Week 5

what does physical ownership overtime transforms to?

• possession over time

• transforms into formal legal ownership

• through acquisitive prescription

What is the main problem with acquisitive perscription?

• when someone maintains exclusive control over land / movable object for years

• at what point should the law bar the original owner from reclaiming it?

basic rule for prescription DCFR

• art. VIII - 4:101(1)

acquisitive prescription defintion DCFR

owner possessor acquires ownership by continuous possession

is acquisition a new ownership title or derivative?

• acquisition is original, not derivative

• ownership is not transferred from the previous owner

• instead a new ownership title is created by operation of law

3 cumulative requirements for acquisitive prescription

1. Owner-possession = holding physical control with the intent to act as the owner (animus domini)

2. Continuous possession = uninterrupted possessory control throughout required timeframe

3. Specified period of time = exercising duration for duration mandated by law

what type of possessors can never qualify for acquisitive perscription?

• limited right possessor (tenant, borrower)

• can never obtain ownership through acquisitive prescription no matter how many years pass

• because they acknowledge another party’s supperior right

when is possessor in good faith in DCFR acquisitive perscription

• art. VIII - 4:101(2) DCFR

• possessor is in good faith if they:

  • honestly believe that they are the owner

  • and that they are reasonably justified in that belief

is good faith presumed or not?

good faith is presumed by law until proven otherwise

what is the exception to good faith?

• land register exception

• when dealing with registered immovable land

• a person cannot claim good faith if an inspection of the land would have revealed they were not registered owner

what do specified time limits vary upon (art. VIII - 4:101)

• time limits vary depending on good faith

• good faith possessor = 10 years continuous possession = ownership

• bad faith possessor = 30 years = ownership

the thief exception

• art. VIII - 4:101(3)

• a thief who acquired possession by theft or illegal acts is strictly barred from acquisitive prescription

• regardless of how much time passes

Difference between bad-faith and thief exception

thief exception = originates from a criminal activity

bad faith = if person does not honestly believe they are the legal owner or are not reasonably justified in that belief (possession did not originate from a criminal act)

Human rights and original owner in acquisitive prescription

conflict

• stripping original owner of their title after a statutory period

• interferes with their property rights under art. 1 ECHR

Oxford Ltd and another v UK

facts

• a squatter acquired valuable agricultural land under english adverse possession, without paying compensation

reasoning ECtHR

• no violation of human rights

• if they satisfy public interest + proportionality requirements

ECHR proportionality

3 requirements

1. Lawfulness = prescribed in law

2. Public interest = legitimate aim

3. Proportionality = fair balance between individual property protection and social interest

ECHR margin of appreciation for limitation periods and property registration (+art)

• wide margin of appreciation

• contracting states enjoy broad discretion to design their own domestic limitation periods and property registration regimes

• art. 1 prot. 1 para 2

Limited proprietary rights

• establish a direct legal relationship between a person and a thing

what type of rights are limited rights?

• erga omnes = binding to everyone, enforced against 3rd parties

• core property principles apply

Limited propietary rights in DCFR

• art. VIII - 1:204

• categorizes limited rights into 4 main types:

1. Security rights

2. Rights to use

3. Rights to acquire

4. Trust related rights

Security rights DCFR

• book (IX)

examples of security rights

• mortgages

• pledges

• charges

rights to use examples

• usufruct

• servitudes

• building rights

rights to acquire

• art. VIII - 2:307

Trust related rights (what are they + where to find them DCFR)

• propietary rights under trust related rights

• book X

What is the DCFR approach to limited rights

• presupposition of national law

• DCFR has comprehensive rules for security rights (Book IX)

• but otherwise defers to national property law for classical rights of use

Dutch law on limited rights (art)

art. 3:98 DCC

• all statutory provisions governing transfer of property apply mutuatis mutuandis to establishment of transfer and relinquishing of a limited right

mutatis mutandis

with necessary adjustments

3 elements required for creation of limited right under dutch law

1. Valid legal title

2. Right to dispose

3. Delivery / formal creation

Usufruct

• a limited real right (in rem) that grants a person the legal right to use and enjoy property belonging to another person

• as well as to collect the fruits (income or yields) produced by that property, without destroying or altering its essential substance

usufruct in german law

§1032

• requires physical delivery of item

• real agreement that usufruct is to lass

security rights

a type of limited proprietary right granted over an asset to secure the performance of a debt or monetary obligation

commercial purpose of priority principle

• if debtor fails to repay or goes bankrupt

• the holder of the security right can enforce their right against that specific asset

• this satisfies their claim before general unsecured creditors

security rights in DCFR registration system

1. Creation = granting a security right between a debtor and a secured creditor (art. IX - 2:101)

2. 3rd party effectiveness = making the security right binding against 3rd parties through public registration in a European register or taking physical possession (art. IX - 3:101)

retention of ownership

when a seller delivers goods to a buyer but retains ownership until purchase price is paid in full

NL retention of ownership

• art. 3:92 DCC

• Delivery occurs under a suspensive condition

• The buyer gets physical possession and an expectant right, but the seller stays owner

• Ownership shifts automatically to the buyer the exact moment the purchase price is paid in full

Germany retention of ownership

• §449 BGB

• The buyer gets physical possession plus a strong, protected real right called an expectant right, which the buyer can even pledge or sell

France retention of ownership

• 2367 FCC

• French law is normally consensual

• Art. 2367 CC acts as an exception that pauses/delays this transfer until full payment

functional security right DCFR

• art. IX - 1:104

• Any right or title device

• regardless of its contractual form or name

• that functions economically to secure the performance of an obligation using a movable asset

registration and grace period DCFR

• art. IX - 3:107

• to remain effective against 3rd parties, seller must register the retention clause within a 35 day period following delivery

superpriority DCFR

• art. IX - 4:102

• seller with timely registered retention clause gets superpriority over earlier general bank inventory mortgages

conflicts between book IX and book VIII?

• book IX security provisions take precedence over book VIII