The new property law came into force on September 1 with the main objective of exchanging its archaic predecessor for a flexible, modern and contemporary regulation. In principle, the new law only applies to contracts concluded after September 1, 2021. Agreements already in force will remain subject to the old law, unless the parties agree otherwise.
This article focuses on the main changes regarding business rights that may impact you as a business owner.
More clarity for the company as usufructuary
The split purchase, where the bare ownership is acquired by the natural person and the usufruct by the company, is not an unprecedented phenomenon for many entrepreneurs. In addition to some non-tax advantages, there are the well-known tax advantages as a result of which the purchase of a real estate property with the company as usufructuary is a frequently used construction. The new property law responds to this and ensures, among other things, that as of 1 September usufruct can be established for a period of 99 years (previously a maximum of 30 years).
Next, the law also clarifies the situation in which major repairs must be made to the real estate. It is now explicitly stipulated that the bare owner must carry out major repairs after consultation with the usufructuary, but he can require the latter to contribute proportionally to the costs of these repairs. A clarification in the law that should also put an end to the discussion regarding the calculation of the benefit in kind in cases where the bare owner is also the manager of the usufructuary company.
Finally, the new law determines the compensation owed by the bare owner to the usufructuary at the end of the usufruct, if the latter had erected structures and/or plantations with the bare owner's consent. Specifically, the usufructuary can claim the lower of the following two amounts:
- The added value that the works have given to the land, either;
- The cost of the work performed.
If the usufructuary has installed works without the bare owner's consent, the bare owner is not liable for compensation.
What else does the law have in store?
In addition to usufruct, the right of superficies was also relaxed. This right allows a building promoter to build on someone else's land, subject to the landowner's consent, and is a common figure in real estate projects. Thanks to the new law, it is possible to establish a building lease for a maximum duration of 99 years, where previously this was only possible for 50 years. Exceptionally, this right can even be established in perpetuity, for example for real estate projects where there is a building consisting of different volumes, each with a different purpose (for example, a shopping center with an underground garage).
The legislator also tinkered with the duration of emphyteusis. Previously, the minimum duration was 27 years, which for some real estate constructions, such as real estate leasing, was now too long. Consequently, it was reduced to 15 years. In addition, the obligatory periodic payment (canon) that had to be paid in the case of a leasehold property was also abolished.
In both the right of superficies and leasehold, the superficies or leasehold holder is entitled to compensation for any works made when the right expires, calculated as for usufruct.
More contractual freedom
With the exception of a few provisions, including the minimum and maximum duration, most of the provisions of the new law are of "supplementary law," meaning that the parties can agree otherwise.
This provides more flexibility and room to fully customize agreements.
If you have questions about the impact of property law reform, please take HERE Contact our experts.
