THE ACQUISTION OF REAL PROPERTY RIGHTS IN SPANISH LAW. Carlos LASARTE

Transcription

1 THE ACQUISTION OF REAL PROPERTY RIGHTS IN SPANISH LAW Carlos LASARTE Professor and Director of the Civil Law Department of the UNED Vicepresident of the International Commission on Civil Status Permanent Board Member of the General Codification Commission English Translation Martin Kearns Barrister at Law 1. Introduction: the acquisition of real property rights 2. Forms of acquisition: Article 609 of the Civil Code 2.1. Contracts of transfer and conveyance 2.2. The transfer of property 2.3. Inheritance mortis causa 2.4. The legal origin of certain real property rights 2.5. Adverse possession 2.6. Occupation 2.7. Accession 3. Original and derived acquistion of real property rights 3.1. Original acquisition 3.2. Derived acquisition 3.3. Reasons for distinguishing between both 3.4. Other classifications of types of acquisition 4. The acquisition or derived transmission of real property rights 4.1. Derived transfer under Spanish law 4.2. The theory and method of acquiring title 4.3. Reference to the French and German system 5. The conveyance 5.1. Concept and basic consequences 5.2. Classes and forms of conveyance 5.3. Real conveyancing: material and symbolic 5.4. Instrumental conveyances 5.5. Other forms of conveyancing

2 2 1. INTRODUCTION: THE ACQUISITION OF REAL PROPERTY RIGHTS One of the basic problems that any legal system has to face is how to arrive at a determination of what constitutes real-legal title (specifically, full title,) over the assets. The reason for this is quite easy to follow: given that ownership of a real property interest means having power in relation to the assets and, therefore, of being in an economic position of interest to all members of the community, who - in principle and by virtue of the right to exclusive possession characteristic of real property rights - are not in a position to make any valid claim to exploit the real property rights of others. The Roman legal tradition, which provides the basis of our own Law, focuses on the answer to this problem by referring to the types of acquisition as concerns exclusive title and other real property rights respectively. But, in reality, the expression does not have to be framed in this way (linguistically, it does not appear very appropriate at this level) and could be perfectly substituted by the forms of acquisition or, perhaps better by the reasons for acquisition of the property and associated real property rights. In effect, what is important in our legal system is the acquisition (and/or transfer) of the real property rights that are arise on the basis of whatever state of affairs, act or casual business - in accordance with Law that is adequate and sufficient to bring about the creation or, as the case may be, transmission (from one person to another; of a title to subsequent title holders) of what ever real property right. Not withstanding what was said in the previous paragraph, the total abandonment of the expression types of acquisition could bring about problematic results and confusion. Given that private law has its roots deep in history and, as we will see, this makes at least a minimum reference to the historical context and to the so called theory of title important, so for the purposes of explanation it is as well to continue with the types of acquisition formulation.

3 3 2. METHODS OF ACQUISITION: ARTICLE 609 OF THE CIVIL CODE Our Civil Code addresses the problems alluded to in a main provision of article 609, where it states as follows: «Ownership is acquired by occupation. Ownership and the other rights in relation to the assets are acquired and transferred pursuant to the law, by gift, through testate or intestate succession and arising pursuant to certain contracts of conveyance. They may also be acquired by means of adverse possession». As always occurs when one speaks of a systematic key, this article has been doctrinally criticised for being both active and passive. While some criticism is perfectly reasonable; others forget that a legal text does not have to be didactic nor definitive (omnis definitio, periculosa est, as JAVOLENO noted many centuries ago). Legislative orders should resolve problems and not establish definitions or classifications, that are the business of other legal interpretations (such as text books or treaties, to mention the most well known examples). Proceeding then directly to the kernel of the question and without indulging in the chance to examine carefully the criticism made of the legal text, it can be affirmed that article 609 addresses the material object of regulation with the appearance of relative success, although without doubt its legislative content requires additional clarification, to achieve didactic effect Contracts by means of transfer and conveyance We recall that the Code mentions the conveyance with respect to «certain contracts». This last stipulation of article 609 attempts to further the notion that there exist some contracts whose object is to transfer real property rights (sale by mutual consent), while others aim to resolve problems of presentation of services and not in relation to the control of matters (writs, arbitration) This precision, clearly, has an important consequence that should not be forgotten: specifically, it permits one to distinguish between contracts of (or with) a conveyancing objective and those that lack this.

4 4 The conventional transfer (i.e., through contract) of real property rights requires, in all cases, that the conveyance or transfer of the object of the real property right or the making of the arrangement for same in favour of the relevant title holder in question, be genuine ( in the case of a mortgage or with a written option to purchase, it is natural that the conveyance be registered in the relevant registry of title: or the real property rights will not be transferred in favour of the title holder) The gift Due to its contractual nature and treating it as a contract with a conveyancing purpose, the gift is understood separately from the rest of the contracts. The reason for this arises from the fact that the Spanish Civil Code gives to the gift a particular transfer effect as regards ownership of the gifts so donated, without the necessity for a conveyance or transfer of the gift in question (that not with standing amounts to an estimate of the moment of completion of the contract referred to : cfr. arts. 632 y 633 CC) Succession mortis causa Real property rights may also be acquired or transferred «through testate or intestate succession», i.e. by succession mortis causa. Without doubt, granted that inheritance constitutes a united estate, composed of all classes of equity, obligations and rights (not only real property rights), it is natural that it requires a specific study and that it makes up a specific area of the Civil law, that we are not considering specifically at the moment The legal origin of certain real property rights The reason for the existence, acquisition or transfer of real property rights is to be found, on some occasions, in the law its self: usufructs, easements, mortgages, rights of pre-emption. The brevity of the current article means that they cannot be considered here Usucaption Acquisitive prescription or usucaption 1 (art ) is also a lawful means of acquisition, as much to do with property itself (that is the most frequent case) as in relation to the other real property rights that are susceptible to possession. 1 i.e. acquisition of the title or right to the property by uninterrupted and undisputed possession for a prescribed term.

5 Occupation Given the general functionality of usucaption with regard to acquiring real property rights, occupation only makes lawful the acquiring of the ownership, but in principle it is ineffective to transfer the ownership itself. Likewise it cannot form the grounds for the creation or the acquisition of other real property rights Right of action With regard to the forms of acquisition set forth in article 609 there is no express reference to the right of action. Without doubt, this omission does not naturally affect its own proper condition as a means to acquiring additional matters that are to be incorporated from the beginning. 3. ORIGINAL AND DERIVED ACQUISITION OF REAL PROPERTY RIGHTS Given that article 609 basically follows an enumerative or descriptive technique in relation to the reasons for acquiring ownership and of other real property rights, we now proceed to consider the confrontation between original and derived acquisition Ordinary acquisition We speak of original acquisition when the ownership title (or whatever other real property right) is obtained independently of the previous right of the title holder for instance: - Because the same acquisition coincides with the right (of ownership), being created or generated: as occurs in the event of squatting on vacant or abandoned property assets. - Because the real legal title (ownership or whatever other limited real property right, that is susceptible to possession) is obtained without being based on the right of title of the previous title holder e.g., usucaption.

6 Derived acquisition Derived acquisition arises when the owner grants or transfers his real property right (title rights or what ever other, assuming that it is transferable: e.g., use and right of residence) to another person, who in turn becomes the new holder of the title. The new title holder occupies the position of the previous owner and, consequently, the content and extent of his right is held with the same conditions as was the case with the previous title holder. So the previous owner can fully transfer his real property right or a power in this. In this way, the owner is able to dispose himself of his real property rights or even create a usufruct or a mortgage, while maintaining his title of ownership. To refer, technically, to both possibilities one should distinguish, in relation to derived acquisitions between: A) Acquisition derived transfer By of which it is possible to transfer or acquire the same right of title as the previous owner (the vendor of the title, the mortgagee who grants the mortgage loan to another etc.). B) Constitute derived acquisition In this case, the title holder partially transfers or conveys his right, in the process creating a new real property right (the owner creates a usufruct, the usufruct so granted gives to the person the right to inhabit the property of the estate; the holder of the surface rights amounts to a mortgage, etc.) Reasons for the differentiation between both The confrontation between original and derived acquisition is not the only classification possible of the reasons for acquisition or the methods of acquiring. But it is the most useful and operative, and for explanatory purposes it is abundantly clear.

7 7 Secondly the classification of one type of acquisition as original or derived is not independent of practical consequences. In the case, for example, of the original acquisition of ownership, this is assumed to be free of whatever other real property right that previously applied to it. So, then, the occupation or the acquisition of the title by prescription, involves the extinction of the real property rights of the original title holder and the previous charges that attach to it Other classifications of types of acquisition As it is helpful, one must indicate other classification criteria as regards methods of acquisition, which do not require more than a mention to be understood: 1. Attending to the existence or not of consideration on the part of the buyer of the real property right, one can speak of onerous and gratuitous methods of acquisition. 2. The acquisition of real property rights may arise equally either through inter vivos or mortis causa transactions. 3. Realising the objective scope of the transfer or conveyance, one speaks of universal methods of acquisition (an illustrative example is inheritance, to slip back into a combined inheritance) and individually, when one is referring to the acquisition and transfer of one or other real property rights individually considered. 4. THE ACQUISITION OR DERIVED TRANSMISSION OF REAL PROPERTY RIGHTS The question posed at the outset of this article (how to arrive at a demonstration of real legal title) sharpens its importance through connecting it with the assumptions for the free transfer of real property rights, that now affect every day economic life.

8 8 In effect, what we have termed contract with a transferring purpose (whose model is the conveyance) are, perhaps, the most frequently found in practice. So consequently, determining when the buyer acquires real property rights in relation to a thing ( or, what amounts to the same, when he knows that ownership is now vested in him) in absolute is a technical or advisory question. Without doubt, it is obvious that this question can be posed in the abstract, independently of the regulatory material of Spanish law and drawing on the regulation of other legal systems. In this line, it is clear that one can pose as a hypothesis a variety of answers to the question: now based in comparative law, now in the imaginative capacity itself and the techniques of those who have to offer the answer Derived transfer under Spanish law Obviously, the last of these eventualities has to be largely set to one side here, given that this exposition - of a purely introductory nature - has as its objective to offer a clear explanatory and if possible a succinct picture as regards the Spanish regulatory system, which on the other hand in its basic outline is easy to explain. As we have seen, pursuant to Article 609 the conventional transfer of real property rights requires the existence of two elements: a) «definitive agreements» (aimed at transferring), and b) «through the conveyance» or delivery of something in connection with which the real property right lapses. This rule pervades the combined regulation of Spanish inheritance law and, sometimes, expresses itself overtly in the article of the Code in clauses that have the aim of being «general». This happens, specifically, in Article of the Civil Code, with reference to the obligation to grant and whose regulatory order is sufficiently expressive: «The creditor has the right to the benefits of something from the moment that the obligation to deliver it comes into being. Without doubt, he will not acquire real property rights in relation to same until this has been delivered».

9 9 The buyer, then, is not converted into the real title holder until such time as the handing over or transfer of the item (that we will study in the following section) and this said handing over is basically to be found in the contract that is sufficient for transfer of the title ( or the real property right with which it deals). Our regulatory system, then, represents a faithful continuation of the Roman system with regard to the derived acquisition of ownership or title. The medieval interpreters, for their part, developing this Roman system formulated the said theory of title and in a fashion that, underlies the formulation of Spanish legislation, as is commonly agreed in doctrines of jurisprudence The theory and method of acquiring title With similar designation (widely used in jurisprudence) reference is made in Spanish law to the conceptual formulation made by interpreters, of the formalities of the Roman conveyance, that according to the studies of J. GONZÁLEZ Y MARTÍNEZ- have their origin in two famous texts: A) Traditionibus et usucapionibus dominia rerum, non nudis pactis transferuntur (i.e., the ownership in things is not transferred by the simple agreements, only by means of the conveyance and adverse possession). B) Nunquam nuda traditio transferit dominium, sed ita si venditio, aut aliqua justa causa praecesserit, propter quam traditio sequeretur (or, what is the same, the conveyance does not transfer the title if no prior sale or other just reason is to be found). Historically, ACCURSIO in this interpretation grants to the conveyance the character of a dominant cause in relation to acquisition, while «the reason why the transfer makes it so», amounts to the ultimate reason or justification for the transfer of real property rights. In agreement with this, what characterises the basis of the Spanish system for the derived transfer of real property rights has its basis in the reason for title or grounds for title (justification) and, besides, the method or conveyance, as against other legislative options, that are offered in contrast.

10 Reference to the French and German systems French law and the German system offer diverse options so given that the present exposition concerns itself with Spanish law, we will limit ourselves to noting these systems (all the more so when some of the audience for this essay come from one of these countries). The first of these is characterised because the transfer can take place through the simple agreement between the interested parties in the dynamics of the real property law with which it deals. The process of «spiritualization of the transfer» to which we refer in what follows but based in Spanish law, created at the time of the French codification that the requirement for a conveyance was annulled by the codified legislative texts. There was no reason for this preceding substratum, what was sufficient was the abstract simple agreement with regard to the acquisition or transfer of the ownership. The German code, unde the influence of SAVIGNY (who place less value on the Roman justa causa traditionis and more on signing the relevant agreement between the parties in relation to the conveyance), arrived at the opposite conclusion: the reason for the title is irrelevant. A prior substratum is not required, but what is enough is the simple abstract agreement with regard to the acquisition or transfer of the ownership. 5. The Conveyance 5.1. Concept and basic effects Article 609 states that «Ownership and the other rights in relation to property assets are acquired and transferred... by means of the conveyance», this makes it abundantly clear that the transfer of ownership (and the other real property rights that may possibly be acquired) require that, independently from the title in question, these effectively come into existence on the handing over of the title document to which the relevant legal rights correspond. In this context, conveyance (the romance word for the Latin traditio) signifies the plain and straightforward delivery of the title or the possession of the title to which the rights of ownership attach (or other property rights) that is transmitted from one person to another.

11 11 Then it is clear that the delivery has to have conveyancing intention: the transfer has to have as its final objective the transfer in the ownership of the thing or the real property right with which it deals; and is not just a pure transfer of possession with whatever other purpose (a car loan, or a lease of a flat; delivery of the keys to an apartment of an old neighbour so they can hand them over to the eventual buyer, etc.). For this it has traditionally been affirmed that the delivery is «the transfer of possession with the intention of handing over the ownership», according to the classical and oft repeated definition of the Roman scholar SOHM. The basic consequence of the conveyance consists, then, in transferring from one person to another (not forgetting that this deals with the most characteristic assumption of derived acquisition) the ownership in something or a real property right in relation to that thing. So, when the conveyance has not yet taken place, the purported buyer of the real property right will only have the right to reclaim from the transferor a conduct that has begun to convert him into the owner or holder of the real property right The classes or forms of conveyancing A) Spiritualisation of the conveyance The conveyancing transfer may take place in many ways, from the physical handing over, in the sense of manual transfer from the vendor to the purchaser-, is clearly impossible or inappropriate in many cases (sale of an estate or a group of companies ). Therefore, all legal systems have gradually turned to a process that is known under the name of the spiritualization of the conveyance: commencing with the manual transfer it arrives at and paradoxically- converting the pure agreement between the vendor and the purchaser (i.e. the title that serves as the basis for the conveyance or method in case systems) into an act equivalent to the transfer. The conveyance, then, is spiritualised, having moved away from a primitive materialism. B) In the law The Spanish Civil Code regulates the many forms of conveyance in articles and 1.464, under the article concerned with the contract of conveyance. This contract, notwithstanding being merely based on mutual agreement, is characterised for being the transmitting or transferring contract of ownership by means of a title instead of a name : by means of the delivery of a fixed quantity of money, the purchaser purports to acquire the ownership he desires.

12 12 Naturally, the law concerning the many different methods of conveyancing transfer places no limit in the applicability of the legal rules as regards the matters dealt with by this type of contract. The many different types of legal conveyance may be affected through whatever other transferring business, given that its application by analogy has general character. The explanation of its legal situation is simple: given that the conveyance is by its nature a contract of transference and given, on the other hand, that by virtue of article 609 the transfer of the ownership requires the concurrence of contract and conveyance, with the natural result that is regulated in the contractual type that is the most widely known in practice The real conveyance: material and symbolic Article o states that «the delivery of something for sale will be understood as when it is placed in the power and possession of the buyer» (rectius, of the purchaser). The written text serves to understand that the putting in real possession (not here in the technical sense) may take place in two different manners. a) Materially One speaks of a material conveyance when there really exists an effective manual delivery (I leave on the rain coat that I have purchased) or when the buyer, de facto and in an instantaneous form, exercises the powers that define the owner of the real property right (I remain to take a siesta in the furnished flat that I have just bought). b) Symbolically The symbolic transfer occurs when, without bringing about a material transfer of the thing, the transferor shows in unequivocally and irreversibly his intention to transfer possession to the purchaser. This comes to pass when the transferor hands in the keys, equally with regard to fixed assets as personalty (although expressly article limits itself only to the last category); or when the purchaser acquires the relevant title (cfr. art ; that uses the term title in the formal sense: the documents that prove the material ownership of the transferor).

13 The instrumental conveyance The instrumental conveyance is known as such because it is brought about by virtue of signing the public register (this, in technical language, is certainly a public instrument) and has a great daily practical importance, In effect, with a similar expression reference is made to the doctrine (and with great frequency in the jurisprudence) to the purported conveyance outlined in article o : «When the sale is effected through the public register, the signing of this is equivalent to the delivery of the subject matter of the contract...». The signing of the public register before the Notary is in effect the transfer or conveyance, although in reality and materially there has been no transfer of possession from the transferor to the purchaser. In this fashion, the conveyance is brought about by signing the public registry, from the moment of signing and, in principle, the purchaser becomes the owner (or the party entitled to whatever other real property right), independently of what ever other fact (e.g. payment has not been completely made for the transfer or sale). So then, the automatic effect of the conveyance on signing the public register is not imposed on the parties in a necessary or general form. The final paragraph even comments («... if in the same register there will be no result or one can clearly deduce the contrary») indicating that it excludes this result. The question has importance, given that as we know registers of sale are all too common (above all in relation to urban accommodation, but also in relation to machinery, cars and other motor vehicles, etc.) in which a clause is introduced clearly reserving ownership, that as laid out in art o -, excludes the consequences of the transfer in favour of the purchaser, in the event that they have not paid the full sale price required Other forms of conveyance Together with those outlined above, that also exist other forms of conveyance that are possibly of less practical significance, but which must be equally considered. A) Conveyance brevi manu Under this name are identified those circumstances where the transferor does not necessarily need to truly deliver the thing to the purchaser, in order to have it under his possession. For instance, supposing a bailee or lease holder reaches an agreement with the owner to purchase (or accept the gift) the thing bailed or leased. This eventuality is contemplated in the final clause of article 1.463: «if the buyer [rectius, purchaser] already has the thing in his possession for some other reason».

14 14 B) Constitutum possessorium This represents the reverse of the previous situation: the transferor retains possession of the thing, but not as title holder or owner, but by whatever other title: to follow the previous examples, the owner will become the bailee ( meanwhile the purchaser may take charge, materially speaking, of the thing) or leaseholder (for a period that is agreed between the parties). An analogous eventuality does not find legislative support in any article of the Civil Code, but neither does there exist any difficulty in accepting it, as is it is uniquely accepted by doctrine and jurisprudence, by means of the analogous application, but contrario sensu, in article 1.463, in terms of the general regulations in relation to private autonomy (the STS of the 15 th of January 1904 outlines the following: «there is no legal rule that prohibits the vendor continuing, with the agreement of the purchaser, in possession of the assets transferred, now that the contracting parties can establish all agreements and conditions that they deem convenient, and in no sense is this contrary to law, morality or public order»). The textual terms of article refer solely to «the delivery of personal property». Without doubt, it is generally considered that the brevi manu conveyance as much as the so called constitutum possessorium are equally applicable, in as much as they are legitimate forms of transfer of real assets. On the other hand, both forms of tradition concur in the view that besides granting possession in the circumstances referred to ( that the purchaser retains the thing in this power or that the transferor retains possession), there exists «agreement or consensus between the contracting parties» [rectius, interested parties]. This agreement is normally deduced from the general overall circumstances of the transfer; not with standing, as against possible litigation, it is preferable if it is written down expressly. C) The simple transferring agreement: the false conveyance Besides what has been said, one can deduce from the second proposition of article that «the delivery of the personal property. is to be affected.by sole agreement or in conformity with the wishes of the contracting parties if the thing sold cannot be transferred to the power of the buyer at the moment of sale». This analogous normative text, apparently insignificant, is without doubt of the greatest importance, granted that it is solely applicable to personal property. In the first place, because it indicates the top level of spiritualization of the conveyance in our law, in so far that it does not attempt to exclude the general scope of dominia rerum... non nudis pactis transferuntur.

15 15 In second place, for its practical significance: there exists an agreement between the vendor and purchser with regard to the transfer of real property rights, that the purchaser will be the title holder «the moment of sale [rectius, transfer]», always and when «the thing sold [transferred] cannot be conveyed into the power of the buyer [purchaser]» in this instant. Therefore, this rule is applicable to many conveyancing contracts and including in as much as they refer to the transfer of real property rights to the majority of commercial conveyancing agreements (cfr. SSTS of the 15 th of April and the 3 rd of May 1947, relative respectively to conveyancing agreements for the purchase of a winery and a goods placed in a wagon). D) The transfer of rights In relation to the transfer of rights, article has the following to say: «With respect to incorporeal assets, is governed by the provisions set forth in the second paragraph of article In whatever other case to which this is inapplicable delivery will be understood in terms of the act of putting in the power of the purchaser the relevant titles, or the use that the same purchaser makes of his right, with the agreement of the vendor». This principle must be understood with reference as much as to the incorporeal assets properly so called (such as the right of authorship) as to the real property rights that can be held (in the contrary case, one could not be able to speak in relation to the principles of use), excluding ownership in relation to things. For the rest, the conveyance causing general rules as regards instrumental and symbolic conveyancing, by means of the «appropriate titles». Finally, the article refers to the «legal practice» or, in doctrinal terms, to agreed practice. But possibly this practice, more than a form of transfer, properly constituted in probatory terms a supporting conduct that the delivery or transfer of the right in question has been affected with priority.