something specified. Burden runs with the land (successive owners are bound by the restriction) Equitable property right, Negative obligation, can never lead to easement. RESTS ON THE LAND Cannot be ambiguous Tulk case Ownership Servitude Right to path Usufruct FR (CC) 544 637, 686 2 lands, dom. Must benefit, negative duties “Legal Servitude” 649, 650, 682  binds 3rd parties 578 Quasi-usufruct: 587 Use/Habitation 625 Emphyteusis 451-1 Code Rural (max 99 years) Superficies 522 Entails right to path DE (BGB) 903 (indivisible) 1018 -“- NL (BW) 5:1 5:70 Deed of creation 917 (not LPR  neighbours’ law 5:57 -“- 1030: of objects 1060: of rights Real burdens: 1105 1113 (right of hypothec) Special rights: option to purchase 1094 Very restricted (German view on ownership) 3:201: on the person Duty to draft an inventory: 3:216 3:226 5:85 (perpetual) 5:101 Week 5 – Security Rights Paritas creditorum Exceptions Personal All claims are equal, and all creditors have the same rights Distributed between creditors equally 1) Some creditors are entitled to specific property with priority over others 2) State and social security entities have priorities 3) Privileged creditors can take first - Contractual and inviolable between inter parties security Real security Accessority and Non-Accessority Suretyship Guarantee Pledge Floating and Fixed charges (UK) Transfer of ownership (for security purposes) Hypothec (LPR) Chattel Mortgage Retention of Title General Characteristics of Security Rights - Suretyship, guarantee Right on a specific object, Erga Omnes Accessority: Security right extinguished when the debt is paid. Non-Accessority: Security right remains in place even after the underlying debt has been paid (DE: Grundschuld) One who promises to pay or perform an obligation owed by the principal debtor A legal commitment to repay a debt if the original borrower fails to do so. Not enforceable unless it is in writing Bailment that conveys possessory title to property owned by a debtor to a creditor to secure payment for some debt or obligation Possessory: possession is given to the creditor (publicity) Non-Possessory: no possession provided to the creditor (symbolic possession by contract  pledgor still able to use the object Security right that covers most or all present and future assets (usually of a business), but does not attach the assets until a certain event happens (liquidation, bankruptcy etc.), in which case floating becomes a fixed charge Transfer of ownership as a security asset  returned when debt is paid NL: not allowed officially. However, sogelease case, allowed in a sale-and-leaseback operation (actual transfer is allowed). Minor exception Secondary security right (LPR) Immovables A right given by the debtor to the creditor to ensure that an obligation will be respected. Debtor the owner of the property. 1) Must be registered via deed 2) Specificity 3) Immovables (NL: also planes, boats etc.) 4) Accessory nature 5) Non-possessory Mortgagor transfers to the secured creditor his entire title, that when the debt is repaid will be retransferred. Written + registered Reverse ownership in the assets to the seller until the price is paid in full, notwithstanding that the assets are delivered to the buyer. 1) Specificity 2) Publicity 3) Accessory nature (exceptions: Grundschuld) 4) Prohibition of unjustified enrichment (when debtor is in default) 5) Prohibition of oversecuritisation (moment of creation of security right) SR on movables Pledge NL (BW) Both 3:227, 3:236(1), 3:237, 3:248 DE (BGB) Possessory only §1204-05 §1228-9 (non-p. in case of extremely valuables) YES §930 FR (CC) Both 2333 (p) 2337 (non-p) Only banking and financial transactions 313-23 ( ) 2367, 2368 Written document UK Floating – fixed charges Transfer of Ownership NO Fiducia Ban 3:84(3) (prohibits it) Retention of Title (ownership remains with the seller) Right of retention (possession with the seller) 3:92 Retention of ownership - Consensus 449 - Consensus 3:290 3:291 §273 2286 L624-14 Commercial Code Lien: 41-43 SGA DE 1113-1114 873 Grundschuld: 1190,1192,11 99 FR 2393, 2397 2416, 2419, 2420 UK Charge of Land: Law of Property Act 1925 s. 101 s. 17-19 SGA No formal requirements SR on immovables Hypothec NL 3:227 3:260.1