A recent topic of discussion is that of Emphyteusis, a regime which has its roots in Roman Law. It formed part of the feudal system and is connected with the agricultural economy. Farmers were offered the possibility to cultivate land thereby sustaining themselves. In return, farmers paid an annual ground rent or canon in money and or in kind.
Ownership is divided into two categories:
- Dominium Directum – the right of the (dominus) landlord.
- Dominium Utile – use without ownership as a (emphyteuta) tenant.
The closest Common Law legal term to Emphyteusis would be a, ‘leasehold’. The landlord retains the ownership of property; the tenant has the right to use it for a contractually agreed period of time. However, in an Emphyteutical contractual arrangement, the tenant must also maintain and improve the estate.
Emphyteusis can affect both land and urban buildings, even villas and apartments. During the period of Emphyteusis, if land is involved, the tenant has the right to alter the surface of the land. He may plough up pastures to cultivate a crop or plant trees. Where buildings are concerned, the tenant may alter these, provided alterations do not cause any deterioration thereof. Thus, if the tenant would like to build further or to add further to the already existing structures, the tenant may do so.
The contract between the ‘landlord’ and the ‘tenant’ must be a written agreement, payments are recurring and the duty to pay such rent only ceases if the estate is destroyed, ether by human causes or through natural events.
Duration and obligations of Emphyteusis
Emphyteusis can be perpetual or limited to a minimum of 20 years. In both cases, the tenant is entitled to the same rights as the landlord.
The tenant can sub-let the property, receive compensation for the improvements made and even retain the property until full payment of his credit is rightfully received. These things as well as those mentioned above do not need the consent of the landlord.
If the Emphyteusis has a duration of 20 years, the tenant can not transfer rights with a contract. The right of pre-emption does not apply to the tenant in the same way it does to farmers i.e. the tenant in an Empyteutical contract arrangement does not have right of first refusal to purchase land.
The tenant has a very broad right to disposing of the property held under perpetual Emphyteusis; he may dispose of the emphyteutical property by means of a deed in compliance with Italian Civil Code. This can either be an act inter vivos, i.e. made during the tenant’s lifetime, or causa mortis, i.e. made after his death, in this case, by means of a Will.
Redemption of Emphyteusis
A tenant can acquire full ownership of Emphyteutical property through the payment of a price corresponding to fifteen (15) times the annual rent. A tenant can make use of this redemption right at any time.
This redemption right prevails as an equivalent right accorded to the landlord in case of breach of contract by the tenant, known as the “devolution” (devoluzione). Redemption may be settled:
- Out of court, by means of an agreement between the landlord and tenant. Settlement must be reflected in a deed drafted by a public notary;
- In court, if the landlord and tenant cannot reach an agreement out of court.
A tenant must increase the productivity, the usefulness or the value of the estate, rural or urban. This obligation lasts for the duration of the term of Emphyteusis and can be regulated with a written agreement. Payment of rent must be made to the landlord on an annual basis.
The landlord has the right to request the end of the Emphyteusis due to a breach of contract by the tenant. The landlord is obliged to refund any improvements the tenant has made, in a manner which is proportional to the increase of value of the estate when this is delivered back to the landlord.
Acquiring, redeeming or disposing of property subject to Emphyteusis can present challenges. It is advisable that you appoint legal representation to guide you through the process.