From the Latin, superficies means the upper part of something that is placed on the ground or attached to the ground, usually a building that is erected on the land of a third party.
It was therefore created on the basis of the use (site) of public land, a right 'created' by the Roman praetors as early as the end of the 2nd century B.C. It was born of the housing shortage that existed at the time. The birth of the right was due to the shortage of housing that existed in Rome at that time. In order to solve the crisis, the state allowed private individuals to build houses on unbuilt land. Later, it was also practised on the basis of the lease of private land, on which the lessee built and used a building at his own expense, being able to dispose of it by means of a legal deed.
In the Carpathian-Danubian-Pontic region, when it began to develop, the right of superficies was also called emphyteusis or embatic and was established on the basis of a written contract.
In the Soviet period, the institution of superficies did not exist in the legal system, but the essence of it existed, however, through the allocation of land by local government authorities to be owned and used by citizens for the construction of dwellings, recognising the right of citizens to ownership of the houses built.
Land was also transferred to consumer cooperatives and other non-governmental organisations with the right of possession and use, recognising the right of ownership of these entities over the buildings, installations or plantations located on that land. The principle of superficio solo cedit was also extended to the legal regime of treasures, subterranean deposits, accessions, etc.
In an objective sense, the right of superficies, as a legal institution of private civil law, is a set of legal rules intended to regulate the social relations relating to the construction and operation of a building or the planting and using of plantations by one person (superficio) on the land of another (landowner).
The main purpose of the building lease is to fairly regulate the relations between the landowner and the superficiary in the process of possessing, using and disposing of the land and the buildings or plantations on that land.
Subjectively, the right of superficies is a prerogative, a power obtained by a subject (superficiary) in accordance with the law and guaranteed by the objective law in force to build and operate a structure or plantation on land belonging to another subject by private right.
The subjects involved in the legal relationship of superficies are the landowner and the superficied.
The rights of ownership and the limited rights in rem are the rights in rem (Art. 454 of the Civil Code). Limited rights in rem are: a) the right of usufruct; b) the right of use; c) the right of occupancy; d) the right of superficies; e) the right of servitude; f) the rights of guarantee in rem, including pledge and mortgage; g) other rights expressly granted this character by law.
In the context of high (sale and purchase) prices of building land, investors who want to develop real estate and invest in new building sites, in order to avoid the full cost of the land, do not buy it but instead acquire land for which they only owe fees for the possession and use of the land. In addition, the superficiary can mortgage the surface right to obtain credit and finance construction, since the surface right is transferable.
In the Republic of Moldova, this legal institution in land relations has evolved from the institutions of lease and tenancy (under the 1992 Law on Lease, repealed in 2007) to that of superficies, which is very close to the land lease relations that were in existence until the regulation of superficies in the Civil Code.
The situation changed only with the modernisation of the Civil Code by Law No. 133/2018 (from 01.03.2019), since the Law on lease of 1992 understood lease as a legal institution encompassing the temporary use of property for any purpose, including non-agricultural purposes, against payment, and Article 10 of Law No. 1308/1997 established the method of calculating the lease payment with the same concept (for the use of agricultural land and for other purposes).
Superficies can also be seen as a temporary suspension of the principle of superficio solo cedit, which states that the owner of the land also owns the buildings, installations and plantations on the land, in other words, what is on the land belongs to the landowner. Article 460, paragraph 4, recognises only one exception to this principle - the superficium.
In the same sense, Art. 460(2) of the Civil Code (Parts of immovable property) states that
Buildings and other things and works permanently attached to land which are built on another's land on the basis of a superficies right, as well as things temporarily attached to land, are not part of immovable property.
Therefore, the right of superficies is
- a subjective right of ownership of a certain person over the structure built by him () on the surface of land belonging by right to another person;
- a division of the right of ownership of the land (attributes: possession and use);
- a limited and temporary but long-term (up to 99 years) right in rem in immovable property;
- a transferable and inheritable right (can be transferred by legal acts between living persons as well as by death or, in the case of legal persons, after reorganisation of the legal person);
- cannot be created subject to a condition precedent.
- may be sold or mortgaged (in the case of an existing building) only together with the building.
- cannot be limited to a part of the building.
- is not extinguished by the demolition or dismantling of the building, unless otherwise provided.
Depending on whether it is in full or incipient, the content of the surface right varies.
If it is established on land without a building, the building right is incipient and consists only of the right to use the surface or subsoil.
Later, after the building is constructed, the emphyteusis becomes complete and the value of the building increases. Except in the case of a testamentary disposition, the building right can only be transferred together with the building, regardless of whether the construction has just begun (but is registered) or has already been completed. The building lease is registered in the Property Register only with the first rank, and it is not possible to change the rank of the building lease.
The beneficiary may dispose of his right by any contract of transfer of ownership, including a contract of sale, exchange or donation. He may also transfer the exercise of the subjective right to the building plot to another person by means of a lease contract, or transfer it as a contribution to the share capital of a company, or encumber it with a mortgage. The right of pre-emption (of the owner of the land) may not be exercised in the case of donation or transfer as a contribution to share capital.
The right of superficies can be encumbered by an easement, by usufruct, by use or by occupation.
A building encumbered with usufruct or superficies may only be encumbered with a servitude with the consent of the usufructuary or superficiary (Art. 640, para. 6 of the Civil Code).
The right of superficies may be created by a legal act (bilateral (contract) or unilateral (administrative act, will, court decision) or by a legal provision.
The contract for the constitution of superficies is concluded in authentic form on the basis of the following legal provisions
in accordance with the provisions of Art. 454, paragraph 2, letter d) of the Civil Code, the surface right is a limited right in rem.
according to the provisions of art. 323, letter a) of the Civil Code - the notarial form of the legal act is mandatory if the object of the legal act is the alienation of immovable property or its encumbrance with limited rights in rem, except for the cases expressly provided for by law.
Land contracts are therefore subject to notarisation.
According to article 654 of the Civil Code (legal definition), the right of superficies is the right to possess and use another person's land for the purpose of constructing and operating a superficies building over and under that land, or operating an existing superficies building. This right is alienable, transferable by inheritance and may be the subject of a lease.
The rules governing the right of ownership of immovable property apply mutatis mutandis to the surface right, unless the law provides otherwise.
The building lease is established for a term of 99 years, unless another term has been determined, and is enforceable against third parties from the time of registration in the Property Register.
On expiry of the term, the building lease may be renewed (Article 655 of the Civil Code).
Superficies can also be established and registered:
i) by virtue of a legal act by which the owner of the entire property has transferred the building exclusively or has transferred the land and the building, separately, to two persons, even if the constitution of superficies has not been expressly stipulated (e.g. a will orders that ownership of the land shall remain with one person and ownership of the building with another person),
ii) on the basis of the land owner's waiver of the right to invoke the right of access in favour of the builder, where the building has been constructed on another person's land,
(iii) for the benefit of a third party on the basis of an assignment of the right to invoke the right of access.
The general rule concerning the superficiary's obligation to pay a royalty results from the legal stipulation that:
"Unless otherwise provided by the legal act, the superficiary shall owe the owner of the land, in the form of monthly instalments, an amount equal to the rent established on the market, taking into account the nature of the land, the area in which it is located, the purpose of the construction, as well as any other criteria for determining the value of the use. The royalty shall be determined on the date of the establishment of the superfice" (art. 659 Civil Code).
The royalty may be adjusted at the request of one of the parties if economic conditions make non-adjustment unfair. The extent of the adjustment will be assessed taking into account the change in economic conditions and the principle of equity.
The building lease shall lapse:
(a) on expiry of the term or if the contract establishing the surface has been terminated;
b) by consolidation, if the land and the building become the property of the same person;
(c) by the collapse of the building, if there is an express stipulation to that effect;
d) in other cases provided for by law.
If the superficiary has not erected the construction within the time specified in the legal act establishing the superficies or if he violates the obligation to preserve the construction, the owner of the land has the right to request the extinction of the right of superficies (Art. 661 Civil Code).
According to Art. 662 of the Civil Code, at the end of the term or if the contract establishing the superficies has been terminated, the construction which was the subject of the superficies right, from the date of the termination of the superficies, becomes a part of the land according to Art. 460, belonging to the owner of the land, and the superficiary's right to the land and the construction is cancelled. The owner of the land shall be liable to pay compensation equal to the market value of the land from the date of expiry of the term. The landowner is not entitled to demolish the building or parts of it when the building lease expires. The superficiary is obliged to hand over to the owner of the land the documents relating to the erection of the building.
Where the building does not exist at the time the building lease is established and its value is equal to or greater than that of the land, the owner of the land may request that the superficiary be ordered to buy the land at the market value it would have had if the building had not existed. The superficiary may refuse to buy the land if he removes, at his own expense, the building erected on the land and restores the land to its previous condition.
The superficiary has the right to retain the building until the compensation is paid (art. 663 (1) of the Civil Code).
There are also legal grounds for the creation of superficies:
with the entry into force of Law no. 133/2018 (from 1 March 2019), art. 26-31 of Law no. 1125/2002, as amended.
- Pursuant to Art. 521 (artificial accession of real estate) paragraph (6) of the Civil Code:
"If the construction is built partly on the builder's land and partly on adjoining land, the adjoining owner may acquire ownership of the entire construction by paying compensation to the builder only if at least 1/2 of the constructed area is on his land. In this case, he also acquires a right of superficies over the land for the duration of the construction. The compensation must cover the value of the materials and the cost of the work, as well as the value of the use of the land.
- Article 572 of the Civil Code and Article 19 of the Family Code stipulate that property acquired by the spouses during the marriage is their joint property, unless the law or the marriage contract provides otherwise. In view of these legal provisions, property rights acquired during the marriage are presumed to be joint property of both spouses, unless otherwise specified. Therefore, a right of superficies of one spouse may arise even if a house is built during the marriage on land belonging to the other spouse.
According to art. 28 of the Act on the Modernisation of the Civil Code and the Amendment of Certain Legislative Acts, it was established that, with the entry into force of Act no. 133/2018 of 1 March 2019, a right of superficies has been established on the land belonging to the State or administrative-territorial units (regardless of whether it is part of the public or private domain) in favour of the owner of the real estate separately registered in Chapter B (except for temporary constructions) and the owner of the real estate separately registered in Chapter C of the Real Estate Register, if the owner of the real estate in question, on 1 March 2019, is in one of the following situations
(a) has a leasehold on the land with the right to build;
(b) has a leasehold interest in the land;
(c) has a right to use the land on the basis of a public-private partnership; or
(d) has a right to occupy or use the land other than those referred to in points (a) to (c); or
(e) has no right over the land.
The surface right provided for in this Article shall be perpetual. However, if the legal or administrative act or the law governing the said right establishes a term of existence of the said right, at the end of which the owner of the land becomes the full owner of the immovable property concerned, which is separately registered in Chapter B, the surface right provided for in this Article shall expire at the end of the term of existence of the said right.
This legal right of superficies arises by operation of law without its registration in the real estate register, but any interested person may request registration of this right in the real estate register.
Importantly, according to Art. 31 of Law No. 1125/2002, the new legal provisions do not affect the rights, of any kind, of the person who is not the owner of the land to build and to become the owner of the building or the works erected, which were acquired before 1 March 2019 and which will continue to produce legal effects until their extinction according to its content, established before 1 March 2019. Therefore, holders who have built or were going to build for themselves on land, e.g. given in leasehold or freehold use, retain their acquired rights over the buildings or the right to build.
The content of a contract for the sale and purchase of land would be similar to the content of a contract for the sale and purchase of immovable property under construction (Art. 1171 Civil Code).
Thus, the contract of sale-purchase of immovable property under construction must provide:
a) the cadastral number of the immovable property under construction;
b) the number and date of issue and expiry of the construction permit on the basis of which the seller (including the superficiary) is building or ensuring the construction of the object of the contract; the identification data of the construction project;
c) the nature of the seller's right to the land on which the construction is being carried out (ownership or surface right) and the basis for acquiring this right. In the case of superficies, the term of the superficies and the effects of the extinction of the right of superficies provided for by law and, where applicable, by the deed establishing the superficies shall be specified;
(d) the share of the right in the land, building and other common parts which passes to the purchaser;
(e) if any, a description of the exclusive rights of use granted to the purchaser over certain common parts of the condominium, as set out in the condominium deed;
(f) the assumed date of the transfer into use, determined by indicating a specific calendar date;
g) the total price and, where applicable, the instalment payment schedule, which shall comply with the provisions of Article 1173 of the Civil Code;
h) if agreed, the fact that the buyer acquires the right of ownership only after payment of 95% of the price (reservation of ownership).
The contract is attached:
a) a copy of the building permit;
b) a copy of the plan of the object of the contract, approved in the agreed manner.
Prior to the conclusion of the contract and, at the buyer's request, at any time during its execution, the seller (including the superficiary) is obliged to inform the buyer:
(a) the construction project and, at the buyer's request, to provide him, under the seller's own signature, with copies of the construction project or certain files requested by the buyer;
b) the condominium deed of incorporation and, if there is one, the by-laws of the condominium owners' association and the condominium by-laws;
c) the identity of the contractor and other suppliers;
d) the current stage of construction.
With regard to the determination of the size/area boundaries, if the land is publicly owned and its surface is large, the boundaries of the land in question may be proposed by an urban planning study prepared by companies specialised in urban planning, the preparation of which may be requested by the interested party. In this case, the area of the land must not be less than that required for the proper use of the building on which it is built (determined at least on the basis of the building's footprint, i.e. its perimeter).
There are a number of peculiarities in the construction of buildings on public land burdened with surface area. Thus, the urban planning certificate for the design and the building permit are prepared and issued by the mayor of the administrative-territorial unit on the basis of the application of the owner, on the basis of the application of the holder of the surface right to the land, with the written consent of the owner of the land (art. 3 par. 1, art. 12 par. 1 of Act No. 163/2010). Written consent in the case of land owned by administrative-territorial units is given by a decision of the local councils, with the express consent that the superficiary may design and construct the structure with a specific purpose and volume on the surface encumbered land.
Exempted from the obligation to obtain and submit the written consent of the owner are the administrations and residents of free economic zones that have registered the right of superficies in the Real Estate Register, for the development of production infrastructure (construction of industrial halls) and technical and sanitary infrastructure in free economic zones necessary for carrying out the activities stipulated in Act No. 440/2001 on free economic zones.
With regard to the calculation of the fee for publicly owned land, pursuant to Article 29(2) of Act No. 1125/2002, as amended, it is established that the superficiary who owns the legal area (without a contract, pursuant to paragraph (1)(d) or (e) of this Article) is obliged to pay into the public budget an annual fee determined by the Government or the local public authority (depending on the ownership of the land), but not less than the minimum annual rent for publicly owned land, established pursuant to Art. 10(11) of Act No. 1308/1997 on the Standard Price and Manner of Sale and Purchase of Land. This obligation also applies to the subsequent acquirer of the separately registered land plot and the surface right. The problem is that the Constitutional Court, in its decision No. 19 of 31.10.2023, declared Article 10(11) of Act No. 1308/1997 unconstitutional, so that Art. 29(2) of Law No. 1125/2002 now refers to a non-existent paragraph (annulled by the unconstitutionality declaration).
Paragraph 3 of the decision of the Constitutional Court No. 19 of 31.10.2023 ruled that
Until the law is amended by Parliament, local public authorities shall have the right to charge an annual rent for land in connection with privately owned/privatised property, which shall not be less than 2% of the market value of the land, determined by an appraiser in accordance with the Act on Appraisal Activities, which shall not be less than the normative price calculated in accordance with the Act on the Normative Price and the Manner of Sale and Purchase of Land".
Subjects covered
It is noted that Art. 53 par. (5) c1), which was introduced into Act No. 121/2007 by Act No. 193/2023 (in force from 02.08.2023), the publicly owned land which is leased or rented may not be the subject of privatisation. For the future, this rule will be a serious obstacle for private real estate investments on superficies.
In conclusion, surface encumbrance is a legal tool and mechanism available to real estate developers, but with the recent changes in Moldovan legislation, this mechanism has been altered and made less attractive, being affected with unpredictability and uncertainty for developers, which will obviously limit its use and the migration of investments to private land.
Changing the nature of the surface right was done by intervening in the legislation as follows
- Requiring the written consent of the landowner for the superficiary to obtain the building permits, causing bureaucratic delays or even blocking the process (Town Planning Certificates, Building Permits; art. 3 par. (1), art. 12 par. (1) of Law 163/2010, in force from December 2022);
- Unpredictability (determination) of the amount of the fee to be paid for using publicly owned land, given that the payment must amount to at least 2% of the market value calculated according to the valuation report (point 3 of Constitutional Court Decision No. 19 of 31.10.2023). This means that the superficiary could be forced to make excessive and disproportionate payments, leaving the payment at the discretion of the owner;
- The prohibition of the privatisation of publicly-owned land encumbered with surface rights (Art. 53 par. (5) c1), introduced into Law No. 121/2007 by Law No. 193/2023, in force as of 02.08.2023). Investors tend to be reluctant to invest in land that cannot become privatised.