week 5 acquisitive prescription, limited rights and security rights

What is acquisitive prescription

Acquisitive prescription is a mode of original acquisition through which an owner-possessor acquires ownership by possessing a good continuously for a specified period.

requirements under Article VIII.-4:101 DCFR?

Under Article VIII.-4:101 DCFR:

10 years: Continuous owner-possession in good faith.

30 years: Continuous owner-possession regardless of good faith, provided the possessor did not steal the good.

Good faith means genuinely believing that one is the owner and being reasonably justified in that belief. Good faith is presumed unless the original owner proves otherwise.

What are the rules on acquisitive prescription under Dutch

- Article 3:105(1) DCC: A person possessing property when the owner's right of action to terminate possession expires acquires ownership, regardless of good faith.

- Article 3:306 DCC: The right of action to terminate possession prescribes after 20 years.

- Article 3:99 DCC: A good-faith possessor acquires movables after 3 years and other property after 10 years.

- Possession must be outwardly apparent, demonstrating that the possessor acts as owner, for example by building a fence.

What are the rules on acquisitive prescription under German law?

German law — § 937 BGB:

A person acquires ownership of a movable after 10 years of proprietary possession in good faith. If bad faith exists at acquisition or is discovered later, acquisitive prescription is excluded.

How is continuous possession and good faith established under the DCFR?

Under Article VIII.-4:101 DCFR:

- Continuous possession: Presumed if the acquirer proves they were an owner-possessor at both the beginning and the end of the prescription period.

- Good faith: The possessor believes they are the owner and is reasonably justified in that belief.

- Presumption: Good faith is presumed unless the original owner proves otherwise.

Can a thief acquire ownership through acquisitive prescription under the DCFR?

No. Under Article VIII.-4:101(3) DCFR, a thief is explicitly excluded from acquiring ownership through acquisitive prescription.

However, the Dutch rules in Articles 3:105 and 3:306 DCC provide for acquisition after the 20-year period regardless of good faith.

How does Article 1 of Protocol No. 1 ECHR protect original owners against acquisitive prescription?

Article 1 of Protocol No. 1 protects the peaceful enjoyment of possessions.

To assess whether acquisitive prescription violates this protection, it is necessary to determine:

1. Whether the property constitutes a possession.

2. Whether the interference amounts to deprivation of property or control of its use.

3.Whether the measure is prescribed by law.

4. Whether it pursues a legitimate public-interest aim.

5. Whether it is necessary and proportionate, including whether a less intrusive alternative exists.

6. Whether a fair balance is struck between the public interest and the original owner's rights.

The measure must not impose an excessive or unfair burden on the original owner.

What did the ECtHR Grand Chamber decide in J.A. Pye v UK?

The Grand Chamber found no violation of Article 1 of Protocol No. 1.

The 12-year adverse-possession regime was considered:

- A control of the use of property.

- A measure pursuing a legitimate general-interest aim.

- A measure striking a fair balance between the public interest and the original owner’s rights.

States have a wide margin of appreciation when regulating property in the general interest.

Can an original owner claim damages against a thief who acquires land through acquisitive prescription under Dutch law?

Yes. According to the Dutch Supreme Court ruling described in the notes, an original owner can bring a tort claim against a thief within:

- 5 years of discovering the loss; or

- A maximum period of 20 years.

The judge may award damages in the form of returning the acquired property.

What are limited proprietary rights, and what principles apply to them?

Limited proprietary rights concern the relationship between a person and a thing. They encumber the owner’s full authority over the property.

They have erga omnes effect, meaning they can be invoked against the world, including against the owner.

Relevant property law principles include:

Nemo plus

Prior tempore

Numerus clausus

Droit de suite

Which limited proprietary rights does Article VIII.-1:204 DCFR recognise?

Article VIII.-1:204 DCFR recognises:

1. Security rights.

2. Rights to use.

3. Rights to acquire.

4. Trust-related rights.

The DCFR presupposes national limited rights and protects security and trust-related rights within its framework as described in the notes.

How are limited proprietary rights established under Dutch law?

Under Article 3:98 DCC, the rules governing the transfer of full ownership apply mutatis mutandis to the establishment or transfer of limited proprietary rights, unless the law provides otherwise.

Article 3:84 DCC requires:

1. A valid legal basis or title.

2. The right or authority to dispose of the property.

3. Delivery.

How is usufruct created over a movable under German law?

Under § 1032 BGB, creating a usufruct over a movable requires:

1. Agreement between the owner and recipient that the usufruct is intended to pass to the recipient.

2. delivery of the movable by the owner to the recipient.

What are the three methods of creating security rights under Article IX.-2:101 DCFR?

1. the security provider actively creates a secruity right

- clearly specified and identified

- right to dispose

- contract granting the security right

- parties mututally agree on its creatioin under ix-2:105

2. creditopr retains a security rught when trasnfering the asset

3. the secured creditor relies on retention of onwership

When is a security right effective against third parties under the DCFR?

under art ix-3:101 and ix-3:102 dcfr, a secuirty right must be made effective to poretc it against competing rights, certain creditors and bankruptcy trustees.

this can be done by

1. registration in a public register

2. possession of tangible goods by the creditor or an agreen third party

3. control of intangible asstes by the creditor.

general priority rule between competeing secuirty right s

priority between competing secuirty rights over the same asset it determined by the

1. chronological order of regsitration / effectiveness

2. following prior tempore princple

use these two factors unless superpriority applues

registration

the relevant time when registration becomes visibble in the european register. if reg occurs in advance of the final security agreement or acquisition of the asset, the advance registration date applies

effectiveness

The relevant time is when the right becomes effective against third parties through possession or exercise of control

consequences:

- A younger effective right takes priority over an older inffective right

- an older ineffective right takes priority over a younger ineffective right

What is superpriority

a purchase- money retention of ownership device registered within the 35 day grace oeriod recives superprioirty

it takes priority over other secuirty right or limited propreitary rights over the encumbered good, even if those other rights were registered earlier.

How is priority maintained when an encumbered asset is used to produce new goods, combined, or commingled?

Under Article IX.-4:103(1) DCFR, priority is maintained when an encumbered asset is used to produce new goods, combined with other assets, or commingled, provided the existing security right legally extends to the security provider’s rights in the resulting asset.

Without a valid extension, the security right may terminate when the original asset ceases to exist.

what happens to a security right when the encumbered asset ceases to exist?

Under Article IX.-6:101(1)(c) DCFR, a security right terminates if, and to the extent that, the encumbered asset ceases to exist.

For example, the security right may terminate when raw materials are consumed or processed without a valid agreement extending the security right to the resulting goods.

Does retention of ownership automatically extend to newly produced or combined goods under the DCFR?

No. Under Article IX.-2:308(2) DCFR, an extension requires an explicit contractual agreement between the seller and purchaser.

Where the parties agree to extend the security right, it becomes a limited security right in the newly produced or combined goods, not full ownership of the finished product.

Can German and Dutch law extend retention of ownership to newly manufactured goods?

German law: Yes. Parties can deviate from statutory specification rules and extend retention of ownership to manufactured products through a processing clause.

Dutch law: No. Under Article 5:16 DCC, production rules are mandatory and objective. A seller cannot contractually extend retention of ownership to newly produced goods.

How does the DCFR treat retention of ownership?

Under Article IX.-1:104 DCFR, retention of ownership is functionally recharacterised as a proprietary security right, rather than absolute retained title.

Consequently:

Security-right rules apply.

Registration is required to make the right effective against third parties.

If the interest is not registered, it cannot be asserted against a bankruptcy trustee as described in the notes.

Retention of Ownership

German law — § 449 BGB:

Dutch law — Article 3:92(1) DCC:

French law — Article 2367(1) Code Civil:

What is superpriority for retention of ownership, and how does it affect competing rights?

Under Articles IX.-1:201(3) and IX.-4:102 DCFR, a purchase-money retention-of-ownership device registered within the 35-day grace period receives superpriority.

This means the transferor's claim takes priority over other pre-existing or future security rights or limited proprietary rights over the encumbered good, even if the competing rights were registered earlier.