Legal System of Civil Law in the Netherlands
Real property rights always relate to an absolute power over an object that can be effectuated and enforced against everyone. Dutch property law only recognizes eight different real property rights. It’s not possible to create other real property rights than these. A person who wants to get a real property right in an object has to choose for one of the eight real property rights offered by law. Also the content of each real property right is for the most part regulated by law. Consequently, the real property rights form among themselves a closed system of mainly mandatory law.
Real property rights in a movable or immovable thing are always derived from a right of ownership of that thing. Ownership is the most comprehensive real property right. The owner has all possible powers over his property. As a result he may grant someone else the right to use it for some time. This can be done by an agreement in which he gives another person a right of use of his thing. But in that case this other person simply has obtained a debt-claim against the owner personally, not a right in the thing itself. As soon as the owner loses his right of ownership of the thing, the debt-claim of the other person (creditor) is lost too. It can’t be enforced against the original owner, since he no longer has any powers over the thing, and it can’t be enforced against the new owner of the thing either, because this person is not accountable for the debts (obligations) of his predecessor in title. This effect can be avoided by establishing a real property right in the thing in favour of that other person. The owner then must split off certain powers of his right of ownership and grant them to this other person in the framework of an acknowledged real property right. This other person then has acquired a real property right in the thing itself, that he can uphold against everyone, including the owner of the thing and persons who might obtain the ownership thereof from him afterwards. This means that his right want be lost when the original owner passes his right of ownership of the thing to someone else.
The owner of an immovable thing may split off the following real property
rights of his right of ownership:
The owner of a movable thing can split off no more than two different
real property rights of his right of ownership:
As mentioned earlier, Dutch property law makes a distinction between real property rights on the one hand and debt-claims derived from an obligation on the other. From their nature debt-claims only have effect against one specific person, the debtor. He is the only person who has to perform the obligation. When looking at real property rights, no direct debtor can be named. Every person coming into contact with the encumbered object (a thing or a debt-claim) has to respect the real property rights that are vested on it. The proprietor of such a real property right may take legal measures against each person who violates his right. He may demand, if need be in court, that a person who disturbs him in exercising his rights and powers over the object, immediately stops his unlawful behaviour. In addition he may demand that the offender repairs the damage done. One could say that every person on this planet in a way is a debtor of the proprietor of a real property right. All these persons have the obligation to withhold themselves from using the object to which the real property right is attached in a way contrary to the rights and powers imbedded in that real property right. Thus, all these ‘debtors’ have the obligation not to disturb the proprietor in the exercise of his rights and powers over the encumbered object. In this concept the proprietor of a real property right has as many debtors as there are people. This, however, is an artificial way of thinking, which denies the specific character of a real property right. A specific debtor, to be nominated in advance, is lacking. For this reason, when explaining the effect of real property rights, one speaks of a right in an object itself, and not of an infinite number of obligations with fictitious debtors.
The fact that the proprietor of a real property right maintains no personal relationship with those who have to respect his right (all the people of the world), has consequences for the way in which the law approaches someone who acts in violation of someone else’s real property right. Because no obligation exists between the proprietor of the real property right and the person who has dishonoured it, in the sense that there's no legal bond (obligation) as between a creditor and his debtor, such an offence cannot be labelled as a failure in the performance of a debt, nor as a breach of contract or a default of the offender. A violation of someone else's real property right produces other effects. The law has stated in general terms that a person who violates someone else’s rights commits an unlawful act against this other person, which, when there’s no justification for his violation, can be attributed to him and makes him liable for damages. In other words: a violation of someone else’s real property right is considered to be a tortious act of the offender against the proprietor (Article 6:162 DCC). As soon as this tortious act has set in, an obligation between the proprietor and the offender comes to existence by operation of law, which forces the offender to repair the damage that his unlawful act has caused. Although the obligation arises automatically from law, usually the tortfeasor will deny any liability, so the court has to determine whether a tortious act has been committed and, if so, how its impact must be repaired. The obligation to repair the damage may, for instance, impose a duty upon the tortfeasor to pay a sum of money to the proprietor as a financial compensation for the loss suffered. But it may also impose a duty to return the object to its legitimate proprietor, to restore the situation in its original condition, to withhold from further violating behaviour or to make a public apology or rectification. Since the tortious act has created an obligation, the proprietor of the violated real property right can uphold his debt-claim only against the tortfeasor in person. His debt-claim is as such an independent valuable right, that belongs to him beyond the real property right that was violated. A person may, evidently, at the same time possess different debt-claims and real property rights. The owner of a car, which was damaged by another person as a result of a traffic accident, remains also afterwards the owner of the (damaged) car. He can uphold his right of ownership against everyone. But besides this real property right in the car, he has a debt-claim too against the person who violated his property, being the person who, according to law, was responsible for the damage brought about by the road accident (tortious act).
Like in most continental law systems based on Roman law the legal words ‘possession’ and ‘ownership’ do not have the same meaning in Dutch property law. Ownership is a real property right in a movable or immovable thing. The law indicates that the owner has virtually all powers over the object he owns, irrespective of the question whether it is under his actual control. When the owner has granted another person a right of use of his property, it may in fact be under control of this other person. Nonetheless the owner still maintains his right of ownership. Although possession may also imply some legal rights, it refers foremost to an actual state concerning a specific object. Possession is the legally known situation in which a person holds an object as if it forms his property by actually keeping it under his control as if it belongs to him. The mere fact that the thing is under control of a specific person, is not the only important part. It’s crucial too that this person has to act and present himself towards others as the owner of the thing in his power.
In this sense ‘possession’ has to be distinguished as well from ‘holdership’ as used in Dutch property law. Holdership refers to the situation that a person holds and even might actually control an object, but with the intention to keep it for someone else. The holder has the object in his actual power, but he acknowledges at the same time that he himself has no real property right in it, or at least not the principal property right, because the object belongs to someone else who has granted him a right of use. Whether someone holds an object for his own (‘possession’) or for someone else (‘holdership’) has to be determined on the basis of common opinion. The actual facts as they appear are decisive, with due observance of the rule that when a person has started to hold an object for someone else by virtue of a legal relationship (like an agreement), he continues doing so on the same legal basis, as long as this situation has not appeared to have changed, either as a result of an action of him for whom he holds the object, or as a result of contradicting the right of this person (Article 3:111 DCC).
Usually the owner of a thing is also the one who presents himself as the person to whom this object belongs. Since he has the ownership of the object, he will exercise the powers that are included in his right. As a result he not only is the owner, but he feels and acts as such too. So as a rule the object shall be in ‘possession’ of its owner. But now and again a person acts as if he is the owner of an object, while according to law someone else has the right of ownership thereof. This may happen when someone has stolen an object. The thief intends to keep the stolen object for himself. He presents himself to the outside world as the owner of the stolen thing. But according to law he is not, because the right of ownership has not passed to him in conformity with the legal requirements set by law for a passage of property. A mere loss of possession, in other words, does not necessarily bring about the loss of ownership. In the event of a theft, for instance, the owner loses possession, but not his right of ownership.
It’s also possible that someone thinks he owns an object, but according to law he does not. This may occur when an object is transferred to him, but afterwards it becomes clear that the transfer or the agreement on which it was based, was invalid, so that the law cannot recognize the acquiring party as the new owner of the object. Nevertheless, it is conceivable that the acquiring party in the meantime has presented himself as the owner of the object, simply because he thought he was. During this time he had possession of the object, but (often in retrospect) not the right of ownership of it.
When the right of ownership and possession of an object are not united in one and the same person, the legal owner can demand that the possessor hands over the object to him, so that he regains the actual control over it as well as its possession. But the law has linked a few legal effects to the mere possession of an object. So, although possession is not a real property right, the law has attached certain legal rights to it that must be observed by others, including the legal owner.
First of all the possessor is regarded to be the owner of the object he possesses, until someone else proves he has a better right in it. This legal presumption makes that the legal owner has the burden of proof with regard to his legal claim to regain the object. But when the legal owner succeeds in proving his better right, the possessor must give the object back to him. With this, he has lost his possession as well.
Another important effect of having the possession of an object relates to the possibility to obtain the right of ownership of that object after some time through an acquisitive prescription. The possessor who continuously has possessed an object during three years (possession in good faith of a movable object), ten years (possession in good faith of an immovable property) or twenty years (possession in bad faith of a movable or immovable object) automatically obtains the ownership of the object that he possessed for such a long time. The real owner should have reclaimed his property in time. By not opposing for several years, he has lost his right of ownership. The law has granted it to the possessor of the thing.
An object is possessed in good faith when the possessor, at the moment of obtaining his possession, believed and in the circumstances reasonably could have believed that, according to law, he was entitled to the object. Once a possessor is in good faith, he remains to have this legal status, irrespective of his knowledge afterwards. When a person has bought a house and reasonably may assume that all the land within the fence surrounding the premises forms a part of his property, he shall use all of it as if it belongs to him, even when a part of it was in reality the property of his neighbour. Provided that he could not have known, by examining the public registers for registered property, that this part did not belong to the land plot he bought, he has obtained the possession of that part in good faith. If his neighbour doesn’t reclaim this part of his property during a period of ten years, the ownership of it will by operation of law pass to the possessor. The former owner has lost his right in it and can no longer claim it back. In order to calculate the length of this prescription period, the possessor may add the time that his legal predecessor was in possession of the object to the period during which he himself has had possession. Therefore the neighbour, who wants to prevent that he loses his right of ownership of this part of his land, has to summon the possessor to return his property and, if the possessor does not comply, file a legal claim to regain control over this part of his property within ten years from the day after he has lost the factual control over his property to someone who presents himself, towards him and the outside world, as its owner. The prescription period in this example is ten years because the new owner of the house (or his legal predecessor) reasonably could have thought that he owned the concerned part within the fenced off property. It’s also possible that the new owner of a house deliberately places a new fence on a piece of land, even though he knows that this strip belongs to his neighbour. By extending his garden with the strip of land and by fencing it off and using it for his own purposes, he not only has the factual control over the strip, but he acts towards everyone, including his neighbour, as if he owns it. Although he obtained the possession of the strip in bad faith, he will, after having had the continuous possession for twenty years, acquire the right of ownership, provided that his neighbour doesn’t reclaim it before the applying prescription period has elapsed (in that case a new prescription period starts to run). So even a thief of a valuable painting will, after a continuous possession of twenty years, become its legal owner. The real owner has lost his property by operation of law and can no longer claim it back. This certainly is a strange legal consequence, that can't be justified by the fact that the real owner has lost his possession of the painting for such a long period without reclaiming it in the mean time, since he didn't know who had stolen his property, so he was unable to claim it back from him. Nevertheless in the Netherlands this rule still applies in favour of thieves and crooks, unless an object has been stolen that was recognized as European or national cultural heritage (Article 3:310a and 3:310b DCC).
An important rule of Dutch property law concerns the fact that a right of ownership can only surround a thing as a whole, and not one of its parts. In this respect the principle of ‘accession to property’ plays a major part. This principle indicates that, as far as the law does not provide otherwise, the owner of a thing is the owner of all its components (Article 5:3 DCC). This means that the owner of a thing by operation of law will become the owner of all parts forming a component of that thing, irrespective of the fact to whom these parts belonged prior to the moment that hey became a component of another main thing. This principle is binding and refers to the factual situation of material and tangible objects. It cannot be set aside by parties by agreement. Just the factual situation decides whether a material object is a thing or a component of another thing, regardless of what parties may have agreed upon.
In order to determine if a material and tangible object forms a thing in itself or merely a component of another thing, Article 3:4 DCC describes what has to be regarded as a component. All that, according to general accepted views (‘common opinion’) forms a part of a thing, is a component of that thing. According to common opinion a house, a car, a ship and an overcoat form separate things. The parts from which these things are composed, merely are a component thereof. According to common opinion, the balcony forms a component of the house, the headlights are a component of the car and a button is a component of the overcoat.
But in addition, there is a second rule to determine whether a material object is an independent thing in itself or a component of another thing. This rule is to be found in Article 3:4 DCC, stating that a thing attached to another principal thing in such a way that it can't be separated of it without causing meaningful damage to one of the involved items, becomes a component of the principal thing too. This second rule is of importance for material objects which do not already according to common opinion form a component of another thing. A bronze sculpture, placed in the garden of a house, is not an object that specifically, by its nature, forms a part of the garden or the house. So one can’t say that common opinion qualifies it as a component of the house and garden. It isn’t attached either in such a way to the soil of the garden that it can’t be taken away without causing meaningful damage to either the soil or the sculpture. This means that it is a (movable) separate thing of its own. If this sculpture would be attached to a brick wall of the house by screws, it still wouldn’t have become a component of the house. By unscrewing it from the wall, no damage would be done, while it still would not be regarded by common opinion as a specific part of the house. But when the sculpture would be permanently attached to the wall by bone cement, it would have become a component of the house by virtue of the second rule, since now it is impossible to separate it without causing meaningful damage, either to the sculpture or to the house.
One has to notice that the two rules must be applied next and in addition to one another. So it isn’t necessary that a part is attached to another object in order to call it a component. The roof tiles can be removed easily, without causing damage to the roof (house) or the tiles. Nevertheless, as long as the roof tiles are placed on the whole roof of the house, they form a component of that house, because consistent with common opinion the house is the principal thing and the roof tiles form a part of it. On the other hand, it is possible that a material object can be qualified under both rules as a component. Usually a balcony, for instance, cannot be separated from the house without causing damage, but it’s also regarded as on object which in particular forms a part of the house. For the purpose of the principle of accession, however, this makes no difference.
The law distinguishes two different rules with regard to the accession of property, depending on whether it involves a movable or an immovable thing.
If a movable thing becomes a component of another movable thing that has to be regarded as the principal thing, then the ownership of the movable thing passes to the owner of the principal thing (Article 5:14 (1) DCC). The principal thing is the thing of which the value exceeds the value of the other thing considerably or the thing that is regarded by generally accepted views (common opinion) as the principal thing (Article 5:14 (3) DCC). According to common opinion a car is a thing of its own. The parts from which a car is built, like its tires, windows, seats, driving wheel, motor unit and so on, form a component of the car. They cannot be regarded as a separate thing, even though it is possible to remove them easily from the principal thing. A right of ownership can only surround a thing as a whole, that is to say, a material and tangible object which according to one of the rules of accession (common opinion or unbreakable attachment) has to be regarded as an independent and separate thing in itself. A right of ownership cannot be vested on one simple component of such a thing, but only on the complete thing as a whole, with all its parts and components. The same applies to other rights in rem, thus to limited real property rights in a thing, this contrary to a debt-claim, which indeed may be related to just one of the components of a thing. It is not possible for parties to derogate from this principle rule. The reason is obvious. Rights of ownerships and limited real rights in a thing can be enforced against everyone, regardless who owns the thing. This means that they have to be published in accordance with the rules set for this purpose by law. And although these rules make it possible to express sufficiently if a right in rem is vested on a thing and, if so, to whom it belongs, it would become to complicated, especially where it concerns movable things, to express by means of the chosen form of publication that certain parts of the thing belong to someone else. Third parties would not be able to keep things apart. For this reason the entire thing always is the object of a right of ownership or a limited property right in a thing. Parties cannot agree differently. If they do so, this has no real effect, in the sense that it has no result towards third persons. The effect that parties intended to accomplish, is not acknowledged by law. With regard to debt-claims granting a right of use of a thing, this is different. Since only the involved debtor and creditor have to be aware of the existence and content of the debt-claim, there is no objection if they point out solely a single component of a thing as the object of their debt-claim, for instance just one of the tires of a car. Contrary to rights of ownerships and limited real rights in a thing, debt-claims therefore may be related purely to a component of a thing. For that matter, the same applies to limited property rights in such a debt-claim. They follow the nature of the object of which they have been split off. If this object, the debt-claim, only relates to a component of a thing, then also the limited property rights drawn from that specific debt-claim, either directly or indirectly, are always related solely to this explicit component.
With regard to immovable things the principle of accession to property works slightly different, due to the fact that these things cannot be removed and may be attached permanently to the land. The starting point is always the right of ownership of a land plot. The land is at all times the principal thing, which means that it is the thing that is surrounded by the right of ownership of the person who is registered as its owner in the registers for registered property. Article 5:20 paragraph 1 DCC implies that the right of ownership of land comprises, as far as the law does not stipulate differently, the topsoil and all buildings and constructions permanently attached to the soil, either directly or through a connection with another building or construction, unless they are a component of another person’s immovable thing. Also plants and trees connected to the soil are a component of the land. But in addition, all what according to common opinion forms a component of the land or of its unbreakable attached components (a building is for example such a component), is a component as well of the principal thing (land) (Article 3:4 DCC). Because of this, the tiles on the roof of a house are a component of the house, which in itself is a component of the land. Therefore, the owner of the land is automatically also the owner of the roof tiles. His right of ownership encloses the entire immovable thing, including all its components. The owner cannot stipulate differently. As long as a roof tile is actually placed on the roof, this tile falls within the scope of the right of ownership of the owner of the land. No other person than the owner is entitled to remove it or to make it a separate thing of its own.
But the system for publication of rights in rem related to immovable things differs from that related to movable things. The right of ownership of an immovable thing is published by means of registration in the registers for immovable property. The same applies to limited real rights drawn from a right of ownership in such an immovable thing. In two ways the previous effects of the principle of accession to property can be undone. Firstly, by establishing a right of superficies. This makes it possible to separate a construction on the land from the land itself, not factually, but legally. The owner of the land still maintains his right of ownership of the full land, but with regard to a specific component, for instance a house on his land, he has granted someone else a property right in rem exclusively related to that house. The proprietor of a right of superficies may regard himself as the sole owner of the house, despite that it is unbreakably attached to the land. According to Dutch law, however, he has obtained a limited property right on the land of the owner and not an independent right of ownership of the house.
Another method to break through the principle of accession to property is by the establishment of an apartment right. This principle also implicates that the owner of a building by operation of law is the owner of all its components, therefore of all the rooms and apartments within that building. Yet, by creating an apartment right it is possible to grant a third person a right in rem with regard to one or more apartments separately. The proprietor of such an apartment right has the same powers with regard to his apartment as an owner. But once more, according to Dutch law, he has not obtained a right of ownership of an apartment, but a limited property right in the building, related to a specific apartment.
The above mentioned rules and principles must always be kept in mind when studying Dutch property law.
It is clear that a person may not regard himself freely as the proprietor of something. Such a system would lead to conflicts between the alleged proprietors and therefore to a chaotic and unjust society in which only the most aggressive persons would have their way. For this reason the law sets rules which have to be observed by everyone and it makes sure that property (a ‘property right’) can only be obtained if it is acquired in accordance with a procedure imposed by law. Only when this procedure has been followed, the law acknowledges that a person has acquired a property right in, for instance, a movable or immovable thing or a debt-claim. When someone has obtained property in any other way, for example through stealing, threat or blackmail, then the law will not accept his property right. According to law, this person has not acquired any property right in the object under his control and the real proprietor is entitled to take it back from him, if necessary assisted by the force of the police acting on behalf of the proprietor.
The law entails various statutory provisions indicating how property may come to existence and how people may obtain a property right in it. It regulates which person may call himself the proprietor of a newly formed thing. It also shows how already existing property rights may pass to someone else in such a way that the passage of legal entitlement is recognized as such by law. People have to observe these rules. They are not able to invent their own rules for acquiring or passing property, since interests of third persons and the society as a whole are always involved too. If parties want to effectuate any (change in the) legal position towards property, they must fulfil all legal requirements for the acquisition or alienation of property. Otherwise their actions will not have the intended effect. The law simply won’t recognize their operation as a valid acquirement of property, so in spite of all efforts made, according to law all remains as it was.
Some of the legal grounds of acquisition of property, like confiscation and expropriation (dispossession), can be found in public law. The most important grounds, though, are based in civil law. In particular the Dutch Civil Code entails many juridical facts leading to the constitution or passage of a property right. They will be commented on this internet site.
The different grounds of acquisition are divided into two groups, namely in original and derivative acquisitions.
Original acquisition is the acquisition of property without reference to a previous entitlement of another person. Original acquisition creates a new property right, either because new things are formed that will belong to someone or because existing things without an owner are seized in possession by a specific person who treats them as his property, with the effect that the law grants him a property right in the thing. It is possible as well that a thing previously was owned by someone, who has abandoned his property right in it. This property right then has ceased to exist. If another person after a while takes possession again of the abandoned thing, then by operation of law he has created a new original property right of his own. He did not acquire the earlier existing property right of the former owner of the thing, since that property right had already ended. Merely the fact that the new owner has taken possession of the abandoned thing, is a juridical fact to which the law responds by creating a new property right.
Accession to property (‘natrekking’) is usually regarded as a way of original acquisition too. But in fact accession does not lead to the constitution of a new property right. In reality only the object to which a property right is linked expands. When a house is built on a piece of land, the owner of that land becomes by accession automatically the owner of that house as well. But he has not acquired a separate new property right in it. He still has just one right of ownership, that of the land, but this land now includes an additional component, namely the house built on it. Only the object of the right of ownership has grown.
Derivative acquisition covers all situations where the proprietor has acquired a property right in an object that he has derived from a previous title holder. No new property right is formed, but an existing property right has been taken over from a previous proprietor, either entirely or a part of it that was granted to him. Because the acquiring party has derived his property right from someone who already was entitled to that property, he has to reckon with the existence of possible rights in rem of others, which already might have been vested on the acquired object. So it is possible he doesn’t obtain all powers and rights in the acquired object under his control, because third persons may invoke an already existing real property right or a qualitative obligation which he has to respect.
This means that there is a considerable difference between an original and derivative acquisition of a movable or immovable thing. When the acquisition is original, the right acquired to the thing becomes property of its own, which by its nature must be unqualified and unlimited, and since no one but the acquiring party has any right to the thing, he must have the whole right of disposing of it. The acquiring party knows for sure that the thing can’t have been encumbered with any real property rights of others. But with regard to a derivative acquisition, it may be different, for the person from whom the thing is acquired may not have an unlimited right to it himself, but for instance only a limited property right, which means that the acquiring party did not obtain the thing in full property, but merely limited powers and rights in it. Or the person from whom the thing is acquired may have alienated it with certain reservations of right, for example because he already had granted others a right in rem in the thing. Again the acquiring party may have obtained the thing fully under control, but all the same it’s possible that he has not obtained all the rights and powers over it, due to the fact that there may be other proprietors who are able to exercise their rights in the thing against him.
A right of ownership is a property right. The same has to be said of a debt-claim belonging to a creditor. They both form the most important property rights of Dutch civil law. All rights which are derived from either the right of ownership or a debt-claim, are property rights as well (Article 3:1 DCC). How a right of ownership or a debt-claim may arise, will be examined firstly. As soon as a new property right is created, that is not derived from someone else, one speaks of an original acquisition of property.
Subsequently, it will be shown how new limited property rights can be split off of a right of ownership or of a debt-claim. In this way new property rights may be shaped. It’s even possible to split off a limited property right of another limited property right that in itself already had been split off of a right of ownership or a debt-claim. A new property right may also be created when the proprietor of a right of ownership, a limited property right or a debt-claim grants someone else a right of use in personam. This other person then has obtained a debt-claim, which in itself is a property right too, on the understanding that it can only be enforced against one specific person, namely against the debtor. In this way various debt-claims may arise. In these situations the created property right, whether it’s a limited property right or a debt-claim, is always derived from someone else. This other person has either have split off a limited property right of an already existing property right or he has granted someone else a debt-claim to obtain a performance that is related to an already existing property right. Therefore, strictly spoken, this involves a derivative acquisition of property.
An existing property right (right of ownership, limited property right, debt-claim) forms a part of the property of its proprietor (natural or legal person). As a rule it can move over to someone else’s property, usually in exchange for a counter performance, like a financial sum. There are various ways in which the entitlement to a property right may pass from one person to another. Again, in al these situations, the property right is obtained from someone else and therefore the acquisition has to be regarded as a derivative acquisition of property, either under universal or under particular title.
An existing property right may cease to exist. A debt-claim, for instance, ends as soon as the performance, to which the creditor is entitled, has been carried out properly. After the creditor has received the indebted performance, he can’t debt-claim it again. Property rights may also end on the expiry of a fixed period or the fulfilment of a specific condition. Furthermore a property right ends when the thing, to which it is attached, is destroyed or damaged in such a way that it no longer has any use or value. Property rights may also end when the juridical act which has created it, is nullified or appears to be null and void from the start, in which case the property right legally never existed.
An existing property right, whether it’s a right of ownership, a limited property right or a debt-claim, belongs to someone, its proprietor. It forms a part of his property. In general an existing property right may pass to someone else in order to form a part of his property. Provided that the legal requirements for such a passage are observed, the law will recognize that the property right has moved from one proprietor to another, who, as of then, may exercise all the powers in it. This means that the new proprietor may use and enforce, if necessary with assistance of the judicial authorities and police, his powers, either against the whole world (if real property rights are passed on) or against the original debtor (when debt-claims are alienated).
A property right may in various ways pass from one proprietor to another. The new proprietor takes over an existing right from someone else, so in all events it concerns a derivative acquisition. The property right may be acquired under universal title or under particular title. In the first concept the proprietor obtains (a share in) the entire property of his legal predecessor. For this reason he usually acquires not only (a share in) more than one property right, but also (in) all the legal duties and obligations of his predecessor. It is not possible to stipulate otherwise. He has just one possibility: to refuse or to accept the complete package. He can’t pick out just one or more property rights or leave out one or more debts or obligations. Dutch property law identifies three grounds of acquisition under universal title: succession by inheritance (‘erfopvolging’), joining of estates under matrimonial law (‘boedelmenging’) and joining or separation of properties through a merger or split up of legal persons (‘fusie’ and ‘splitsing’).
Where the new proprietor obtains just one specific property right, he acquires it under particular title. He will only receive this specific property right, with all the duties and obligations immediately attached to it (because of possible limited real property rights or qualitative obligations on it of others that he has to respect), but he doesn’t acquire any other property rights of his legal predecessor, nor any other legal duties or obligations, neither in full nor by means of a share. All other derivative ways of acquisition than the three earlier mentioned acquisitions under universal title represent an acquisition under particular title. The most important are the apportionment of a community of property (‘verdeling’), the transfer of property (‘overdracht’) and the transfer of a contractual position (‘contractsoverneming’).
Although the creation of a limited property right is theoretically not a way of derivative acquisition, since an entirely new property right comes to existence, it can nevertheless be regarded as such, if one considers that in fact it concerns a split off of a limited number of powers of an already existing property right, which are granted for a specific time to another person with real effect and will return to the principal proprietor afterwards. The only difference with a transfer is that not all powers embedded in an already existing property right, thus an entire property right, are transferred to the acquiring party, but merely a few of these powers, and possibly for a limited period of time. Not surprisingly the legal requirements for establishing a limited property right are exactly the same as for the transfer of the property right of which the limited property right has been split off.
Characterising for an acquisition under universal title is that the legal successor passes his entire estate to one or more successors in title, therefore all his assets (property rights and other valuable rights) and all his legal duties and obligations. If there is just one successor in title, this person will obtain the entire estate of his legal predecessor, which is added to his own property. All these assets and debts of both properties form together his new estate. This means that the creditor of a debt that was taken over from the legal predecessor can be recovered from all assets of the successor in title, regardless whether he has obtained them from his predecessor or has been imposed by it previously on his own or even afterwards in another way. But usually there are two or more successors involved in an acquisition under universal title. Then they all receive an equal share in the estate of the predecessor, therefore in all his assets and all his obligations. Although such a share immediately belongs to the personal estate of the involved successors, it is usually treated separately, awaiting for the moment on which the debts of the legal predecessor will be paid off and the remaining assets will be apportioned to the different co-successors in title, each in proportion to the value of their shares. Only after an asset, previously belonging to the legal predecessor, has been appointed and transferred to one of the involved successors, this person will have obtained a full right in it, solely belonging to him. The other successors in title have lost their share in it. Because the bond with the co-successors is broken for ever, the asset will be treated as of then as a normal property right belonging to the estate of the person to whom it was apportioned.
An person who is called as heir to the estate of a deceased person, acquires under universal title a share in all assets and liabilities belonging to that estate. The assets and liabilities of the deceased's estate together form a community of preoperty as long as the assets have not yet been divided and apportioned to the individual heirs.
There’s an easy explanation for the fact that an acquisition under universal title has the effect that the successors at all times obtain the entire property, thus all assets and obligation of the legal predecessor, each to equal proportions. In such event the legal predecessor always passes over his entire estate to someone else. If he would be able to grant the other person only his assets, his creditors would in fact lose the ability to recover their debt-claim from the property of their debtor. After the assets are alienated to someone else, the property of the legal predecessor would only consist of debts and obligations. But since these are attached to the creditor personally, the successors under universal title could not be held responsible for them. The heirs would solely have acquired the assets, while the creditors of their legal predecessor still would have to turn to their own debtor to debt-claim performance, although he no longer owns any valuable property with which he could satisfy his debts.
In general the legal predecessor who passes on property under universal title, does not get a counter performance for it in return, which would flow in the property of the legal predecessor as an equal compensation for the loss of assets. Normally, under such circumstances, the creditors of the legal predecessor would be able to nullify the transfer of the assets on the basis of fraudulent conveyance (Article 3:45 DCC), this in order to return the assets to the property of their own debtor to preserve their recovery rights. But sometimes this is not a convenient solution. There may be valid reasons to pass all assets of a person to someone else, for instance when the proprietor dies. Because the deceased proprietor no longer can hold the assets himself, it is logical that he wants to leave them to his children or to his other heirs or legatees. This is a normal desire that as such is recognized by law as a legitimate ground. But to guarantee that the recovery rights of the creditors of the deceased proprietor are not harmed, the law had to order too that the heirs of the proprietor not only receive the assets from the deceased’s estate, but also his debts and obligations. So an heir who wants to receive any assets from the deceased’s estate, has to accept an equal portion of the debts into the bargain. This means at the same time that the creditors of the deceased are entitled to recover their debt-claim, in proportion to the share of each heir in the deceased’s estate, from the property of these heirs, which now includes the assets acquired under universal title from the deceased’s estate. Nevertheless, this may be a disadvantage to these creditors when an heir has many other personal creditors of his own, who are equally entitled to recover their debt-claims from his property. In order to keep away from such a situation, the creditors of the deceased have the right to postpone the apportionment of the deceased estate as long as their debt-claims have not been fully recovered from it. By postponing the apportionment, they are able to preserve the same opportunities to recover their debt-claims as they had before the moment that the property of their debtor passed under universal title to the heirs. Before the passage under universal title they could only recover their debt-claims from the property of their debtor, i.e. the deceased. After the passage under universal title they are at least still able to recover their debt-claims from that same property, namely the not apportioned estate of the deceased, but in addition they may turn to the property of the heirs, although then they’ll encounter competition from the personal creditors of the heir himself.
For the same reason the conclusion of a marriage under a marital community of property leads to a joining of two properties under universal title. The marital community of property is constituted by all assets and debts of the husband and all assets and debts of his wife, without the exclusion of one or more assets or debts. The creditors of the husband are, as soon as the marriage has been concluded, entitled to recover their debt-claim from all assets of the marital community of property, irrespective whether these were brought in by the husband, their original debtor, or by his wife. The same applies, of course, to the creditors of the wife. If, for instance, the husband would be able to bring solely his assets into the community of property, the marriage could have negative effects for his creditors.
This, however, does not guarantee that the creditors of the future spouses can never be harmed by the marriage at all. Although they still may recover their debt-claims from the assets of their debtor and even from the assets which were brought in by his spouse, they have to compete after the conclusion of the marriage with the creditors of that spouse when trying to recover their debt-claims from all assets of the marital community of property. So if their debtor marries someone whose property includes more debts than assets, their recovery rights will in effect diminish. The creditors have no means to stop this result. The law has explicitly accepted this possible consequence, since the freedom for future spouses to marry into a marital community of property and to shape their family live in this way is valued more highly than the financial interests of their creditors.
The same thought lies behind the third ground for an acquisition under universal title: a legal merger of two or more legal persons. Such a merger (or split up) may be necessary or desirable for business reasons. But again, the law wants to prevent that a legal person is able to transfer solely his assets to another legal person, and not his debts, because this would mean that the creditors of the first legal person would be left with an empty shell, since they would not be able to claim performance of the other legal person who has obtained all valuable assets. Debt-claims are attached to the debtor personally. Therefore this other legal person, whether he already existed as a separate legal entity or has been incorporated especially in view of the legal merger, always acquires under universal title all assets and all debts of all legal persons involved in the merger. When an existing legal person is split up into two or more separate legal persons, each of them will, in proportion to the acquired assets, obtain as well a proportional part of the already existing debts of the split up legal person. It is not possible to leave all debts in the split up legal person behind and to transfer all its assets to the newly formed entity.
Property can be obtained also in another way than under universal title of succession. When the acquiring party only receives a property right in one specific asset of his legal predecessor, and not a share in his entire property (assets and liabilities), one speaks of an acquisition under particular title. The acquiring party solely gets a property right in one asset, without taking over one or more debts of the former owner of that asset. The buyer who has obtained the ownership of the sold object, doesn’t obtain as well a proportional part of the debts of the seller’s property. As a rule none of the debts of his legal predecessor pass to him, not even debts of which the performance was related to the acquired asset. The same applies when an object is delivered on another legal basis, like a donation, or when the acquiring party merely has obtained a right of use (debt-claim) in someone else’s asset. No existing debts of the other party are taken over.
When an asset has passed to someone else under particular title of succession it has left the property of the alienator for good. This could affect the recovery rights of the alienator’s creditors too. Yet, this danger is less present than at an acquisition under universal title. At an acquisition under particular title usually not all assets of the alienator will pass to someone else’s property, as in the case of an acquisition under universal title. This generally means that the alienator still has sufficient other assets with which he is able to pay off his debts. Moreover, the alienator, as a rule, obtains an equally valuable counter performance from the person who has acquired his asset. One asset indeed leaves his property, but at the same time another asset of equal value is brought into it. On the balance the value of his property stays the same. At an acquisition under universal title the acquiring party doesn’t have to pay a counter performance to the alienator at all, which means that nothing fills up the gap that the alienated assets have left in his property. Only by anchoring an equal part of the debts to the alienated assets, the recovery rights of the alienator’s creditors can be protected. That’s why, at an acquisition under universal title, even after the assets have passed to someone else’s property, these creditors may recover an equal part of their debt-claims from these particular assets.
All the same, also an acquisition under particular title may harm the recovery rights of the alienator’s creditors, especially when the alienator doesn’t receive any counter performance in return for his asset or he receives a counter performance of far less value. As long as his other assets are sufficient to cover his debts, he may donate an asset to his friend or a family member or he may accept a less valuable counter performance from anyone he pleases. His creditors are still able to recover their debt-claims entirely from the remaining assets. But when such a transaction is made at a moment that his property already entails more debts than assets or when such a transaction will have as result that his property becomes insufficient to cover all his existing debts, his creditors may react to it. The law provides them the right to nullify the transactions which the debtor has voluntarily entered into and which have harmed or will harm their recovery rights. If a debtor, although legally not obliged to do so, performs a juridical act, while he knew or should have known that it will harm the opportunities of his creditors to recover their debt-claims from his property, then this juridical act is voidable on the ground of ‘fraudulent conveyance’ (Article 3:45 DCC). This ground of voidability can be invoked by every creditor who’s opportunities to recoup himself are harmed by this juridical act, irrespective of the fact if his debt-claim already existed before the juridical act in question was performed or if it came to existence afterwards. After the debtor has been declared bankrupt, the liquidator has even more possibilities to nullify transactions that have unreasonably harmed the recovery rights of the creditors.
The most important grounds of acquisitions under particular title are a transfer of property, the creation of a limited property right, the transfer of a contractual position and the apportionment of a community of property.
A transfer is a juridical act under which an alienator with power of disposition delivers an existing property right to another person, the acquiring party, by performing all necessary requirements for the publication of the entitlement of the acquiring party, in such a way that the law acknowledges the acquiring party indeed as the new proprietor of the transferred property right. A valid transfer of a property right requires that the underlying object is delivered to another person under a valid legal basis by someone who has power of disposition to do so (Article 3:84 DCC). This means that a transfer, in order to be recognized as a valid passage of property, must meet the following three legal requirements.
First of all the transfer must have been performed by a transferor with power of disposition over the transferred object. This requirement is founded on the plainest dictates of common sense, adopted in all systems of law, that no one can transfer a right to another which he has not himself (‘nemo plus juris ad alienum transfers potest quam ipse habet’). The law can’t accept a transfer when the transferred property right didn’t belong to the transferor or when there was an obstacle for the proprietor preventing him from exercising his power of disposition, for instance a seizure or a mortgage that was already vested on the transferred object.
The second requirement for an effective transfer deals with the necessity of a valid legal basis. ‘Legal basis’ is the official term indicating the reason for the passage of property. The law can only accept a transfer if it is based on a valid reason. The most common reason is the mutual intention of the transferor and transferee to make the latter the new proprietor of the transferred property right, which intention is preset by parties in an agreement, like a sale contract or donation agreement. The law obeys this wish, provided that the agreement has been concluded in accordance with all legal requirements and, of course, that the remaining two requirements for a valid transfer are met as well. The agreement between parties then forms the legal basis for the transfer. It justifies why the law, after all publication formalities have been fulfilled, should accept the transferee as the new proprietor. Although an agreement usually serves as legal basis for a transfer, other legal sources for obligations may play this role as well, like a tortious act which has produced an obligation to pay damages. In fact the obligation for the tortfeasor to pay a sum of money as compensatory damages is the legal basis for the transfer of the money he owns up until that moment, to the person who has suffered damage and who will have to obtain an entitlement in it with real effect. In such instance the law acknowledges this obligation as a legal basis for the transfer of money because in this approach the damage that someone has suffered will be largely repaired in an appropriate way by the payment of money. Other obligations, arising directly from law, that may as well create a legal basis for a transfer of property, are an undue performance and an unjustified enrichment. The recipient is obliged to return the object he has obtained without any legal justification or with which he has been enriched at the cost of the other. The received object, however, was en still is his property when the obligation to return it came to existence. In order to comply with this obligation, imposed on him by law, he has to transfer the received object back to the person who previously had transferred it to him. An obligation may also come to existence when a party to an agreement has rescinded this agreement on the ground of a breach of contract by the opposite party. The rescission itself has no retroactive effect. The law does not presume that the transfer has never happened. Even after the rescission of the agreement, a transfer based on it, remains intact. The rescission merely produces an obligation for the party who has received the object under this transfer, to transfer it back to its original owner or, if this is no longer possible, to pay compensatory damages in money. As far as the opposite party is still able to transfer the received object back to its original proprietor, such an obligation may function as a legal basis for this transfer. The same applies when he has to pay a sum of money as compensatory damages.
A third requirement for a valid transfer is a delivery of the transferred object in the legally required way. This requirement is connected with the fundamental principle that third persons at all times must be able to retrieve who has a real property right in an object which gives this person the right to exercise certain powers over it, enforceable against everyone, and which gives him power of disposition, so he is allowed to alienate the underlying object to other persons. For this reason a right of ownership of an immovable thing must be published in the public registers for registered property. The same applies to limited real rights in such things. Third persons must at all times be able to know who owns a house or land plot or who has a limited property right on it. So when another person has acquired such rights on the basis of a transfer, this change of entitlement must be shown by means of a corresponding registration in these registers as well. The new owner or limited proprietor must be recorded in the public registers as such, so that everyone can see that from a specific moment in time he owns the house or land plot or has acquired a limited property right in it. The formalities that the transferor and transferee have to observe in order to publish the fact that the transferee has become the new proprietor of a property right in immovable property, outline the necessary delivery. The transferor and transferee must ask a notary to make a notarial deed of transfer, which will be registered in the public registers for registered property. Only after this registration has been made, the transfer is completed. Each person consulting these registers, can now become aware of the fact that the immovable property belongs to another owner or that it has been encumbered with a limited property right which is enforceable against everyone.
The publication of real property rights in a movable thing occurs by exercising actual power over that thing. The person who keeps a movable thing under his control, may be regarded by others as the person who owns it. Hence, the way in which real property rights in a movable thing are published, is by actually holding it in control. Other persons may, according to law, assume that the person holding a movable thing in his power owns it or at least has acquired a pledge or usufruct on it (a pledge and a usufruct are the only possible limited real rights in movable things). So, obviously, the formalities to deliver a movable thing consist of actions which allow the transferee to take actual control over that thing in order to enable him to present himself towards all other people as its new proprietor (new owner, pledgee or usufructuary). After the transferor has handed over the movable thing to the transferee, everyone may assume that, because the transferee holds the object in his power, he is the owner (or pledgee or usufructary).
Just like any other independent property right, a debt-claim can be transferred to someone else. The creditor may himself collect the performance which the debtor owes to him, but he may also grant the entitlement to it to another person, who as of then will be regarded by law as the new creditor, having an enforceable right against the original debtor to demand the indebted performance from him.
Although a debt-claim has no real effect, since it has to be observed exclusively by the involved debtor, it’s obvious that the one person liable for it, namely this debtor, must at all times know to whom he has to perform his obligation. This means that the required publication must be tuned to his knowledge. On the other hand: since no other persons than this specific debtor can be held accountable for the performance of his obligation, it’s sufficient when only this debtor knows to whom the debt-claim belongs, therefore who is entitled to demand the indebted performance from him. For this reason the publication of property rights in debt-claims purely effects the debtor himself, and no one else.
When an obligation comes to existence the debtor will always be aware towards whom he is engaged to fulfil the indebted performance. Where the obligation is derived from an agreement between the debtor and creditor, this agreement automatically implies that the debtor has accepted to perform his obligation to his counterparty. So his counterparty to the agreement will be the proprietor of the debt-claim, unless he has explicitly appointed another person to this end. Where the obligation is immediately set by law, as in the case of a tortious act, an undue performance or an unjustified enrichment, usually the person who has suffered a disadvantage as a result (injured person, performer of an undue performance, person who has been impoverished) will turn to the tortfeaser, the recipient of the undue performance or the unjustifiably enriched person. The law automatically imposes a debt on these persons as soon as the facts meet the legal requirements for these sources of obligations. The debtor, who has been approached by the disadvantaged person, may immediately recognize his debt-claim and perform the indebted obligation to him. It’s possible too that he will deny his liability. In that case the court must decide whether an obligation has arisen from law on the basis of one of these legal grounds. If the court awards the claim of the disadvantaged person, the debtor will again automatically know to whom he has to perform his debt. The publication of a debt-claim is guaranteed this way.
But what if the original creditor decides to transfer his debt-claim against the debtor to another person. The necessity that the debtor always must be able to know to whom he has to perform his obligation, implies that the old and new creditor must inform him of the passage of the debt-claim. If the transfer concerns a debt-claim to name, the transferor (old creditor) and transferee (new creditor) have to draw op a private deed of assignment and notify the debtor of the transfer of the debt-claim, with indication of the identity of the new creditor. This notification is necessary to make the new creditor indeed the new proprietor of the debt-claim. As soon as the debtor has received the notification of assignment, he knows that he is committed to a new creditor. The formalities for such a delivery resemble the formalities for the delivery of a real property right in an immovable thing, with the difference that the notification of the transfer, in view of the nature of the debt-claim, only has to be addressed to the debtor who has to carry out the chargeable performance and not, as in the case of immovable property, to the whole world, this is to say, to all people who could possibly come across the immovable thing and have to observe the powers of persons with a real property right in it.
When a debt-claim is made to order or to bearer, the debtor has accepted in advance that he has to pay his debt to any person who will show him the negotiable instrument at the agreed moment. If a creditor wants to transfer such a debt-claim to a third party, he merely has to hand over the negotiable instrument to him. With this instrument the third party is able to present himself to the debtor as the (final) creditor to whom the debt must be paid. The formalities of such a delivery show resemblance with the delivery of a real property right in a movable thing. In both cases the object, with which the existence of the property right is published, is brought under control of the new proprietor, enabling him to present himself towards each person who might encounter that object as the (new) proprietor.
The second mentioned requirement for a transfer, the existence of a valid legal basis, makes sense because it’s possible that parties have fulfilled all other requirements, yet without having the intention to alienate any property to one of them. If, for instance, Jan, the owner of a watch, wants to borrow it for a while to his close friend Peter, who puts it at his wrist, one could say that Jan has brought the watch under control of his friend Peter, who is able to present himself towards the outside world as the new owner of the watch. This delivery would have been carried out by the owner of the watch, Jan, therefore by a person with power of disposition. But still no transfer of ownership of the watch has occurred. Jan and Peter never intended this, so a valid legal basis for such a transfer is absent. Where not all three requirements of a valid transfer are met, the law can’t recognize the actual situation as a passage of property, even when all facts seem to point in this direction. Jan still owns the watch, even when it’s at the arm of Peter.
The law makes it possible for the owner of a movable or immovable thing to split off one or more powers of his property right and to grant these powers with 'real effect' to someone else, on the understanding that parties have to choose for one of the standard frameworks which the law provides for this purpose. A split off exists of a transfer of some of the powers which are enclosed in an already existing right of ownership to another person, leaving the remaining powers at the owner. The split off powers must be captured in one of the seven standard forms that are available, next to a right of ownership, for this purpose and be published as a limited real property right in the legally required way to ensure its existence and real effect. The split off itself is called the establishment of a limited real right. The separated limited real right is vested on the right of ownership. This means that the right of ownership only represent the remaining powers (with real effect) during the time that the limited real right exists.
Since the establishment of a limited real right is nothing else than the (temporary) transfer of some of the powers of a right of ownership, the formalities to create such a limited property right are the same as those for the transfer of a full right of ownership to a new proprietor, yet restricted, of course, to certain powers, and possibly to a fixed period of time. Article 3:98 DCC makes clear that the statutory provisions for the transfer of property rights apply accordingly to the establishment of limited (real) property rights. This means that the establishment of a limited real right requires that the encumbered object is delivered to another person under a valid legal basis by someone who has power of disposition over that object (Article 3:84 DCC). The legal requirements for establishing a limited real right are therefore exactly the same as for a transfer of the entire encumbered property.
Solely the owner (proprietor of right of ownership) of the to be encumbered property right has the necessary power of disposition. As a result no other person is allowed to vest a limited real right on the movable or immoble thing, that is to say on the right of ownership in that thing. If this happens anyway, the limited proprietor has acquired his right from a person without power of disposition, so that not all legal requirements for a valid establishment are fulfilled. The law will not accept that a limited real right has been established, unless the person who acquired it acted in good faith. A person who, in good faith, acquired a limited real right from someone without power of disposition is protected by law in the same way as a person who, in good faith, acquired a full property right by virtue of a transfer. Only when the owner has failed to publish his property right correctly, it’s conceivable that the limited proprietor did not have to know that the person who granted him his right was unauthorized to do so. Only then it is possible that he acquired his limited real right in good faith.
Usually an obligation serves as legal basis for the establishment of a limited property right. This obligation may be derived from an agreement between the main proprietor and the limited proprietor or from another legal ground, like an undue performance or an unjustified enrichment or a judgment of the court. When the bank grants a loan to its client, it will almost certainly demand collateral, for instance by stipulating a mortgage or pledge in the loan agreement. Then this loan agreement produces the obligation which forces the client of the bank to establish a real security right on behalf of that bank. When two neighbours have a dispute over a right of access, the court may order that one of them has to give the other an easement. In that case a court order serves as legal basis for the establishment of this limited real right. Without a valid legal basis, no valid limited real right can be established.
Also the formalities necessary to actually bring about the limited real right are exactly the same as for a delivery that is necessary to accomplish a valid transfer of the underlying property. They serve the same purpose: third persons must always be able to determine if a limited real right, being a right that is enforceable against everyone, has been vested on another property right and, if so, to whom it belongs and which powers it entails. Because limited real rights can be upheld against everyone, third parties having acquired a property right will be bound by already existing limited real rights in the acquired object. So when someone intends to acquire a movable or immovable thing, for instance an inventory or a house, he wants to ensure beforehand that he can’t be confronted afterwards with already existing limited real rights of others. For the reason that limited real rights have real effect, the law demands that they are published properly by means of observing the formalities which are set for the delivery of the right of ownership of the thing, that also intend to make the transfer of that thing known to the people who it may concern.
If the encumbered object is an immovable thing, the formalities for the establishment of a limited real right in such a thing consist of the making of a notarial deed of establishment between the principal owner and the limited proprietor and its registration in the public registers for registered property. After the limited real right has been made public, everyone at least has the possibility to ascertain whether such a limited real right has been vested on the immovable thing. An immovable thing may be encumbered with the following limited real rights: long leasehold, easement, apartment right, right of superficies, usufruct and mortgage.
Not more than two kinds of limited real rights may be vested on movable things: a usufruct and a pledge. The formalities to establish these rights are once again the same as for a delivery of the encumbered movable thing itself. The owner must bring the movable thing in the power of the usufructuary or pledgee. A usufruct is usually established on a movable thing as part of a usufruct on the entire property of a person, as in the case of a usufruct of the surviving spouse on the estate of his deceased partner. His partner’s estate may include a house and land and all movable things that are present in that house. The usufruct on the house and land is established by registration of a notarial deed in the public registers for registered property. It allows the usufructuary to use the house and land and to live there. When the usufructuary moves in the house, he will automatically exercise the actual power over all movable things in it. By taking control of these movable things in this way, the usufruct on these movable objects is established. But although the usufructuary has the encumbered movable things under his control, he has not acquired a right of ownership of them. The legal basis which allows him to take control of the movable things and to use and enjoy them, is not a passage of property. Therefore one can’t speak of a transfer of movable things to the usufructuary.
A pledge on a movable thing is established similar. A pawnbroker will only lend money to someone when this person hands over a movable thing to him as security for the debt-claim. The pawnbroker doesn’t own the thing that is handed over to him. There is no legal basis for that, but solely for the creation of a pledge. He is neither allowed to sell the pledged thing. Only if the owner fails to pay back the loan, the pawnbroker may sell the pledged thing in order to recoup himself out of the sale proceeds. In the same way a pledge is vested on other movable things, like paintings, jewellery, household effects, inventory, machines, goods in stock, cars, animals and so on. The fact that the pledged thing is under control of the pledgee ensures him that its owner no longer is able to present himself to others as a person with power of disposition. It prevents that the pledgee can lose his pledge to a third party who acquired the movable thing in good faith from the owner. But often the pledgee doesn’t want to keep the pledged things in custody. A bank has no room to store all assets that are pledged to it by its clients. The owner, on the other hand, wants to keep using his machines, inventory, goods in stock, cars et cetera. He needs these assets to run his business. The law has provided a solution for this problem by means of the establishment of a ‘non-possessory pledge’. A pledge may for this reason be vested also by notarial deed or by a registered private deed, without the necessity of bringing the pledged movable thing in the actual power of the pledgee. The pledged thing, for instance a machine, remains under the actual control of its owner, who may keep using it, but who, by virtue to his legal relationship with the pledgee, is not allowed to transfer it to someone else.
Two limited property rights can be split off of a debt-claim: a usufruct and a pledge. The formalities for establishing these limited property rights are the same as for the delivery of a debt-claim itself. Where it concerns a pledge on a debt-claim to name, the creditor and usufructuary or pledgee, respectively, have to draw up a private deed and notify the debtor that a usufruct or pledge has been established on the debt-claim, mentioning at the same time the identity of the usufructuary or pledgee. This way of publication ensures that the debtor knows that he has to perform his obligation, as of that moment, to the usufructuary or the pledgee. When the pledge is vested on a debt-claim to order or to bearer, the creditor has to hand over the negotiable instrument to the usufructuary or pledgee. Usually parties write on the negotiable instrument that the person who is actually holding this paper is entitled to do so on the basis of a usufruct or pledge.
A pledge on a debt-claim to name may be established also by means of a notarial deed or a registered private deed, without notifying the debtor of the fact that a pledge has been vested on the debt-claim. Such a pledge is known as an ‘undisclosed pledge’. It isn’t published in any way. There is, for instance, no public register which may be consulted to verify whether a debt-claim has been encumbered with a pledge. When parties have chosen for an undisclosed pledge, the required private deed will be sent to the Tax Authorities, where a tax official puts a stamp on it and returns it to the pledgee. The debtor is not aware of this procedure. As long as the establishment of the undisclosed pledge has not been announced to him, he may and must pay his debt to his creditor. When the creditor fails to comply with his own obligation towards the pledgee, the pledgee is allowed to notify the debtor after all that a pledge has been established on the debt-claim of the creditor. From that moment the undisclosed pledge is transformed into a disclosed pledge, so that the debtor is compelled to perform his obligation to the pledgee, instead of to his creditor.
Another way to acquire property is through an apportionment of assets coming from a community of property. Persons who jointly own property, each have a share in the separate assets of this community of property. So when a community of property includes two similar things, the co-proprietor do not each own one thing, but theu both have a share (one half) in the two things jointly. When the community of property ends, its assets will be divided among the participating co-proprietors. Each of the co-proprietors will obtain a number of assets for himself. As of then he is the sole proprietor of this asset. This way of acquiring property rights is called apportionment.
Natural persons and legal persons may form a community of property with each other. Sometimes such a community of property is instituted by law, as in the case where a man and a woman enter into a marriage under a marital community of property or when a natural person dies and leaves his estate to a number of heirs, each having a share in the assets of the deceased’s estate.
People may also voluntarily enter into a community of property, for instance when two or more natural persons or legal persons start a commercial partnership. Under the present law this partnership is merely an agreement between the participating partners. But usually these partners not only bring in their working capacity, but also several assets, like machines, business inventory and money. The law specifies that these assets together form the joint property of all participating partners. Each partner holds an equal or unequal share in it. In course of time, during the existence of the commercial partnership, other assets will join this community of property, and earlier assets will be removed from it as a result of transactions performed in the ordinary conduct of business of the commercial partnership
Finally, it is quite common that persons, cohabiting together unmarried, obtain joint property besides their personal properties, for instance when they buy a house together. Then also this single house forms a community of property between them.
Like everything, a community of property may come to an end. This occurs, for instance, when the marriage takes an end due to a divorce or the death of one of the spouses or when the partners in a commercial partnership decide to finish their joint business affairs. At some point also the heirs, having a share in the deceased’s estate, want to be released from their mutual bond. When co-proprietors want to end the community of property all joint assets and debts must be divided in accordance with the value of the share of each participating co-proprietor. The co-proprietors are towards the creditors liable for the joint debts, i.e. debts having a connection with the community of property, each co-proprietor either for a specific part of the debt or joint and several for the whole joint obligation. After the end of the legal relationship which made the creation of a community of property logical, they don’t want to be involved with each other any more. The divorced spouses both will go their own way. The same applies to the former partners in a commercial partnership, to unmarried persons living together and to the heirs of an estate. They want to exclude the possibility that they may be held responsible by the creditor for a (part of the) joint debt which, within the mutual relationship between the co-proprietors, because of their internal arrangements only concerns one of them. Therefore each of the co-proprietors is entitled to demand that the joint debts will be settled first from the assets belonging to the community of property, before any division of assets takes place. Also the creditors with a debt-claim recoverable from the community of assets may demand this in court. After all joint debts are satisfied, each of the co-proprietors still has a share in the remaining assets of the community of property. The value of these assets will be estimated. The different assets will be apportioned to the co-proprietors in proportion to the value of their share. After the co-proprietors have jointly divided the remaining assets among themselves, they have created a joint obligation towards each other. According to this obligation each co-proprietor is obliged to deliver his share in a divided asset to the co-proprietor who has been appointed to receive it in full. This co-proprietor already held a share of his own in the assets that was assigned to him. In order to make him the full proprietor of this asset, the other co-proprietors must each deliver their share in that asset to him. Yet, the division itself doesn’t bring about the transfer of the shares. The joint decision regarding the division of the community assets merely forms the legal basis on which the transfer of the different shares may be executed. Under Dutch civil law a ‘division’ is each juridical act, performed by all co-proprietors jointly, either in person or by representation, intending to assign one or more assets of the community of property to one of the involved co-proprietors (Article 3:182 DCC). A division may have any form, so it can be made verbally, tacitly or in writing (Article 3:183 (1) DCC). But to pass the shares in the divided asset to the appointed co-proprietor, thus to make him the sole proprietor of that asset, it is still necessary that all shares are delivered to him in accordance with the formalities set by law for a transfer of property rights (Article 186 (1) DCC). Only after all co-proprietors have delivered the assigned asset to the appointed co-proprietor in the way as prescribed for this type of asset by law, that co-proprietor will have acquired a full property right in the involved asset. From that moment the others no longer have a share in it. It is this act, whereby the other co-proprietors on the basis of a division agreement (legal basis) deliver their shares in an individual asset to one of the involved co-proprietors, that is called an apportionment. Like a transfer it entails three necessary elements: the delivery of the assigned asset to another person (the appointed co-proprietor) under a valid legal basis (the division agreement) by someone who has power of disposition over that object (the joint co-proprietors each with regard to their own share).
As mentioned before, the division agreement itself does not accomplish a passage of the divided and assigned assets to the various co-proprietors individually. This agreement merely forms the legal basis for the delivery which completes the apportionment and makes the appointed co-proprietor the sole proprietor of the delivered asset. The answer to the question which delivery formalities have to be observed, depends on the nature of the apportioned asset. Once more the same rules apply as in case of a delivery based on a transfer of property. As far as an apportioned asset was encumbered with a limited property right of a third party, not being one of the co-proprietors, the sole proprietor has to respect this right after he has acquired the full ownership of an asset. Of course, this will have decreased the estimated value of that asset, so that the co-proprietors have to take this into account at the division of the community assets among themselves.
Prescription is a means of acquiring property rights or a means of being released from legal duties and obligations, in both cases exclusively by the expiration of time and the fulfilment of specific factual requirements fixed by law. Prescription is called acquisitive in the first case and extinctive in the second. Both are based on the fact that the proprietor for a long time has failed to act against an existing situation which is in conflict with his property right. After some years he has lost his right to demand that the factual situation is restored in the legally correct state. A distinction has to be made between two concepts of prescription.
In the first concept – the extinctive prescription - the proprietor has not lost his property right after the prescription period has lapsed, but solely the adjoining right of action which enabled him to enforce his property right in court. Therefore he can no longer legally claim that the other person has to respect his property right, for instance that he performs an obligation. The other person may put the extinctive prescription forward as a defence. An extinctive prescription is known in Anglo-American law as a limitation of actions, which only bars the remedy, but does not extinguish the right itself.
The second concept - an acquisitive prescription, known in Anglo-American law as adverse possession -, deals with another matter. It’s a legal ground on which a property right in someone else’s thing can be acquired by exercising the continued and regular possession of that thing during a long period of time, although this was in violation of an existing property right of the real proprietor and done without his permission. When a specific prescription period, fixed by law, has expired, the possessor obtains by operation of law a property right in the thing which he so long possessed, whereas the real proprietor, who did not stand up against the not allowed interference of the possessor, automatically has lost his property right in that thing.
A person who has possessed another person’s movable or immovable thing for a fixed number of years, without any suitable objection of the real proprietor, acquires the right of ownership of that thing by operation of law. The legal reality has to be brought in line with the factual situation as it appears for a long time, which is defendable since the real proprietor, although competent to do so, has never performed any actions to restore the factual situation into the legally right state. The legal conception of prescription (‘verjaring’) serves legal security. At a certain point the legal reality must be adapted to the optical, factual reality. By incorporating an acquisitive prescription in the Civil Code, the legislature has made it easier too for the owner to prove his title. It prevents that the owner must trace back all preceding owners to assure that they all have acquired their title legitimately and in conformity with legal requirements. One single defect in the entitlements within the chain of previous owners would otherwise have meant that the present owner has not acquired his property lawfully from an alienator with power of disposition and that he, in fact, never has become the owner himself, unless he would be protected by law due to his good faith. The concept of prescription, therefore, gives the owner another opportunity to prove his title, simply by referring to the fact that he and his predecessors in title have had the involved object at least for a fixed number of years in possession.
The duration of the period of uninterrupted possession, required for an acquisitive prescription, depends on the question whether the possessor acted in good faith or not when he took possession of the thing and whether that thing is movable or immovable. When the possessor acted in good faith, in the sense that he reasonably could have believed that the thing belonged to him, he must hold the thing continuously in possession for at least three years (movable things) or ten years (immovable things) before he can call himself its owner (Article 3:99 DCC). Where he acted in bad faith, in the sense that he reasonably ought to have known that the thing did not belong to him when he took possession of it, he shall acquire the ownership of it only after a continuous possession of twenty years, regardless whether it concerns a movable or an immovable object (Article 3:105 in connection with Article 3:306 DCC). Decisive for the question whether the possessor has obtained his possession in good or bad faith is only what he reasonably ought to have known at the moment when he started to possess the thing in the legal meaning of the word. If he reasonably could have thought that he owned the thing, then he is and will remain to be in good faith, even when he discovers after a few days that he has been mistaken because the thing belongs to someone else. Where it is not reasonable to say, in the given circumstances, that he could have believed he owned the thing when he took possession of it, he has acted in bad faith en will be treated as such during the entire prescription period.
In two ways the expiration of the prescription period may be stopped.
Firstly when the possessor loses possession of the object. Acquisitive prescription requires the continuous possession of the thing concerned. So if the possessor loses possession of it before the prescription period has expired, he can’t acquire a right of ownership on this legal ground. When he regains possession of the thing after a while, an entirely new prescription period starts to run for the full three, ten or twenty years, without the possibility to add the previous period of possession to it. Nevertheless, an involuntary loss of possession does not interrupt a running prescription period, provided that the possessor within one year recovers possession or at least has started legal proceedings in order to regain possession (Article 3:103 DCC).
Secondly, the real proprietor may interrupt the expiration of a running prescription period by claiming his property back. Although the possessor holds the thing in possession, he is not yet its owner. As long as the prescription period has not expired, the real proprietor is entitled to use all legal actions that the law provides to him to reclaim his property. A prescription period is interrupted by a legal claim which is filed to this end in court, but also by any other action from the real proprietor with the purpose to get his property back (Article 3:104 (1) in connection with Article 3:316 (1) DCC). This means that also a letter of formal notice, in which the proprietor reserves all his rights in the thing, will interrupt the prescription period, but on the condition that the proprietor files a legal claim in court within one year afterwards (Article 3:317 (2) DCC). Where a prescription period has been interrupted correctly, an entirely new prescription period starts to run for the full three, ten or twenty years. During legal proceedings the course of the prescription period is suspended.