Limitations on the
Freedom of Contract –
Denaturation of Property
Rights in Perspective
Ghijsbrecht Degeest
KU Leuven - Institute for Property Law
PhD research in general
Five main parts:
1. Characterization and recharacterization/denaturation
2.
3.
4.
5.
in general
Recharacterization/denaturation in property law
Recharacterization/denaturation in tax law
Consequences of civil and tax
recharacterization/denaturation
Divergence between the civil and tax approach to
recharacterization/denaturation
(Re)characterization in general
1. Notion
 Characterization
 Recharacterization/denaturation
2. Characterization vs. interpretation
How?
1. First hypothesis: the parties did not characterize the
agreement
 Question: when is there a characterization of the agreement?

Direct vs. indirect
 Consequence: judge must charecterize based on the common
intention of the parties
How?
2. Second hypothesis: the parties characterized their
agreement
 Question: what is the role of the characterization?

Option 1: an element in the general assessment
 Old Belgian approach: judge not bound by the characterization (cass. 22/10/1983)
 Fr: absence of essential elements or incompatible elements (cass. fr. Com. 23/06/1992)
 Quebec: element in the assessment (Grenier c. Grenier (1924); Laframboise c. Vallières (1927);
Guille Shamir c. Hôpital Général Juif Sir Mortimer B. Davis (2005))

Option 2: a starting point
 ‘Recent’ Belgian approach; factual elements that exclude the characterization or are incompatible
with it (cass. 23/12/2002; cass. 28/04/2003; cass. 03/05/2004; cass. 25/05/2009)
 Option 1 gives more room to recharacterization/denaturation
than option 2
When?
Factors that could lead to recharacterization/denaturation:
1)
Characterization contrary to mandatory law
2)
‘improper’ characterization: discorrespondence with the common
intention of the parties
Denaturation of property rights – which
property rights?
From a Belgian law perspective:
1. Usufruct (‘vruchtgebruik’)

artt. 3:201-3:225 NBW (NL) - artt. 1120-1171 CCQ (Quebec) - artt. 578 – 624 CCF
(Fr)
2. Superficies (‘recht van opstal’)

artt. 5:101-5:105 NBW (NL) – artt. 1110-1118 CCQ (Quebec) – jurisprudential (Fr)
3. Emphyteusis (‘recht van erfpacht’)

Artt. 5:85-5:100 NBW (NL) – artt. 1195-1211 CCQ (Quebec)

France:


Bail emphytéotique: artt. L. 451-1 – L. 451-13 Code rural et de la pêche martime (CRPM)
Bail à construction: artt. L. 251-1 – L. 251-9 Code de la construction et de l’habitation (CCH)
Denaturation in property law – numerus
clausus
1. Principle: Numerus clausus in property law

Typenzwang

Typenfixierung

question of recharacterization/denaturation has clear answer in
property law
Denaturation in property law – numerus
clausus
1. Numerus clausus in Belgian law

Art. 543 BBW

Cass. 16/09/1966 (‘Blieck’)
2. Numerus clausus in Dutch law

Art. 3:81 NBW
3. Numerus clausus in Quebec law

Traditional view: closed system

Modern view: no limited list (art. 1119 CCQ)
 = Servitudes personelles/droits réels de jouissance innomés
Denaturation in property law – numerus
clausus
4. Numerus clausus in French law

Cass. fr. 13/02/1834 (Caquelard)

Cass. fr. 18/01/1984: ‘Droit perpétuel d’affichage’

Cass. fr. 23/05/2012: ‘Droit de crû et à croître à perpétuité’

Cass. fr. 31/10/2012 (La Maison de Poésie I): liberté de créer un
droit réel sui generis

Cass. fr. 08/09/2016 (La Maison de Poésie II)
Denaturation in property law – numerus
clausus
2. Weakening of numerus clausus

Typenfixierung?
 Few mandatory rules property rights vs. limits on freedom of contract personal
rights (increase of mandatory law)

Typenzwang?
 Cf. France, Quebec

Consequence 1: question of recharacterization/denaturation has
no clear answer in property law

Consequence 2: possible denaturation of a property right into a
personal right (and vice versa) (cf. infra)?

Consequence 3: limited use of the first factor of
recharacterization/denaturation (contrary to mandatory law)

Consequence 4: importance of second factor of recharacterization/
denaturation (common intention of the parties)
Finding the common intention in property law
– factors relevant for possible denaturation
1.
2.
3.
4.
5.
6.
7.
Type of property?
Nature of the right?
Retributive character?
Mandatory law - duration?
Essential characteristics?
Supplementary law?
Behavior of the parties?
I. Type of property
1. Category A: (in)tangible (im)movable property
 Usufruct
 Lease
2. Categorie B: (in)tangible immovable property
 Emphyteusis



<-> Quebec: tangible immovable property: art. 1195 CCQ
<-> NL: tangible immovable property (exc.: art. 5:118a + art. 5:93, lid 1 NBW)
<-> Fr: bail à contruction et bail emphytéotique: tangible immovable property
3. Categorie C: tangible immovable property
 Superficies
II. Nature: property- vs. personal right
1. Principle: no denaturation of property right into personal right
2. Difference between property- and personal rights attenuates

Freedom of contract (cf. supra)

Positive obligations

‘Right to follow’

Publicity

Actio in rem (rei vindicatio)
 Consequence: denaturation of property right into personal
right?


E.g. recharacterization of emphyteusis into lease (cf. infra);
Art. 1,2° Belgian Farm Lease Act (pachtwet)
III. Retributive character
1. Categorie A: (non)retributive charachter
 Usufruct
 Superficies
2. Category B: essentially retributive character
 Lease
 Emphyteusis (canon)

<-> NL + Quebec
3. Category C: essentially non-restributive character
 Loan (‘commodatum’)
IV. Mandatory law - duration
1. Usufruct
 Minimum duration: /
 Maximum duration:

Natural person:
 life

(art. 617 BBW and CCF; art. 1162 CCQ; art. 3:203, par. 2 NBW).
 Life or 100 years: Quebec (art. 1123 and 1162 CCQ)
Legal person: 30 years or ‘life’ (artt. 617 and 619 BBW and CCF; art. 3:203, par. 3 NBW; art. 1123
CCQ)
2. Lease
 General regime: no minimum or maximum
 Special regimes (residential-, commercial-, farmland lease)
 ‘lease for life’
IV. Mandatory law - duration
3. Emphyteusis
 Minimum duration:


BE: 27 years (art. 2 Erfpachtwet (EPW) – Fr: 18 years (art. L. 451-1 CRPM (bail emphytéotique); art. L.
251-1 CCH (bail à construction)) – Quebec: 10 years (art. 1197 CCQ).
No minimum duration in Dutch law (art. 5:86 NBW)!
 Maxium duration:


BE: 99 years (art. 2 EPW) – Fr: 99 years (art. L. 451-1 CRPM (bail emphytéotique); L. 251-1 CCH (bail
à construction)) – Quebec: 100 years (art. 1197 CCQ)
No maximum duration in Dutch law (art. 5:86 NBW)!
Consequence:




Agreement < 27 years  no (re)characterization as/into emphyteusis
Recharacterization into usufruct = difficult
BE legal doctrine: emphyteusis < 27 years = denatured into a lease
Fr: bail à construction/emphytéotique terminated < 18 years = possible denaturation
into a lease
IV. Mandatory law - duration
However:
 Cass. 30/03/2006: termination emphyteusis in case of liquidation
procedure or dissolution of the legal entity
Consequence: duration can be linked to the ‘life’ of the
(natural or legal) person
 Denaturation into usufruct possible?
 Clause specifically intended to circumvent the minimum duration of
an emphyteusis
IV. Mandatory law - duration
4. Superficies:
 Minimum duration: /
 Maximum duration:


BE: 50 years (art. 4 Opstalwet)
No maximum duration: FR – NL (art. 5:104, par. 2 juncto 5:86 NBW) – Quebec (art. 1113 CCQ)
Consequence:
 Agreement > 50 years  no (re)characterization as/into superficies
 Recharacterization in usufruct = difficult
IV. Mandatory law - duration
However:
 Duration can be linked to ‘life’ (cf. cass. 30/03/2006)
 Sanction when establishing superficies > 50 years?

Conversion into superficies of 50 years
Consequence:
 Recharacterization/denaturation of superficies into usufruct or
emphyteusis possible?
V. Essential characteristics
1. Emphyteusis

canon
 BE: essential characteristic – periodical canon
 Fr:

Bail emphytéotique: essentially symbolic character

Bail à construction: essentially retributive character
 NL + Quebec: not essential (art. 5:85, lid 2 NBW; art. 1207, par. 1 CCQ)

Duration (cf. supra)
2. Superficies

Duration (cf. supra)
3. Usufruct

Temporary/’personal’ character (cf. supra)
 Quebec: ‘personal’ character not essential (art. 1120 CCQ)
VI. Supplementary law - examples
1. Transferability of the right and right to mortgage
 BE: limitation = indication for lease


Quebec: essentiel element of an emphyteusis
FR: essential element of bail à construction (Cass. 3e Civ, 15/03/1983) + bail
emphytéotique (cass. 10/04/1991)
2. Obligations
 Extensive obligations for the ‘bare owner’ = indication contra
emphyteusis, superficies, usufruct and pro lease
VI. Supplementary law - examples
3. Right/obligation to build (and maintain)
 BE: no right to build = indication against superficies (and
emphyteusis)


NL: no obligation to maintain = indication contra emphyteusis and pro
superificies
Quebec: no right to build = no emphyteusis
 Lease + propriété superficiaire: a right, not obligation to build
 propriété superficiaire: no obligation to maintain

France: no right to build and maintain = no bail à construction
 Lease + bail emphytéotique: a right, not obligation to buid (cass. civ. 3e 30/01/2008 + Cass. Civ. 3e
11/06/1986)
VI. Supplementary law - examples
4. Rights granted on the land
 BE: right to use = indication contra superficies


Quebec: ancillary right to use
FR:
 bail à construction and bail emphytéotique: right on the land
 Superficies: no right on the land
5. Limitation of the right to use (in general)
 BE: limitation = indication contra emphyteusis

Fr:
 Limitation of right to use = no bail emphytéotique (cass. civ. 13/05/1998)
VI. Supplementary law - examples
6. Duration (within limits of mandatory law)
 Long duration: indication pro superficies, emphyteusis, usufruct
 Short duration: indication pro lease
 Linked to ‘life’: indication pro usufruct
7. Right to change the destination
 BE: no right to change the destination = indication contra
emphyteusis + superficies and pro usufruct + lease

NL:
 Right to change the destination = indication pro superficies (<-> contra emphyteusus)
VII. Behavior of the parties
Examples:

Superficies: holder of the right does not build

Right to use: the holder transfers or leases his right (with consent of
the bare owner)

Usufruct: the holder tears down the building

…
Consequences of denaturation
Various consequences:

Possibility of mortgaging?

Application of supplementary law?

Applicability of special regimes?

Consequences in case of insolvency?

Duration?

Tax consequences (cf. tax recharacterization)

The competent court?

…
Thank you for your attention