Maltese property law: the emphyteusis contract
Section 1494 of the Maltese Civil Code (Chapter 16 of the Laws of Malta), defines emphyteusis as follows:
“The emphyteusis is a contract by which one of the contracting parties grants to the other, in perpetuity or for a time, a property for a certain annual rent or ground rent, which the second agrees to pay to the first, in money or in kind, as recognition of possession.
The emphyteusis is typical of continental (European) law and not of English law. It is very different from leasing or renting a house or land. This is due to the fact that, unlike the lease, the emphyteusis is a real right that is attributed to the land that is hired and not to the person who hires it. On the other hand, the lease, being a personal right, does not affect the land or the house that is granted, but only the person who receives the lease. The legal implications derived from these differences are considerable, especially with regard to the rights and obligations of the contracting parties.
The Emphyteusis contract must be made by public deed before a Notary Public. It would be void if it was done in private writing. The lease, on the other hand, may be entered into by private deed and shall have the force of law. The Emphyteusis contract cannot be modified during the entire emphyteutic period. Once ground rent is established, it cannot be changed.
Article 1494 establishes three key phrases that need to be clarified:
Yo. in perpetuity or for a time
There are two types of emphyteutic concessions: perpetual emphyteusis and temporary emphyteusis. The first is a payment that must be made annually with the legal option of redemption. Redemption turns the earth into freehold. Temporary emphyteusis, on the other hand, is a multi-year contract. (Usually in Malta the most popular number of contract years is 17 years, 21 years, 99 years and 150 years.)
ii. declared annual rent or ground rent
The ‘canone’ or land rent must be included in the contract, under penalty of nullity, and must be paid annually to the dominus, that is, to the owner of the house.
iii.
The user acknowledges the fact that he can legally enjoy that property and must recognize the dominus as the real owner of said property.
The Emphyteusis contract is a sui generis contract whereby the dominus, who is the true owner of the property, is temporarily deprived of all his property rights. Said rights and obligations are transferred to the ‘utilista’, the person who enjoys said concession, during said period. At the expiration of the contract, the property, with all the improvements made on it, will revert to the dominus and there will be no right to extend the Emphyteusis.
In the old days, landowners used to give emphyteusis to farmers who took care of the land. Sometimes the pact was that as recognition, instead of paying money, the farmer gave the dominus part of the product, harvest or fruit that the land produced.
The rights and obligations of property are, during the execution of the Emphyteusis, conferred on the utility and not on the actual owner. Article 1507 establishes that the user is obliged to comply with any obligation imposed by law on the owners of buildings or land. This demonstrates the responsibility that the user has regarding the maintenance of the property. He must treat such assets as if they were his own. However, if the fulfillment of said obligation implies a considerable expense, the utility company can request before the First Chamber of the Civil Court that the dominus be forced to contribute with a part of the expense. In such a case, the court will take into consideration, first, the emphyteusis contract entered into by the parties, the remaining term of the concession, the amount of ground rent and other circumstances pertinent to the claim.
The utilitarian has a very broad right to dispose of the goods that he has under Emphyteusis; he can dispose of the emphyteutic property by means of a public deed, which can be acto inter vivos, that is, made during his life, or causa mortis, that is, made after his death, in this case, by means of a will. The utility can sell the Emphyteusis to a third party for a specified amount of money. Obviously, she will sell the rest of the emphyteutic period. In addition, he can regrant the property under Emphyteusis, known as sub-Emphiteusis, in which case, he himself will be receiving land rent.
Such alienation of assets does not require permission or consent of the dominus, in either case. In addition, the rights and obligations of the utilita, after the transfer, will be transferred to the new utilita or sub-emphytheuta. The latter will only become the new utility after the dominus has recognized it. Unless the new utility is known to be incapable of meeting its contractual obligations, the dominus cannot refuse to acknowledge it. In the event that the dominus refuses to recognize the new utility, it will continue to be personally linked to the first for the payment of ground rent.
During the period of execution of the Emphyteusis, the owner has the right to “modify the surface of the property, provided that it does not cause any deterioration thereof” (article 1506 (2)). Therefore, if the user would like to build more or add more to the already existing structures on the land, he can do so. Furthermore, he is entitled to any ‘hidden treasure’ he may find on said property. The dominus is not entitled to a share.
Upon expiration of the Emphyteusis, the utility is required by law to return the land or property with all the improvements made throughout the years during which the property was under the Emphyteusis.