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Real Property Law and Procedure in the European Union

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Real Property Law and Procedure in the European Union European University Institute (EUI) Florence/European Private Law Forum Deutsches Notarinstitut (DNotI) Würzburg Real Property Law and Procedure in the European Union General Report Final Version scientific co-ordinators: Dr. habil. Christoph U. Schmid, Ph.D. European Private Law Forum European University Institute, Florence, www.iue.it Christian Hertel, LL.M. Director DNotI (German Notary Institute), Würzburg, www.dnoti.de with contributions by Dr. Hartmut Wicke, LL.M., DNotI, Würzburg 31.5.2005 EUI-Real Property Law - General Report - page 2/103 Overview page Introduction 8 1. Principles 11 2. Land Registration 27 3. Sale of Real Estate 47 4. Special Problems concerning the Sale of Real Estate (Cases) 65 5. Sale of a house or apartment by the building company (vente d‘immeuble à construire/Bauträgervertrag) 69 6. Private International Law 82 7. Mortgages 85 8. Literature 103 EUI-Real Property Law - General Report - page 3/103 Contents page Overview 2 Contents 3 Introduction 8 Objectives 8 Families of Legal Systems 8 Terminology and Definitions 9 Countries covered by this study 10 1. Principles 11 1.1. General Features and Short History 11 1.2. Concept of Ownership (Property and Estates) 12 1.2.1. Specific Common Law Types of Ownership (Estate and Trust) 12 a) Estates and other divisions of property 12 b) Trusts, settlements and overreaching 13 1.2.2. Superficies solo cedit 14 1.3. Limited Real Rights in Land (Interests in Land) 14 1.3.1. Numerus clausus of Real Rights 14 1.3.2. System of Real Rights in Land 15 1.3.3. Rights of use (usus or prohibitio usus) 15 a) Overview 16 b) Easements or servitudes 16 1.3.4. Security Rights, in particular Mortgages and Rent Charges 17 1.3.5. Rights in Rem to Acquire Real Property, in particular Pre-emption Rights 18 1.3.6. Other Real Rights in Land 19 1.4. Apartment Ownership (Condominiums) 19 a) Basic legal models of apartment ownership 20 b) Common features of the various models 21 1.5. Building Leases 21 1.6. The Public Law and Policy Context of Real Property Transactions 22 a) Consumer Protection 22 b) Public law restrictions 23 c) Taxes 23 d) Subsidies 24 1.7. Brief Summary on "Real Property Law in Action" 24 a) Real Property Markets 24 b) Actors and Institutions 25 2. Land Registration 27 Basic assumption: 5 basic types of land registers in Europe 27 2.1. Organisation of the land register 27 2.1.1. Official terms for the national land register 27 2.1.2. Relation to cadaster (land survey) 28 2.1.3. Integration in the court system or administrative authority 30 2.1.4. Educational requirements for the land registrars 30 2.2. Contents of Registration 31 2.2.1. Percentage of land registered (questionnaire 2.1.4.) 31 2.2.2. Registration of rights or of titles 32 2.2.3. Format of registration 32 EUI-Real Property Law - General Report - page 4/103 2.3. Constitutive or declaratory effect (questionnaire 2.5.) 32 2.3.1. Substantive effects of the registration in general 32 2.3.2. Constitutive or declaratory effect of the registration 33 2.3.3. Constitutive effect for limited rights 34 2.4. Bona fides 34 2.4.1. Transfer of ownership 34 British system: 34 2.4.2. Creation of limited rights 35 2.5. Correlation between the different classification factors 35 2.5.1. Correlation between constitutive/declaratory effect and bona fides protection 36 2.5.2. Correlation between registration of rights and protection of bona fides 36 2.5.3. Correlation between constitutive effect and registration of rights 37 2.6. Summary: Types of land registers 38 2.6.1. Table of different systems 38 2.6.2. Basic types of land register in Europe 39 2.6.3. Subgroups and hybrid forms 39 2.6.4. Dual systems in France, Greece and Italy 40 2.6.5. Central European system chosen by most Eastern European reform states 40 2.6.6. Changes in the registration systems in England, Ireland and Scotland 41 2.7. Priority and rank of rights (questionnaire 2.6.) 42 2.7.1. Rank of limited rights 42 2.7.2. Transfer of ownership 42 2.7.3. Priority Notice 42 2.8. Registration Procedure (questionnaire 2.3.) 43 2.8.1. Form of filing (application) 43 2.9. Access to information (questionnaire 2.4.) 44 2.9.1. Legal Restrictions on the Access to Data 44 2.9.2. Electronic Registration 44 2.9.3. EULIS 45 3. Sale of Real Estate 47 3.1. Procedure in general 47 3.1.1. Main steps of a real estate sale (matrix) 47 3.1.2. Examples of different countries 47 a) Germany 47 b) England 47 c) France (and other Code Napoleon countries) 48 d) Sweden 48 3.2. Real Estate Sales Contract 48 3.2.1. Form 48 3.2.2. Contracting (Who normally drafts the real estate sales contract?) 49 a) Professional Assistance 49 b) (Latin) Civil law notaries, British solicitors and licensed real estate agents Nordic style 50 c) Neutral or double counsel 50 3.2.3. Two consecutive transactions (preliminary contract) 51 3.2.4. Typical Real Estate Sales Contract 51 3.3. Transfer of Ownership and Payment 52 3.3.1. Requirements for Transfer of Ownership 52 a) Steps for transfer of ownership 52 b) Causal and abstract systems 53 EUI-Real Property Law - General Report - page 5/103 c) Constitutive and declaratory systems 53 d) Roman law: titulus and modus 53 3.3.2. Payment due 54 a) Systems by country 54 b) Systematic overview 54 3.3.3. Ways of the seller to enforce the payment 56 3.3.4. Transfer of possession to the buyer 56 3.3.5. Chain management 56 3.4. Seller’s Title 57 3.4.1. Title Search: Ascertaining the seller’s title 57 3.4.2. Title Search: Absence of Encumbrances 58 3.4.3. Title Insurance or Liability 58 3.4.4. Leases 59 3.5. Defects and Warranties 59 3.5.1. Statutory rules 59 3.5.2. Typical contractual clauses: the scope of caveat emptor 60 3.5.3. Liability of the Buyer for Debts of the Seller 60 3.6. Administrative Permits and Restrictions 60 3.7. Transfer Costs 60 3.7.1. Contracting and Registration 62 3.7.2. Transfer Taxes 62 a) Tax rates 62 b) Levying methods 63 3.7.3. Real Estate Agents 63 3.8. Buyer’s Mortgage 63 4. Special Problems concerning the Sale of Real Estate (Cases) 65 4.1. The Conclusion of the Contract 65 4.2. Seller’s title 65 4.2.1. Consequences of an invalid Sales Contract 65 4.2.2. The Seller is not the owner 65 4.2.1. Execution against the Seller 66 4.3. Delay in payment 66 4.4. Defects and Warranties 67 4.4.1. Misrepresentation 67 4.4.2. Destruction of the house 67 5. Sale of a house or apartment by the building company (vente d‘immeuble à construire/Bauträgervertrag) 69 5.1. Statutory Basis 70 5.1.1. National Law 70 5.1.2. Influences of EU law 71 5.2. Procedure in general 72 5.3. Conclusion of the Contract 75 5.4. Payment 76 5.4.1. Payment date 76 5.4.2. Securities (cf. also under 5.5.3) 76 5.4.3. Acquisition of Ownership 77 5.4.4. Financing of the Buyer (questionnaire 5.4.5.) 78 5.5. Builder’s Duties - Protection of Buyer 78 5.5.1. Description of the Building 78 5.5.2. Late Termination of the Building 78 EUI-Real Property Law - General Report - page 6/103 5.5.3. Material Defects 78 5.6. Builder’s Insolvency 80 5.6.1. Unfinished Building 80 5.6.2. Repayment 81 6. Private International Law 82 6.1 Contract Law 82 6.1.1. Conflict of Laws Rule 82 6.1.2. Formal Requirements 82 6.2 Real Property Law 82 6.2.1. Conflict of Laws Rule 83 6.2.2. Formal Requirements 83 6.3 Restrictions on Foreigners acquiring Land 83 6.3.1. Restrictions limited to Foreigners 83 6.3.2. Other Restrictions 83 6.4 Practical Case: Transfer of Real Estate among Foreigners 83 7. Mortgages 85 7.1. Definition and types of Mortgages 85 a) Definition 85 b) Types of Mortgages 85 c) Statutory charges and forced mortgages 86 7.2. Setting up a mortgage 86 7.2.1. Owner’s consent (Contract between owner and mortgagee) 86 7.2.2. Formal Requirements 86 7.2.3. Registration 87 7.2.4. Traditio of the mortgage certificate 87 7.2.5. Time and Cost (Questionnaire 7.2.4.) 87 7.3. Accessory and non-accessory mortgages 89 7.3.1. Accessoriness and causality in general 89 a) Definitions 89 b) Legal traditions 90 c) Mortgaging practice 90 d) Legislative developments 91 7.3.2. Invalid Loan Contract and Right of withdrawal 91 7.3.3. Changing the secured debt 92 7.3.4. Independent/abstract promise of payment 92 7.3.5. Mortgage for the land owner himself 92 7.4. Mortgagee’s rights, in particular priority in enforcement 93 7.4.1. Money only: Capital and interest 93 7.4.2. Enforcement Procedure: Forced sale or sale out of court 93 7.4.3. Overriding interests and priority (questionnaire 7.5.) 94 7.4.4. Scope of the Mortgage (questionnaire 7.6.) 95 7.5.
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