Investor Guide to Europe 2014
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TYPES of oWnERSHIP
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freehold - ownership :
«ownership through an owner’s share
certificate to a cooperative housing associa-
tion is also a possibility»
•
Ownership is not defined by Law. The owner of a property
has the right to use, receive the benefits of, and dispose of a
property in the most absolute manner, subject only to a non-
prohibited use.
•
It is no validity requirement to register rights over real property
with the Land Register, and thus an agreement is enforceable
inter partes without registration. Any title, transfer or change
on the ownership right must be registered on the local Land
Registry in order to be protected against third party rights over
the property. Most rights are registered.
•
Apartment houses may be registered as one or several indivi-
dual properties in the Land Registry, each with its own right of
ownership. Membership of the owners’ association is manda-
tory. The association is an administrative body which main role
is to manage common areas and facilities. Each owner has a
right to use the common areas.
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Leasehold - Commercial leases
•
According to the Danish Business Lease Act the tenant has
certain mandatory rights secured by Law.
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Basic rights of a tenant are protected against third parties by
statute and do not require registration. Agreed terms which
provide the tenant with better rights can be secured against
third party rights by registration with the Land Registry.
•
The tenant enjoys a right which may be mortgaged (although
not registered), and in some cases transferred.
RIGHTS affECTInG oWnERSHIP
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Easement
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Is a burden imposed upon a property, for the use and utility of
another property (its owner and/or users) or other persons. As
an attribute of the right of ownership, easements are transfer-
red with the related property.
•
Is exercised to the detriment of the property assets which they
encumber – servient land – and to the benefit of adjoining
assets which they enhance – dominant land.
•
While the owner of a dominant land may, at its expense, carry
out any work required to use or to preserve the easement, it
is not entitled to do anything to aggravate the situation of the
servient land; the owner of the servient land must allow the
easement to be exercised without doing anything to restrict it.
•
No strict limits applies as to what may be agreed in a docu-
ment registered as an easement. Some formal limitations must
be observed; real property transactions need to adhere to the
so-called unity principle, under which it is illegal to dispose over
part of a real property without formal division of said property
prior to disposal. Only a whole unit can be transferred, and if
one would like to sell part of a property, the property must be
formally divided with the National Survey and Cadastre (if pos-
sible). To avoid circumvention of this rule, it has also been out-
lawed to establish rights of use for a part of a real property for
a period of more than 30 years. This prohibition does not apply
for the lease of buildings, however. Also, to avoid interference
with public plans for land development, easements governing
matters which may also be governed by local plans require
approval from the local municipality prior to registration with
the Land Registry.
•
Must be registered in the Land Registry to be protected against
third party rights. Registration fee is DKK 1,660.
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Mortgage
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A mortgage over a property in question is one (and the prevai-
ling) method of securing a property loan and must be registe-
red with the Land Registry to be protected against third party
rights over the property.
•
Entitles the lender to a preferential right over other creditors
in the event of a forced sale of the relevant property as the
mortgagees are covered in order of priority.
•
The fee for registration of mortgages amounts to DKK 1,660
plus 1.5 % of the principal amount. If there is an existing mor-
tgage registered (regarding the seller’s loans) the variable part
of the fee may be lower or even inapplicable.
•
In general any property in Denmark may be mortgaged and
there is no limit on the number of mortgages that may be
created over the same property.
Î
Preferential claims and local planning
•
Tax authorities, insurance companies, lessees, and in some
cases utility suppliers may have third party protected rights
over the real property for which a tax, fire insurance premium,
lessee’s claims, or utility bill is outstanding without registration.
Such claims are enforceable through forced sales.
•
Furthermore, the local planning regulation is applicable and
enforceable against property owners regardless of registration
with the Land Registry.
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Pre-emption right
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The tenants of residential leaseholds have mandatory pre-
emption rights for properties with a minimum of 13 residential
tenants. This threshold is lowered to a minimum of 6 residen-
tial tenants if the property contains residential tenancies only
(as opposed to business tenancies). The pre-emption rights are
mandatory and applicable in case of a transfer of the property
or in case of change-of-control of the owner company (but
not in case of change-of-control in the parent company of the
property owning company).
•
Other pre-emption rights by agreement must be registered in
the Land Registry in order to be protected against third party
rights.
aCQuISITIon PRoCESS:
KEY STaGES
The Danish purchasing restrictions render it practically impossible
for most foreign investors to make direct purchases of Danish real
property without permission from the Ministry of Justice. It might
be possible to obtain the permission if the property is sought
acquired to establish a business in Denmark, whereas grant of
permission is less likely if the targeted property is purely an invest-
PRoPERTY LaW
