Investor Guide to Europe 2014
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TYPES of RIGHT ovER REaL ESTaTE
Î
freehold ownership
ownership right
•
Freehold ownership (
droit de propriété
) is defined by the
Luxembourg Civil Code as the right to enjoy and dispose of
assets in the most absolute manner, subject to overriding legal
provisions or third party rights.
•
Ownership of real estate includes the ownership of the land
and any buildings rerected on it. Both are registered on the
same title.
•
Although private agreements will be binding upon the parties,
any transfer of ownership will require a notarial deed to be
enforceable against third parties.
•
All transfers of ownership shall also be subject to a registration
(
transcription
) before the registrar of mortgages (
Bureau de la
Conservation des Hypothèques
). The land surveying adminis-
tration (
Administration du Cadastre et de la Topographie
) also
lists all parcels and buildings covering the territory of the Grand
Duchy of Luxembourg.
Co-ownership and division of a building
•
The Law of 16 May 1975 regulates the co-ownership of buil-
dings (
copropriété des immeubles bâtis
).
•
The co-ownership of buildings includes a freehold ownership
of the privately owned areas (
parties privatives
) and a co-
ownership of the common areas (
parties commune
s) of the
building. The division shall be carried out through a “
cadastre
vertical
” approved by the land surveying administration (
Admi-
nistration du Cadastre et de la Topographie
).
•
The management of the building and obligations of the co-
owners are provided in the rules of the co-ownership (
règle-
ment de copropriété
).
•
The appointment of a representative of the co-owners (
syndic
de copropriété
) is required.
Î
Long term lease
(droit d’emphytéose)
•
Long term leases are rights in rem whose beneficiaries enjoy
all rights which an owner would enjoy (including the right to
assign and mortgage the property).
•
The beneficiary is not entitled to depreciate the value of the
property (and is usually required to make improvements
thereto).
•
The minimum term is 27 years and the maximum term is 99
years.
•
The beneficiary will pay a rent, as well as taxes and other costs.
•
Long term leases must be notarized and registered in the
land registry before the registrar of mortgages (
Bureau de la
Conservation des Hypothèques
).
Î
Building right
(droit de superficie)
•
A building right is a right over a land entitling its beneficiary to
construct and own a building on such land.
•
The maximum term is 99 years.
•
The beneficiary will pay taxes and other costs on the land.
•
Buildings rights must be notarized and registered before the
registrar of mortgages (
Bureau de la Conservation des Hypo-
thèques
).
Î
Rights in
rem
affecting ownership
Easement
(servitude)
•
An easement is a encumbrance imposed upon a property,
for the use and enjoyment of another property belonging to
another owner.
•
Easements are created naturally, by law or by contract. The
latter must be notarized and registered before the registrar of
mortgages (Bureau de la Conservation des Hypothèques).
usufruct
(usufruit)
•
The usufruct of a property is a right to the use and enjoyment
of the fruits or profits of another’s property.
•
Usufructs are statutory or contractual. Contractual usufructs
are notarized and registered before the registrar of mortgages
(
Bureau de la Conservation des Hypothèques
).
Mortgage (
hypothèque
)
•
A mortgage is a security encumbering the asset, which entitles
the beneficiary to a preferential right over other creditors in
the event of a forced sale of the concerned property.
•
The mortgage will follow the property irrespective whose
hands it is in. The creditor benefiting from the mortgage will
acquire a right of pursuit and a right of preference.
•
Mortgages can be established by law (statutory mortgage),
by court order (judicial mortgage) or by agreement (contrac-
tual mortgage). contractual mortgages are notarized. To be
enforceable towards third parties, the notarial deed shall be
registered before the registrar of mortgages (
Bureau de la
Conservation des Hypothèques
).
Î
Pre-emption right
•
The pre-emption right is the statutory option provided to cer-
tain public authorities to substitute an acquirer in a real estate
transfer for purposes of general public interest.
•
It prevails over any rights of pre-emption which may be held by
private persons.
aCQuISITIon PRoCESS:
KEY STaGES
No prior authorisation is required from foreign investors wishing
to enter into real estate transactions in the Grand Duchy of
Luxembourg.
Î
asset deal vs. share deal
•
Many acquisitions are carried out through share deals. Legally,
the owner will remain the same and no registration duty will be
due.
PRoPERTY LaW
