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Article 654. Notion of superficies

(1) A right of superficies is an immovable proprietary right to possess and use the land of another for the purposes of building and exploiting a construction of the superficiary, on and under the land, or to exploit an existing construction of the superficiary.  This right is transferable, heritable, and may be leased.
(2) Unless otherwise provided for, a right of superficies may be exercised only over the built surface or the surface on which the construction will be built, as well as over the surface not built but necessary, according to the nature or destination of the construction, for its normal exploitation.
(3) The scope of the right of superficies to use the encumbered land is established by contract or law. In absence of contrary contractual terms, the land is encumbered by a servitude necessary to exercise the right of superficies. The servitude is extinguished when the right of superficies is extinguished.
(4) The rules on ownership over immovable property apply mutatis mutandis to the right of superficies unless the law provides otherwise.
(5) The construction is an essential part of the right of superficies. The ownership over the construction build on the land encumbered by the superficies is exercised by the superficiary as long as the right of superficies exists. In case if the construction was registered in the register of immovable property, the superficiary shall be shown as the owner of the construction as long as the right of superficies exists.
(6) A right of superficies may not be established under condition subsequent.
(7) A right of superficies may not be limited to a part of the construction.


Annotation:
Author: Octavian Cazac
Published: 3 September 2020 | Updated: 11 December 2020

I. Purpose of the article

1. Article 654 defines superficies as a limited proprietary right (jus in rem) over immovable property and characterizes the complex legal situation formed after the establishment of a superficies over a land.

2. Also, to maintain this legal concept, the Article contains certain conditions of validity of the superficies, as well as some of its legal characters (transferable, heritable, temporary).

3. A superficies is justified in particular when the purchase price of land for building is high.  An investor who wishes to build may avoid the cost of the land if, instead of purchasing it, it acquires only a superficies in the land. Then it only owes a ground rent.  Since the right of superficies is transferable, it may be mortgaged by the superficiary to secure a loan and finance its building works.  The advantage of superficies for the owner of the land is that besides the ground rent it is entitled to, it keeps the land as a good long-term investment (real estate investment), but, at the same time, the land is being developed and is used for residential or commercial needs of the community.  Superficies offers a special advantage to public authorities. If a public authority sells the land, it can no longer control if it and how it is developed. If, however, the public authority remains owner, in the superficies contract it may impose an obligation of the superficiary to build and even indicate specific details of the construction to be built (e.g. a stadium, a hospital) for targeted community needs [see Jan Wilhelm, Sachenrecht (De Gruyter Handbuch), 5. Auflage, De Gruyter, Berlin, 2016, p. 959, no. 2085].

4. Title to property of the public domain may not be transferred, but it can be encumbered by superficies (Article 7(3)(f4) of the Law No. 121 dated 4 May 2007 on Administration and Privatization and Public Property).  Superficies may also be established under a public-private partnership contract (Article 18(1)( f) of Law No. 179 dated 10 July 2008 on Public-Private Partnerships).

Illustration
Government Decision No. 360 dated 18 April 2018 on the hand over of a portion of land into superficies:
1. It is accepted to hand over in superficies to the LLC „Grand Oil” a portion of the land with the surface area of 0.2498 ha out of the land with cadastral number 0100308003, public propert of the State, Public Domain, used by the SA „Termoelectrica”, located in Chişinău, 3 Meșterul Manole Street, related to the contruction owned by LLC „Grand Oil”.
2. The Ministry of Economy and Infrastructura shall ensure the hand over in superficies of the portion of land specified in section 1  by entering into a superficies contract between SA „Termoelectrica” and LLC „Grand Oil” and will monitor the performance of the superficies contract and use of land conveyed into superficies.

For context, see the informative note of the draft Government decision.

II. Complex Immovables Ownership

1. Suspension of the Principle superficies solo cedit

5. The Civil Code adopts the principle superficies solo cedit, i.e. that all constructions and works located on land and underneath it are not immovable property, but rather are essential parts of the land (see annotation to Article 460 and the exceptions mentioned therein).  The same Article 460(4) recognizes a single temporary exception from this principle — the superficies.  Since superficies is by its nature a temporary right, it cannot be submitted that the principle superficies solo cedit is excluded; it is merely suspended.  From the time when the superficies legal relationship is established, the land remains an immovable property, and the construction or the work build or to be built becomes an immovable property (separate from the land and forms the subject-matter of proprietary rights of other holders).  This suspension ends once the superficies ends, and the principle reactivates. To this effect, Article 662(1) provides that a construction “from the date of establishment of the superficies, becomes ex legem an essential part of the land under Article 460, belonging to the owner of the land, and the right of superficies in respect of the land and building is to be deleted.”  So, ownership of the superficiary over the construction is not transferred to the owner of the land, but ends, the constructions ceases to be an immovable property distinct from the land, and becomes an essential part of the land and, therefore, belongs to the owner of the land.

6. Even if the legal definition mentions only “construction,” read in conjunction with the new Article 460(4), it must be interpreted broadly and includes any plantations or works which may be recorded in chapter B of the Register of Immovable Property.  The same understanding underlies Articles 27-29 of the Law on Putting into Operation of the Civil Code, which established statutory rights of superficies over certain lands as of 1 March 2019.

More recently, the fact that a plantation may be the object of superficiary ownership is provided by Article 4(41) of the Law on the Cadastre of Immovable Property, introduced by Law No. dated 20 July 2020 (in force as of 11 October 2020):

(41) Ownership over the permanent plantation is to be registered for a person other than the owner of the land only after registration of the right of superficies or concurrently with it, save for legal relationships arisen before 1 March 2019.

2. The Proprietary Rights of the Superficiary: 3 in 1

7. When a person wants to invest in the land belonging to someone else and build over it or plant something for the long term, it is advised that Article 460 opens the door for superficies alone.  A non-lawyer would ask: “What rights do I get then?”

Because the legal structure of superficies did not mature in private roman law, the continental legal systems have largely ignored it (e.g. the French Civil Code of Napoleon of 1804) or have given an insufficient regulation (BGB in 1896).  Due to pressure from developers and social need to build, in particular on public land, case-law (France) and legislation (in Germany, in the context of the real estate crisis following world war I, by way of the Gesetz über das Erbbaurecht dated 15 January 1919, abbreviated as Erbbaurechtsgesetz, ErbbauRG) have recognized and developed the modern right of superficies.  But, as with many other legal concepts, they took different legal shapes.  In the French system, after many debates and uncertainties [see Benoît Grimonprez, Superficie, Rep. civ., mars 2013], a dual approach was taken, where the superficiary holds both a right of superficies over the land and a superficiary ownership over the construction.  In effect, it is a legal dissociation of the immovable property.  The German system, on the other hand, adopted the monistic approach, i.e. a superficiary has only a right of superficies, which encumbers the land and, at the same time, an essential part of the right of superficies is the construction.  Hence, in the German system a superficiary is not treated as the owner of the construction but merely has a limited proprietary right over it [See §12(I)(1) ErbbauRG; Jan Wilhelm, op. cit., p. 959, no. 2083; still, another part of the German doctrine supports that the superficiary is the owner of the construction and limited right possessor, and direct possessor of the land, see Christiane Siemon, Zukunftsfähigkeit des Erbbaurechts Eine Analyse zur alternativen Möglichkeit des Immobilienerwerbs, Springer Fachmedien, Wiesbaden, 2016, p. 5]. It the recent German doctrine it has also been stated that the construction is not an essential part of the land, but “the construction if a part of the right of superficies, and the superficiary is the owner of the construction. Ownership to the land and to the construction are separated; ownership over the construction is inseparably connected to the right of superficies”  [see, Helmut von Oefele, Karl Winkler, Jürgen Schlögel, Handbuch des Erbbaurechts, 6., überarbeitete Auflage. 2016, C.H.BECK, München, §1, no. 28].

By selling the superficies, the superficiary sells to the purchaser both the right over the land and the right over the construction. The right of superficies is a right likened to the land (germ. — grundstücksgleiches Recht).  This German legal construct is assessed as succesful [see, e.g. А.И. Дорохов. Природа права на строение, возведенное на основании права застройки, по законодательству Германии и проекту ГК РФ. În: Опыты цивилистического исследования: Сборник статей, Вып. 3 / Рук. авт. кол. и отв. ред. А. М. Ширвиндт, Н. Б. Щербаков. — М.: Статут, 2019, p. 90].

8. Initially, the Moldovan Civil Code of 2002 took over the German statutes and, with them, the monistic approach.  This is in particular derived from Article 654(5), under which the construction is an essential part of the right of superficies.  It may appear contradictory that an object is included in the content of a right.  In fact, the initial approach of the German doctrine was that ownership over the construction was an essential part of the right of superficies.  But the final draft German law was slightly different — the construction (and not ownership in it) is an essential part of the right of superficies [Jan Wilhelm, op cit., p. 960, no. 2088].

Further, initially, the Moldovan Civil Code had no provision to clarify that the superficiary was an owner of the construction.  The dominant doctrine was also highlighting this and refused to recognize a superficiary as the owner of the construction, but was mentioning that “the value of the construction will be recorded on the name of the superficiary” [v. Sergiu Baieș. Nicolae Roșca, Drept civil. Drepturile reale principale, ed. a III-a, Chișinău, 2016, p. 220].

Contractual practice and that of the Register of Immovable Property created a common understanding (opinio juris communis) that the superficiary is the owner of the construction and must be indicated in this capacity in the register. The Law to Modernize the Civil Code has, beginning with 1 March 2019, consolidated this approach, and brought our civil law closer to the dual approach.  An important argument of the legislative policy was that in the national legal conscience the concept of “owner of the construction” is clearer than “superficies that contains the construction.” The current legal provisions do not however provide that the superficiary holds a classic, pure and simple, ownership over the construction, but one limited in time and scope.  Indeed, Article 654(5) (II) & III, and Article 460(4) are nuanced in that they do state that the superficiary is an owner, but rather that the superficiary “exercises ownership over the construction” and that it “will be indicated in the register as the owner,” and, in both cases, this status is temporary, as long as the superficies exists [comp. Article 956 of the Italian Civil Code].

9. Consequently, the French notion of “superficiary ownership” may be adopted in the Moldovan legal language to designate the nature of the rights of a superficiary.  Notwithstanding, it cannot be submitted that the national civil law adopts the French dual approach, because in the French system superficiary ownership may be perpetual, being a true kind of ownership, while in the Moldovan system — it is limited in time, and is more of a precarious ownership.

In conclusion, we suggest a hybrid approach, which combines the two approaches and fits the legal provisions contained currently in the Moldovan Civil Code: the superficiary is the owner of the construction for the duration of the right fo superficies.  Ownership over the construction is an essential part of the right of superficies.  This second statement is proven by a joint reading of Articles 654 and 464, which provide for the principle of confusion between immovable property and ownership over the immovable property.  A similar opinion is held by prof. Valeriu Stoica in Romanian law, who defines superficies as an immovable proprietary right, a dismemberment of ownership, which includes in its juridical content the ownership over the construction, plantations, and other works that are autonomous and of long-term, located on the land of another, as well the power of use [Valeriu Stoica, Drept civil. Drepturile reale principale, Ed. C.H. Beck, București, 2009, p. 238].

This approach is compatible with that contained in title 5.8 of the Dutch Civil Code.

The image below explains the complex structuring of rights when a superficies is established.

 

One of the advantages of this approach is that, if the superficiary, to obtain financing for a future construction, creates a mortgage over its superficies, it indirectly mortgages its expected ownership over the construction.  If and when the Register of Immovable Property will register the construction and ownership over it, the mortgage will encumber ex legem this ownership.

10. In this regime, the construction does not have two owners (that of the land and the superficiary), is not joint property; so, it is inconceivable that one of the parties to the superficies relationship seek partition, as they would in a scenario of co-ownership [v. Benoît Grimonprez, op. cit., no. 5].

Constanţa Obadă — Reflecţii asupra construcţiei juridice a dreptului de superficie, 2016

3. Object of the superficies

a) Land

11. Paragraph (7) requires that the entire structure be held by the superficiary as superficiary owner but does not prohibit that only a part of the land be encumbered by the superficies, while the other part of the same land remains free from the encumbrance.  The encumbered part of the land will be that on which the construction subject to superficiary ownership is or will be located.  Since the land is a single immovable property, it can be mortgaged only in its entirely, because it can be sold only entirely.   A mortgage can be established on the land regardless that a part of the land is encumbered by superficies and another part is not.  The purchaser of the mortgaged land as part of enforcement of the mortgage by the mortgagee will acquire the land in the form it was held by the former owner of the land (i.e. the mortgagor), namely with a part encumbrance with superficies (see Article 504).

b) Construction

12. The superficiary may have one or several constructions on the encumbered land, as well as a combination of constructions and works. This does not mean that its right to build is unlimited.  The instrument establishing the superficies may provide for limitations on the number and nature of constructions and works, up to a detailed presentation of the area, number of levels, and design of the premises. Even if the construction was made by the superficiary outside the limits imposed by the instrument establishing the superficies, it will entirely belong to the superficiary (and not the owner of the land).  This does not exclude the legal remedies of the owner of the land to seek demolition of anything that was built outside of the scope of the superficiary’s entitlement [for a discussion of the issue in German doctrine see Roland Böttcher, Praktische Fragen des Erbbaurechts. 9. Auflage, RWS Verlag, Köln, 2020, p. 5 et seq.].

Naturally, any construction must observe the limits imposed by public law, especially urbanism and construction authorization law.

4. Legal Characters

a) the right of superficies is an ownership over an immovable by way of assimilation

13. This is the meaning and effect of the rule under paragraph (4).  The right of superficies grants the superficiary basically all the powers of an owner: the right to build, to use, to modify, to demolish, to rebuild.  In addition, a right of superficies includes the right to use the land encumbered by superficies and which is not covered by the construction.  Not only the ownership of the building is dismembered from ownership of the land, but also, absent a stipulation to the contrary, the entire use of the land. The owner of the land is left, as long as the legal relationship of the superficies lasts, only with the economic use of the land by receipt of the rent, as well as the right to transfer ownership of the land or encumber it with limited proprietary rights ranking junior to the superficies. It has thus been stated that the right of superficies constitutes the most profound limitation of ownership of the land and, economically, is equivalent to ownership itself.  By the act to establish the superficies this large scope of rights granted by superficies could be restricted, thus leading to a different distribution of powers among the owner of the land and the superficiary [see. Helmut von Oefele, Karl Winkler, Jürgen Schlögel, op. cit., §1, no. 28].

b) Transferable

14. As superficies is, from an economic standpoint, viewed as complex ownership, the law tends to assimilate it to straightforward ownership, which, in its turn, is fully transferable.  However, paragraph (5) of this Article has the purpose of clarifying the legal regime of superficies by setting out that it is assimilated to the legal regime of ownership over immovable property.  This rule is the point of entry into the regime of the superficies of the new regulation on the non-transferability clause (Article 506 et seq.), which allows, under certain restrictive requirements, to set up a contractual prohibition to transfer in the contract for the establishment of the superficies, provided the prohibition is subject to a time limit of 49 years.

15. If a superficies is transferred under a sale contract, the owner of the land enjoys a right of preemption, which may be excluded (see annotation to art. 658(2)).

c) Temporary 

16. Superficies is by its nature a temporary proprietary right.  When establishing the superficies by contract the parties must agree on its time limit, otherwise the default rule of Article 655 sets out a time limit of 99 years as of the time when the superficies was established.  Therefore, no perpetual superficies may be established under Moldovan law.  In German law, a contract for the establishment of a superficies is not even valid if it does not specify a time limit [see §11(I)(1) ErbbauRG].  In French law a superficies can be perpetual, which is sharply criticized by scholars for economic considerations — a perpetual superficies sterilizes property [see Louis Josserand, Cours de droit civil positif français, 2e éd., 1932, Sirey, p 943]. It appears excessive for an owner of the land to renounce ad vitam aeternam, for the benefit of a developer, to the accession of constructions built on its land. What utility can a property offer if it surface can never again be exploited by the owner? What legal solutions are available for an owner to terminate a perpetual superficies when the superficiary has simply abandoned the land? [see Benoît Grimonprez, op. cit., no. 63].

Moldovan civil law avoids these challenges by imposing the temporary character of a superficies; perpetuity in respect of a property is, in substance, a sign of ownership (comp. Article 1253).

Obviously, nothing precludes that, in the contract establishing the superficies or in a separate contract, the owner of the land agrees to grant to the superficiary a discretionary option to purchase the land encumbered by the superficies, also known as call option (see Article 1001).  This structuring makes commercial sense in particular where the superficiary does not have, at the very outset of the project, the financing required to buy the land and hence obtains a superficies only; but it also gets an option to purchase in consideration of its plan to buy the land in the future, when financing becomes available.  If the land is part of the public domain, such an option to buy is not allowed unless the option to subject to the condition that the competent authority will transfer the land from the public domain to the private domain under the law.

17. By way of an exception, Article 29 of the Law to Put into Operation the Civil Code provides for the perpetual nature of a statutory superficies over land owned by the State or an administrative-territorial unit.  This policy choice had been adopted to avoid expropriation of owners of buildings (statutory superficiaries) following the expiration of a time limit of the superficies.  It was also hoped by the drafters that, in time, the statutory superficiaries will purchase the lands from the competent public authority so as to avoid any further payments of ground rent.

18. In its capacity as immovable proprietary right, a superficies is established when it is entered into the Register of Immovable Property.  A legal discussion exists on the question of the time when superficiary acquires ownership over the construction.  Normally, this ownership would also arise, under the general rule, when it was entered in the Register of Immovable Property.  A superficiary however holds an interest to sell its investment before the construction is ready and before ownership over it is entered into the Register.  From this perspective, the legal position that once a superficies is sold or mortgage (Article 658), the unfinished construction is deemed sold or mortgaged too.  An argument for this is that the right of superficies is the foundation of acquisition of ownership to the construction by the superficiary and the suspension of the principle superficies solo cedit. This solution is also supported by the hybrid approach taken by our law (as argued in no. 9 above), under which ownership over the construction is part of the right of superficies, and the sale or mortgage of the superficies alone covers any future construction to be built by the superficiary on that land.

Recommended citation: 
Octavian Cazac, Annotation to Article 654 [online]. Codul civil Adnotat [accessed on 5 August 2020]. Available at animus.md/en/annotations/654/
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