Usufruct, Surface Rights, and Security Interests in Spanish Civil Law

Posted on May 4, 2024 in Law & Jurisprudence

ITEM 14: Usufruct

Legal 57. Régimen of Repairs and Improvements to the Usufruct

Repairs

Ordinary repairs: These are required due to damage from the natural use of things and are essential for their conservation (e.g., changing light bulbs, maintaining heating). The usufructuary is obligated to make ordinary repairs (500 CCi) but is not liable for damage resulting from normal use that cannot be avoided by such repairs (481 CCi).

Extraordinary repairs: These do not arise from natural use but do not put the thing at serious risk of destruction (e.g., a crack appearing in a load-bearing wall). The owner is required to make extraordinary repairs and, if they do so, may require the usufructuary to pay the legal interest on the amount invested. If the owner does not make indispensable repairs, the usufructuary can make them and is entitled to require the owner, at the end of the usufruct, to pay the increase in value the thing would have had if the works had been done. If the owner refuses to pay, the usufructuary is entitled to retain the thing to recover the costs (501 and 502 CCi).

Improvements

“Useful or recreational” improvements (seemingly including both the improvement itself and spending on accessories of pure luxury, pleasure, or adornment) can be made by both the usufructuary and the owner, as long as they maintain the fit and substance of the thing and do not prejudice the rights of the other party (487 and 503 CCi). However, there is no right to compensation for the one who makes them. The beneficial owner is expected to remove the elements of the improvement at the end of the usufruct, if this can be done without detriment to the property (487 CCi final), and offset these improvements against any defect for which they are responsible due to a breach of the duties of care contained in Articles 481, 497, and 498 CCi (488 CCi).

58. Destruction of the Building Located on the Estate in Usufruct: Regulation of Compensation and Liability Insurance

If the land is primary and the building is the only accessory, the usufruct remains on the soil and waste materials (517, para. 1, CCi).

If the land is a mere support of the building, which is the main element of the usufruct, the rule is the same. However, if the owner wants to rebuild, they are entitled to occupy the land and materials, and are liable to pay the usufructuary, during the usufruct, the interest on the value of those elements. The beneficial owner shall have no right to the reconstructed building and land (517, para. 2º CCi).

In the case of liability insurance on the building, according to Article 518 CCi:

• If both the owner and the beneficial owner paid the premium, the compensation goes to the owner, but the usufructuary has a right to the new building, if reconstructed, or to the interest on the compensation if the owner decides not to rebuild (as long as the usufruct lasts).
• If only the beneficial owner paid the insurance cost, they are entitled to the compensation, but with the obligation to reinvest it in rebuilding, if the owner is interested, and the right to remain in the enjoyment of the rebuilt property (as corresponds to the destroyed building, not a building of higher volume and expense of the owner).
• If only the owner paid the insurance cost, the usufructuary has no right to compensation, but only as provided in Article 517 (the usufruct continues on the soil and materials, or they receive the interest on the value of such assets if the owner chooses to rebuild).

59. Causes of Extinction of the Usufruct

Article 513 of the CCi lists the following causes of extinction of the usufruct:

1. Death of the usufructuary.
2. Expiration of the term or fulfillment of the resolutory condition.
3. Renunciation of the usufructuary.
4. Total loss of the thing in usufruct.
5. Consolidation, or the meeting of the usufruct and ownership in one person.
6. Prescription.

UNIT 17: The Right of Surface

60. On the Right of Surface

Concept

According to 40.1 TRLS, “The right of surface is a real right attributed to the surface owner that grants the right to construct buildings or structures on the ground and in the airspace above and below a foreign land, while maintaining temporary ownership of the building or construction. The right can also be constituted on already completed buildings or structures, or on dwellings, premises, or private elements of buildings or structures, attributing temporary ownership of the surface rights thereof, without prejudice to the separate ownership of the land.”

Hierarchy between CT and Legal Regulation

According to 40.4 TRLS, surface rights are governed by the provisions of Chapter II of Title V of the text itself, by civil law in matters not covered by it, and by the title deed of the right.

Requirements for the Establishment of the Right

Under 40.2 TRLS, to make the right effective, it requires formalization in a public deed and registration in the Land Registry.

Maximum Duration

According to 40.2 TRLS, the maximum duration of the right of surface is 99 years.

Causes of Extinction

Expressly mentioned causes of extinction include: failure to construct in accordance with regional and town planning regulations within the period stipulated in the title deed, and termination of the term of the right (41.5 TRLS).

ITEM 18: Security Interests and the Pledge

61. Common Characteristics of the Mortgage and the Pledge

1. Accessoriness: According to the CC, security interests must be established to ensure the fulfillment of a principal obligation.
2. Indivisibility: The security interest remains intact even if the debt or credit is divided (CC), or if the guarantee covers several things (123 LH).
3. Difference between the constitution of real rights and the promise of their establishment: The latter only produces a personal action between the contracting parties (CC).
4. Nullity of the Lex Commissoria: Agreements whereby the creditor automatically becomes the owner of the things covered by the guarantee upon breach of the secured obligation are null and void (CC).
5. Power of Sale: The holder of the security interest has the power to promote the forced sale of the property and the privilege to collect their debt from the amount obtained before other creditors of the debtor (LECI and DC).

61 BIS. Legal Differences between the Pledge and the Mortgage

In addition to the differences in prescription periods, other key differences include:

• Object: The object of a mortgage is real estate, while the object of a pledge under the CCi is movable property (compare Articles 1874 and 1864 CCi).
• Constitution: A mortgage requires a public deed and registration in the Land Registry, while a pledge requires the transfer of possession of the pledged object to the creditor or a third party chosen by agreement between the creditor and the owner of the thing pledged (compare Articles 1875 and 1863 CCi).
• Execution: In the absence of an express agreement, the execution of a mortgage cannot be carried out through the creditor’s own agency, while this is possible for a pledge (compare Articles 129 LH and 1872 CCi).

62. Irregular or Bond Pledge: Does it Convey Ownership?

The irregular pledge is used for fungible things, particularly sums of money (bail). Its uniqueness lies in the fact that, to fulfill the obligation, it does not make sense to proceed with the forced sale of the pledged amount. Instead, compensation is operated by offsetting the creditor’s claim with the amount pledged by the owner.

The CC does not contain any provision suggesting that, in this case, the ownership of the pledged amount is transferred to the secured creditor. Article 1859 CC, which prohibits the pledgee from appropriating or disposing of things given in pledge, applies without exception. Nor can the creditor be considered a custodian with the power to use the pledged amount, as the analogy to Article 1859 CC is unsustainable and the articles of the CC are absolute in prohibiting the depositary from using deposited things without the depositor’s permission.