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PROPERTY LAW
Types of ownership
Freehold
Ownership
• The Estonian Law of Property Act defines ownership as full
legal control by a person over a thing. An owner has the right
to possess, use and dispose of a thing, and to demand the
prevention of violation of these rights and elimination of the
consequences of violation from all other persons.
• Immovable is a part of land including things permanently
attached to it, such as buildings and standing forest. The
provisions applicable to immovable are also applied to an
apartment ownership. Ownership of an immovable and real
right must be registered in the Land Register.
Co-ownership
• Any property may exist in the form of shared property in the
ownership of several persons. The Law of Property Act defines
shared ownership as common ownership (kaasomand) or
joint ownership (ühisomand):
–– common ownership is ownership in legal shares of
a shared thing belonging to two or more persons
concurrently. As an example an apartment building may
consist of apartment ownerships, whereas the common
areas are in the common ownership of the apartment
owners;
–– joint ownership is ownership in undefined shares
of a shared thing belonging to two or more persons
concurrently.
Leasehold
Lease (üür)
• Lease enables the lessee to use the leased premises for
agreed payment. Compared to a real right, a lease contract
concluded between the lessor and the lessee has a legal effect
limited to the parties of the agreement. The lease contract
does not have legal effect on third persons. Also, a lease
contract does not enable the lessee to own or encumber a
thing attached to an immovable (such as a building). A lease
agreement must not be notarized or entered in the Land
Register.
Rights affecting ownership
• The ownership of an immovable or real right may inter alia be
affected by contractual rights and real rights. The contractual
rights are most commonly be established by contracts for the
use of immovable (lease contract, rental contract). The most
common real rights include the right of superficies, servitude,
mortgage and the pre-emption right.
Right of superficies (hoonestusõigus)
• An immovable may be encumbered so that the person for
whose benefit a right of superficies is constituted has a
transferable and inheritable right for a specified term to own
a construction permanently attached to the immovable.
The building erected on the basis of right of superficies is
(as an exception from the general rule) not a part of the
encumbered immovable and belongs to the owner of the right
of superficies.
• A superficiary has the right to transfer or bequeath a right of
superficies or to encumber it with real security, servitude, a
real encumbrance or a right of pre-emption.
• The agreement establishing a right of superficies may include
the obligation of the superficiary to erect a building specified
by the agreement. The right of superficies is established for
a specified term of up to 99 years. The right of superficies
is registered in the Land Register. A long-term right of
superficies is similar to ownership.
Servitudes (servituut)
• A real servitude encumbers a servient immovable for the
benefit of a dominant immovable. On the basis of a real
servitude, the owner of the dominant immovable is entitled
to use the servient immovable or the owner of the servient
immovable is required to refrain from certain action for the
benefit of the dominant immovable. As an example, the
owner of the dominant immovable has the right to use a road
passing through the servient immovable on the conditions
established by agreement.
• An individual real servitude (usufruct, personal right of use)
establishes a real right for the benefit of a person. As an
example, the utility works are erected and operated by the
owner of the utility works on the basis of a personal right
of use.
• The contract establishing servitude must be notarised and the
real right must be entered in the Land Register.
Mortgage (hüpoteek)
• Mortgage is a security encumbering the asset, which entitles
the beneficiary to satisfy the claim by selling the immovable.
A beneficiary has a preferential right over other creditors not
holding a mortgage or holding a mortgage established later
(lower ranking mortgage) in the event of a forced sale of the
relevant asset.
• Any immovable or real right may be mortgaged and there is
no limit on the number of mortgages that may be created over
the same property.
• The contract establishing mortgage must be notarised and
the real right must be entered in the Land Register. The
mortgage is ranked in the Land Register according to the time
of creation of the mortgage and the earlier mortgages have
priority over later mortgages.
Pre-emption right
• A pre-emption right may be established by contract or by law.
A pre-emption right enables the entitled person to step in a
transaction of immovable, replacing the purchaser under the
conditions agreed by the original parties.
• The public authorities hold a statutory pre-emption right for
purposes of general public interest (such as an immovable
located in nature conservation areas or an immovable under
heritage conservation).
• A co-owner of an immovable holds a statutory option
to substitute an acquirer in a real estate transfer if the
immovable is acquired by a third person.
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Investors Guide to Europe 2015