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Real Estate: New Standards of Superficies Right

Real Estate: New Standards of Superficies Right

Moldova
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The new version of the Moldovan Civil Code, which came into force pursuant to the Law to Modernize the Civil Code and to Amend Certain Legislative Acts 133/2018 (the “Law”), reformed several features of the private law and turned out to be a real challenge for all kind of individuals and organizations, from natural persons and entrepreneurs to public authorities.

The modernized Civil Code includes a significant innovation in the field of Real Rights. The starting point of the civil real estate relationship reform has been the return to the principle superficies solo cedit, meaning the immovable is deemed the plot registered in the Real Estate Register under a distinct cadastral number, upon which the things and any other objects firmly attached (the “Objects”) are a component part. Since March 1st 2019 the Law gives the Objects’ owners a superficies’ right over the plot, regardless whether they have a legal or contractual right of possession or use over the plot or not. Unless otherwise provided by law or contract, the owner’s right in rem covers only the use plot’s part necessary for exploiting the object registered separately in the Real Estate Register. The adjusted Law on the Implementation of the Civil Code compels the parties to negotiate and set the term of the superficies right, or have it be fixed by the court.

Inevitably, the new regulations are likely to increase the number of real rights lawsuits and overburden the Real Estate Register keeper.

A different approach exists for plots owned by the state or administrative-territorial units. Apart from private-to-private relationships, the owner’s legal superficies right over a plot owned by the state is deemed established for a period of 99 years. Except as provided by law, regardless whether the owner has concluded a tenancy agreement with the local public authorities or not, he becomes de iure a superficiary and is bound to pay state-regulated rent till the expiry of his ownership, unless its amount has not been set by contract.

By enhancing fluency in the relationship between Real Estate investors and public authorities, the reformed Civil Code facilitates the development of the Real Estate sector. Thus, investors have been exempted from the bureaucratically burdensome procedure of arranging legal relationships with the authority-landowners.

According to a Regulation-Project of the Chisinau Municipal Council that is about to be approved, local public authorities (LPAs) cannot urge owners to sign contracts granting a superficies right. For new contracts, LPAs have already conceived the main mandatory contract clauses in the new Regulation, such as: LPAs do not guarantee against eviction nor guarantee any characteristics of the plot; LPAs may require the demolition of any buildings or improvements made on the municipality plot at the termination of the contract, without paying any damages; the LPAs have the right to terminate the contract with three months’ notice; the LPAs have the right to unilaterally increase the amount of rent if it is required by the law. In the absence of a contract, the amount of the superficies rent shall be set by the LPAs’ decisions and charged to both the present owners and subsequent acquirers, unless the subsequent acquirers challenge the LPAs’ decisions in court. Also, a specialized municipal subdivision is assigned to develop and approve geometric plans for the plot’s parts encumbered with the superficies right. Nevertheless, the LPAs have not even nearly exhausted the solutions for real-life cases.

However, a problem occurs when an enterprise intends to change the legal relationship arising from a pre-existing tenancy contract into a grant of superficies right. Though the enterprise has a legally arisen superficies right, the LPAs will continue to keep the tenancy agreement in force until its expiration. Obviously, the enterprise should not be deprived of the superficiary’s legal privileges as long as the tenancy agreement remains effective. Amendments to the LPAs’ Regulation are thus required, and we have submitted an argumentative brief in this regard.

Summing up, assuming the parties concerned will comply with the legislative framework, the new regulations aimed at streamlining the real rights relationships will achieve their goal.

By Daniel Cobzac, Managing Partner, and Elena Vintea, Lawyer, Cobzac & Partners

This Article was originally published in Issue 7.6 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

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