A practical overview of the New Property Law
06/09/2021

The new property law of 4 February 2020 that created Book 3 of the new Civil Code on ‘Goods’ (‘Book 3’ or the ‘New Property Law’), published on 17 March 2020 in the Belgian Official Gazette, enters into force on 1 September 2021.

Book 3 tackles a wide range of new legal provisions regarding co-ownership, building rights, long-term lease rights, easements, etc.

This newsflash contains general guidance on the New Property Law and draws on some of its key points. It kicks off of a series of four specific articles that will be posted on our site before the end of the year:

  • the update of the building right (15/09);
  • the update of the long-term lease right (29/09);
  • the update of the easements (13/10); and
  • the modifications applicable to public goods (27/10).

1.       General purpose

Book 3 was written for the following purposes:

  • to integrate: until now property law was contained in the old Civil Code of 1804 under several rigid and outdated provisions (i) the law on long-term leases, (ii) the law on building rights, (iii) the law on mortgages and (iv) the Rural Code (jointly referred to as the ‘Old Property Law’). Book 3 condenses these provisions into a single code and groups similar topics like neighbourhood disturbances, joint ownership and easements together under the single title ‘neighbours’ relations’;
  • to instrumentalise rights in rem agreements: the old Civil Code did not take current day-to-day real estate practices into account. Book 3 takes these practices into account and meets their requirements;
  • to modernise: many of the terms and principles in the old Civil Code were related to the rural and agricultural context of the time, making the Old Property Law either outdated or obsolete. Book 3 brings the Old Property Law into the 21st century. Furthermore, modern-day life has brought with it new circumstances that were not covered under the Old Property Law. In order to deal with these circumstances, new concepts (such as volume ownership) have been incorporated into the New Property Law;
  • to increase flexibility: there is a delicate balance between legal certainty and contractual freedom. Book 3 ensures a large degree of contractual freedom. The provisions it contains are suppletive, unless the Civil Code explicitly provides otherwise. However, it is worth noting that the articles defining rights in rem and their duration are imperative and must be respected under penalty of specific sanction or requalification;
  • to internationalise: some principles of foreign law had not been integrated into the Old Property Law. Book 3 integrates these laws and applies a thorough comparative law approach.

2.     Temporal scope and transitional provisions

2.1.  The deferred effect principle and its exceptions

Book 3 is applicable to all legal acts and legal events that take place after the 1 September 2021 (the deferred effect principle [regel van de eerbiedigende werking / règle de l’effet différé]).

Unless otherwise agreed by the parties, the New Property Law will not be applicable to:

  • future consequences of legal acts and legal events that took place before 1 September 2021;
  • legal acts and legal events that take place after 1 September but which refer to a right in rem that was established before that date (e.g. for a right in rem established by a private agreement concluded before 1 September 2021 for which the notarial deed will be executed after 1 September 2021).

2.2.  Extension vs. renewal

  • If a right in rem agreement established under the Old Property Law is extended after 1 September it will remain under the Old Property Law.
  • If a right in rem agreement established under the Old Property Law is renewed after 1 September, this will cause it to fall under the scope of the New Property Law.

3.     Practical impact

3.1.     Changes to the closed list of rights in rem

Book 3 states that only the legislator can create rights in rem. It also limits rights in rem to the following legal figures :

  • property rights (eigendomsrecht / droit de propriété);
  • co-ownership rights (mede-eigendom / copropriété);
  • rights in rem of use:

o   easements (erfdienstbaarheden / servitudes);

o   usufructs (recht van vruchtgebruik / droit d’usufruit);

o   long-term leases (erfpachtrecht / droit d’emphythéose);

o   building rights (opstalrecht / droit de superficie).

  • collateral security rights:

o   special privileges (bijzondere voorrechten / droits de préférences);

o   pledges (pand / sûreté);

o   mortgages (hypotheek / hypothéque); and

o   retention rights (retentierecht / droit de rétention).

It is worth noting that:

  • co-ownership is now a right in rem;
  • the right of use (zakelijk gebruiksrecht / droit d’usage) is no longer included in the list of rights in rem.

3.2.     Establishment of volume ownership

Until 1 September 2021, the date that Book 3 enters into force, volume ownership was not allowed. The only way to build up a volume over another volume was through a building right, or through owners waiving accession rights, but both of these options were limited to 50 years.

The concept of volume ownership is reflected in the new concept of building rights provided in Book 3:

  • Article 3.177 of Book 3 explicitly defines building rights as rights in rem of use and guarantees ownership of volumes, built or not, in whole or in part, on, above or below another’s land, for the purpose of maintaining any works or plantings;
  • Article 3.180, 2° of Book 3 allows parties to create perpetual building rights for a complex to be divided into volumes and or for a heterogeneous real estate complex comprising several volumes which may have autonomous and diverse uses and which have no common parts between them.

Different volumes can now be qualified as separate units and perpetual building rights can now be established for these separate units. This means that it is no longer possible to apply forced co-ownership for these volumes.

3.3.        Flexible periods for long-term lease and building rights

Under the Old Property Law, the minimum period for a long-term lease right was 27 years. From 1 September, this term will be reduced to a minimum of 15 years. The maximum term of 99 years remains unchanged. However, Book 3 specifies that long-term lease rights can now be perpetual if they are vested for the purposes of public domain property (openbaar domein/domanialité publique);
With regard to building rights, neither the Old Property Law nor the New Property Law requires a minimum term. However, the maximum term will be increased from 50 to 99 years and, according to Book 3, long-term lease rights will be considered perpetual in two situations:

o   if they are vested for the purposes of public domain property;

o   if they are vested to allow for a complex to be divided into volumes or for heterogeneous property complexes comprising several volumes which may have autonomous and diverse uses and which have no common parts between them.

3.4.     Modernisation of usufructs for companies

Although usufructs are often settled in a family context, they can also be the subject of corporate transactions. The usual maximum term for a usufruct vested to a legal entity under the Old Property Law was 30 years. Book 3 extends this maximum term to 99 years.
A usufruct granted to a company must always be related to the ‘life’ of the company, which means that usufructs usually end when companies are dissolved. The dissolution of a company can be caused by (i) bankruptcy or (ii) a voluntary, legal or judicial dissolution. A merger or (partial) merger will not lead to the end of a usufruct as technically the company still exists.

3.5.     Transferral of an assignor’s joint and several liability for rights in rem

In the event that rights in rem of use (e.g. a long-term lease) are transferred, the assignor will remain jointly and several liable along with the assignee of the right in rem of use even after the transfer has taken place.

3.6.     Codification of neighbours’ relations

Book 3 covers ‘neighbour nuisance’, ‘shared separations’ and ‘easements’ under a single title ‘neighbours’ relations’;
A notable update to this chapter comes under the right to access a neighbour's property in order to carry out work on one’s own property.

The right of ‘maintenance easement’ (ladderrecht / servitude de tour d’échelle) had already been established under the Old Property Law allowing parties to carry out repairs and execute maintenance works from a neighbouring parcel (e.g. maintaining a hedge or a wall). However, the right had not been sufficiently defined. The definition has been extended under the New Property Law to include construction work, on the condition that this work is carried out in the least intrusive manner.

We would be very happy to assist you with any matters regarding the implementation of this new set of rules. Should you have any questions or queries, please contact your regular contact at PwC Legal or a member of the private real estate team.

 

François de Montpellier, Partner, PwC Legal BV/SRL

Olivier Charlier, Senior Associate, PwC Legal BV/SRL

Katrien Antonis, Senior Associate, PwC Legal BV/SRL

 

Voir aussi : PwC Legal

[+ http://www.pwclegal.be]


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