1. Superficies solo cedit

 With effect from January1 , 2014, Act No. 89/2012, the Civil Code, introduced the principle of superficies solo cedit (“the surface yields to the ground”), according to which anything firmly attached to the ground, including a structure, becomes part thereof (structures built on another person’s land up to December 31, 2013 are exempt from this principle).

This principle is entirely at odds with the previous situation because, before, it was possible for an owner of land and an owner of a structure on that land to be different persons. Over the effect of the Civil Code, a landowner has been the owner of any structure firmly attached to his land, regardless of who built it.

3. Right of superficies

In this respect, under the Civil Code, it is impossible for the owner of a structure to be anyone other than the landowner, even if the two parties expressly agree otherwise. As this situation can be impractical in certain cases, Section 1240 of the Civil Code has introduced a new concept, the right of superficies (“právo stavby” in Czech), which makes inroads into the principle of superficies solo cedit.

It is by way of this right of superficies that a landowner entitles another person to have a structure on or below his land. This may be an existing structure or a future structure (i.e. the right to build a structure on someone else’s land). A right of superficies constitutes a separate immovable property and is entered as such in the cadastral register. The right of superficies is established when it is entered in the cadastral register.

However, a distinction needs to be made between a structure per se and the right of superficies. A structure is only a part of a right of superficies and expresses the fact that the holder of that right is authorised to treat the structure as the owner thereof. In other words, a holder of a right of superficies does not own the structure per se, but is merely entitled to have a structure on someone else’s land, and has the same rights to that structure as though he were its owner.

One of the important restrictions of a right of superficies is that it is temporary. The right of superficies can only ever be negotiated temporarily, up to a maximum of 99 years. When the agreed time is up, the right of superficies is extinguished and the structure becomes part of the land. However, unless otherwise agreed by the parties, the landowner must offer the holder of an expiring right of superficies compensation equal to half the value of the structure.

Over the duration of a right of superficies, it may be treated as any other immovable good, i.e. it can be sold, gifted, pledged, inherited, etc.

Another important aspect of the right of superficies is the fact that the landowner and the right-holder have mutual statutory pre-emptive rights in relation to each other. If the landowner wishes to sell his land to a third party, he must first offer it to the holder of the right of superficies under the same terms and conditions, and vice versa.

3. Establishing a right of superficies

The most common way to establish a right of superficies is to enter into a contract, which must always be drawn up in writing.

The right of superficies may also be obtained by usucaption, requiring uninterrupted possession for 10 years. However, the right of superficies based on usucaption is limited to 40 years. Once 40 years have elapsed since usucaption, the right of superficies is extinguished.

A right of superficies may be established for consideration (as a lump sum or a recurring amount) or free of charge.

As a right of superficies is an immovable good, it is subject to real estate acquisition tax if established for consideration, or to income tax if provided free of charge.

4. Summary

 A right of superficies is certainly an intriguing concept suitable in situations where a landowner is reluctant to sell his land but is willing to allow someone else’s structure to stand on it for a certain period, with that structure becoming part of the land – and hence property of the landowner – after the right of superficies is extinguished.

In this respect, the temporary nature of a right of superficies and the related assumption of ownership of the structure by the landowner following the extinguishment of that right need to be borne in mind.

Accordingly, in a contract establishing the right of superficies, one of the areas requiring particular attention is the designation of the amount of the consideration to be paid (the “structure charge”), with due consideration for the fact that ownership of the structure will change when the right is extinguished. Another important aspect is the settlement following the extinguishment of the right of superficies, because, unless otherwise agreed, the landowner is required to pay the right-holder half the value of the structure.

Here, for example, a lower structure charge may be negotiated with the proviso that, on extinguishment of the right, the landowner will pay either lower or no compensation (i.e. over the duration of the right of superficies, he receives less money, but will then acquire the structure more cheaply when the right expires) or, conversely, the terms and conditions of the right may be regulated to suit the needs of both parties.

If you are weighing up whether to establish a right of superficies, either as a landowner or an investor, we recommend contacting a law firm to help you set up the conditions of this relationship according to your wishes and to protect you from the potential legal risks of not making professional arrangements.

For more information, please contact our office’s partner, Mgr. Jiří Kučera, e-mail:jkucera@kuceralegal.cz ; tel.: +420604242241.