Investor Guide to Europe 2014
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TYPES of oWnERSHIP
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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 pos-
sess, 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 atta-
ched 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 concur-
rently. 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 concur-
rently
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Leasehold
Lease (üür)
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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.
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Right of superficies
(hoonestusõigus)
•
An immovable may be encumbered so that the person for
whose benefit a right of superficies is constituted has a trans-
ferable 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 speci-
fied 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.
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Servitudes
(servituut)
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A real servitude encumbers a servient immovable for the bene-
fit 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 immo-
vable 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) esta-
blishes 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.
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Mortgage
(hüpoteek)
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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 hol-
ding 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.
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Pre-emption right
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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).
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A co-owner of an immovable holds a statutory option to subs-
titute an acquirer in a real estate transfer if the immovable is
acquired by a third person.
PRoPERTY LaW
