Conceptually the creation of a property interest de novo and its transfer from one person to another have little in common. The first topic concerns the initial allocation of resources and is closely connected with various theories about the origin of property. The second topic involves the more mundane world of everyday legal transactions. Practically, however, the two topics are closely related. Very few tangible things today do not have an owner. Thus, creation of an original title frequently depends on the extinction of another title, either of another private owner or of the state.
Acquisition by adverse possession, prescription, and expropriation
The related concepts of adverse possession and prescription are discussed above in the section. A number of possible rules are buried in the two concepts. One might say, for example, that the expiration of the statute of limitations simply bars the action, but it does not bar the right (limitation of actions, strictly speaking). Alternatively, one might say that the passage of the statutory period bars both the action and the right but does not create any new right in the adverse possessor (extinctive prescription). Or one might say that the adverse possessor, or the one who has fulfilled the requirements for prescription, acquires the title of the one whose title is time-barred (acquisitive prescription, strictly speaking). Both Anglo-American and civil law generally take the more extreme position that, once the rights of the original owner have been extinguished, the person who has prescribed or adversely possessed against those rights has a new original title. At a minimum this means that the new owner may prove his title without having to show how the previous owner acquired his title. It may also mean that he is not subject to restrictions that the original owner may have agreed to. The exercise of the power of eminent domain also normally results in a new title in the sovereign.
Subsequent acquisition
Granted that a property right, privilege, or power exists in a private person, it may be asked whether that right, power, or privilege can be transferred to someone else. The general assumption in Western law is that it can be. Freedom of contract and freedom of alienation of property (i.e., the rights to enter freely into enforceable contracts on terms agreed to by the parties and to transfer property to whomever the owner wishes, on terms of his choosing) are the twin foundations of a market economy, and, despite the challenges associated with extensive regulation and socialization of the market economies of the West, the basic principle regarding the transfer of property has remained unimpaired. Freedom of alienation is less characteristic of non-Western economies and legal systems. Nonetheless, even these systems allow alienation in a wide variety of circumstances.
Contract and conveyance
Any legal system that distinguishes between property and obligation (as do all Western systems) will distinguish between a promise to alienate property and the alienation itself. The promise may be fully enforceable between the parties; it may even affect the rights of third parties, at least those who know of the promise. But until the property is transferred, the original owner has a real right in the property (good, notionally, against the whole world), and the promisee has simply an enforceable obligation to have the property transferred.
In many transactions the contract and conveyance take place simultaneously so that the distinction between the two makes no practical difference. If person A buys a watch at a jeweler’s, pays for it, and walks out of the store with it on his wrist, both a contract of sale and a conveyance of the watch have taken place; there is no need to distinguish between the two. If, however, person A does not pay for the watch but wears it out of the store and then transfers it to some third person, it becomes important to know whether the jeweler still owned the watch when it was transferred (in which case the jeweler may recover it from the third person) or whether person A owned the watch (in which case the third person now owns it, and the jeweler’s sole remedy is against person A). Similarly, if person A pays for the watch but leaves it with the jeweler to have a strap put on it, and the jeweler transfers it to some third party before person A comes back to pick it up, it becomes important to know whether the jeweler still owned the watch (in which case the third party now owns it and person A’s sole remedy is against the jeweler) or whether person A owned the watch as soon as he paid for it (in which case he may recover the watch from the third party, and his remedy, if any, will be against the jeweler).
In the example given above, there are three possible points at which the title to the property could pass: (1) when the contract between the jeweler and person A was formed (normally when they have agreed on a price and a thing to be sold), (2) when person A paid for the watch, or (3) when the jeweler handed over the watch to him. As a general matter, Western law takes the first or the third position and leaves the second possibility to private agreement between the parties. Thus, in the absence of agreement to the contrary, Western law generally provides that transfer of title takes place either when a valid agreement to transfer is made or when the thing is delivered to the conveyee.
Registration and recordation
In the example of the watch, the distinction between contract and conveyance became important as soon as the rights of a third person became involved. But from the point of view of the third party, any one of the three suggested rules about conveyance might be unsatisfactory, because it may be difficult for the third party to know whether a contract has been formed, whether a payment under it has been made, or even whether the property has been delivered to the purchaser as owner, as opposed to as borrower or hirer. To protect third parties in these situations, many legal systems provide for the registration or recordation of transactions, particularly transactions involving items of great value (such as airplanes or boats or cars) or items of great durability (such as land).
Registration systems fall into two general types. The first type provides for the registration of title. Under this system transfer of title does not take place unless and until the transfer has been registered in the system. This is the system of the German Grundbuch, in which titles to land are registered, and of the systems for registration of automobile titles that prevail in the United States. The other type of system is a recording system. Under such a system a transfer is effective even if it is not recorded, but a good-faith purchaser who relies on the record is not protected unless the transaction is recorded. Under this system the previous owner who the record shows is still the owner has the power to convey good title to an innocent third party unless and until the new owner records the transaction. This is the system that prevails in most jurisdictions in the United States for land and under the French system of registration for transfers of land. The English land-registration system is more like the German system than it is like the French or the American.
Sales
In Anglo-American law three things must be established about a conveyance before the law applicable to it can be determined: (1) whether it is a sale or a gift, (2) whether it is of personal (movable) or real (immovable) property, and (3) whether it is immediately effective between living parties (inter vivos) or will take effect only upon the death of the conveyor (testamentary). Whereas inter vivos sales and inter vivos gifts of movables are treated quite differently, the conveyancing aspects of inter vivos sales and inter vivos gifts of immovables are quite similar.
Testamentary sales of either movables or immovables are rare, and testamentary gifts of movables and of immovables are treated similarly. In civil law the distinction between conveyances of movables and conveyances of immovables is far less important than it is in Anglo-American law, whereas the distinction between sales and gifts of immovables is more important than it is in Anglo-American law.
Movables
In both Anglo-American and civil law the sale of a movable is both a contract and a conveyance. In both Anglo-American and French law the contract also serves to transfer the title to the thing unless the parties agree otherwise. German law, on the other hand, following Roman law, requires that there be a handing over of the thing from the seller to the buyer before title may pass. Indeed, in German law title to the thing will pass even if there is no valid contract of sale, so long as the parties intend to transfer ownership of the thing.
The difference between the Anglo-American and French systems, on the one hand, and the German, on the other, can be exaggerated. The number of situations in which there is intent to transfer ownership of a thing in German law without there being a valid contract of sale (or gift) is small (see below Gifts). Further, German law allows the transferor and transferee to agree that the transferor will remain in physical possession of the goods, even though title has passed to the purchaser. Thus, in the example given above where the watch remained with the jeweler to have the strap put on it, all three systems would probably hold that title had passed to the purchaser, but the German system would require evidence that the purchaser and the seller had agreed that the seller retain possession in fact on behalf of the new owner, the purchaser.
Despite the likelihood that all three systems would hold that the purchaser had secured good title to the watch even though the seller retained physical possession of it, all three systems, somewhat surprisingly, would probably protect the third party to whom the jeweler transferred it. All three systems hold as a basic principle that one cannot transfer more rights in a thing than one has (“Nemo dat quod non habet; nemo plus iuris ad alium transferre potest quam ipse habet”), but all three systems recognize numerous exceptions to this principle, particularly in the case of movables. Both the French and German systems recognize that the actual possessor of movable goods (with the notable exception of stolen goods) may give good title, at least to a good-faith purchaser. The Anglo-American system is narrower in this regard, but, at least in the United States, someone who entrusts his goods to a merchant, such as the jeweler in this case, who regularly deals in such goods, is liable to lose his title to the person to whom the merchant sells the goods.
Sale of immovables
Sale of real property in Anglo-American law is radically different from the sale of goods. The Statute of Frauds of 1677, which in one form or another is in effect in all Anglo-American jurisdictions, requires that the transfer of most types of interests in land be made by a writing (deed; see contract). Contracts for the sale of land also have to be evidenced by a writing, but unless the contract and the transfer are evidenced by the same piece of writing (something that in practice is very rare), the contract will not suffice to transfer the title to real property.
In practice, the sale of real property is always preceded by a contract. The contract will fix the price and other terms of the arrangement and will normally fix a date (the “law day”) on which the seller is to appear with a deed to the property conveying “good and merchantable title” and the buyer is to appear with the purchase price. A contract for the sale of land is specifically enforceable. If either side fails to perform, the other party, if ready, willing, and able to perform, may compel the performance. But the ability to compel the performance is not the same thing as having legal (as opposed to equitable) title to the property. That happens only when the conveyance is made—i.e., when the seller delivers the deed to the buyer. During the period between the contract and the conveyance, the buyer typically obtains financing for the purchase while the seller obtains evidence, based on the public record or on his own muniments of title, that he has merchantable title to the property.
In French law a contract of sale of an immovable passes title to the immovable. Subsequent registration serves to protect that title against third-party purchasers in good faith from the original vendor. In German law the contract of sale and the transfer are conceptually distinct, but in practice they are frequently merged in the same transaction. The transfer of title is not valid as to third parties, or even between the parties themselves, until the transaction has been registered in the Grundbuch.
In both the French and German systems the time between the contract and its ultimate consummation is markedly shorter than it is in the Anglo-American system. This may be explained in part by the fact that the public recording and registration systems are more effective (despite the differences in how they operate) and by the fact that in both systems there are fewer possible outstanding interests in land. Another explanation of the differences between Anglo-American and civil-law conveyancing practices would look to the differences in the ways that real-estate transactions are financed.
Gifts
In Anglo-American law a promise to make a gift is not a binding contract, because it lacks the essential element of consideration (the requirement that to be valid a contract must involve a bargained-for exchange). By contrast, in civil law a contract to make a gift is valid if it is accompanied by certain formalities and if it does not violate the expectancies that the close relatives of the donor have in the property. It is not surprising, then, that donative transactions operate in civil law in much the same way as do sale transactions.
Inter vivos
Lacking the contract to make the gift valid, Anglo-American law has long puzzled over the donative conveyance of movables. Traditional doctrine holds that there has to be delivery, a transfer of possession of the thing accompanied by donative intent on the part of the donor, and acceptance by the donee. Acceptance will be presumed, but evidence of both delivery and donative intent has long been thought to be essential. The contortions that this doctrine produces, particularly in situations where the donative intent is clear but the thing in question is awkward or impossible to deliver, have long been noted by courts and commentators alike. Recently, Anglo-American courts seem to be increasingly willing to allow the delivery of a writing embodying a statement of the gift to substitute for the delivery of the thing itself.
Gifts of real property have caused less difficulty in Anglo-American jurisdictions. It is well established that a writing (deed) is necessary for the transfer of title to real estate; it is common for deeds to recite at least nominal consideration, but no preliminary contract is required for title to pass. Recording of the deed is necessary to make it binding as to subsequent good-faith purchasers from (but not donees of) the same donor.
In civil law a promise of a gift is binding if it is notarized and if it does not deprive the donor’s expectant heirs of their obligatory share in his estate (see notary). In French law the contract alone suffices to transfer the property. In German law, as in the case of sale, there must be transfer of possession or an agreement that the donor retain possession on behalf of the donee if the thing is movable or an entry in the Grundbuch if the thing is immovable. Thus, in civil law inter vivos transfers by way of gift parallel those by way of sale, with the important exception that gifts of either movables or immovables may be subject to the overriding interests of the donor’s expectant heirs.
Wills
Western law generally permits a property owner not only to transfer his property while he is alive but also to transfer the property that he owns at his death. This is done by a document called a will or testament. A will is revocable at any time before the testator’s death, but if he dies without having changed it, it comes into effect. Thus, the principal characteristic of the will in Western legal systems is its ambulatory nature. It confers no rights on the beneficiaries at the time it is executed but does so only at the time of the testator’s death, and it transfers not the property that the testator owns when he makes the will but rather what he owns at the time of his death.
On this much both the Anglo-American and civil-law systems are in agreement. Beyond this they differ substantially, largely for historical reasons. The estates of decedents are administered quite differently in the two systems, and there are substantial differences in the amount of freedom of disposition that each system gives the deceased. These differences are considered in the next section.
While the form required for a valid will varies from jurisdiction to jurisdiction, a few common principles are observable: in most civil-law jurisdictions and in some Anglo-American jurisdictions a document entirely in the writing of the testator (holograph, or handwritten document), signed and dated by the testator, will constitute a valid will. In France and Germany such wills are quite common, perhaps even the norm, and they are normally executed after seeking advice from a notary. In those Anglo-American jurisdictions in which they are valid, their use is far less common than in civil-law countries, and they are almost never recommended by professionals.
Both Anglo-American and civil-law jurisdictions also make use of a formal will, derived from the Roman testament. The characteristic of such a will is that it must be witnessed by a certain number (generally two or three in modern law) of disinterested witnesses. It is normally prepared by a professional, a notary on the Continent or a solicitor or other lawyer in the Anglo-American jurisdictions, and it tends to formality of language.
Many Western jurisdictions will excuse some of the formalities required for will making in certain circumstances. Soldiers’ and sailors’ wills, for example, are frequently effective with fewer than the usual formalities, and oral wills (nuncupative wills) at least of certain types of property may be valid if made under certain circumstances, such as when the testator is dying. The nuncupative will is related to, though conceptually distinct from, the causa mortis gift, a device that exists in most Anglo-American and some civil-law jurisdictions.
Protection of the family against intentional disinheritance
Another major difference between Anglo-American and civil-law systems of succession is that wills, though important, are less important in civil law than they are in the Anglo-American system. In civil law someone who dies leaving a spouse or close kin (descendants or ascendants) may effectively dispose of only a portion of his estate by will. The rest must go to the statutory heirs (known by the English term legitim or in French as réserve héreditaire). Wills remain important in the civil-law systems, however, both because the disposable share of the estate may amount to a large monetary sum and because the statutory share of the heirs tends to be viewed in monetary terms. Thus, the will may direct that certain assets be given to certain members of the family, so long as each member receives the value to which he or she is entitled under the statute.
Anglo-American law affords, at least in theory, greater freedom of testation. In England a deceased may dispose of his entire estate by will to the detriment of his spouse and children, subject however to contravention by a court upon petition of the spouse or children if they are not adequately provided for. In the United States a deceased may generally not disinherit his spouse but may disinherit his children, even if this leaves them without any means of support.
Theoretical possibilities, however, do not determine practical realities. Many Americans, for example, avoid the probate system entirely, either because they make lifetime dispositions of their property (for example, in trust) or because their heirs behave as if universal succession were in fact in place—i.e., the heirs divide the property among themselves and pay the creditors and the tax collector out of their own pockets. Similarly, there seems to be little pressure to change the amount of freedom of testation offered to many Anglo-American testators because that freedom is rarely used to disinherit spouses or children. (Perhaps the most common form of American will is one that gives the surviving spouse everything, usually with the tacit understanding that he or she will give anything left over to the children on his or her death.)
Patterns of intestate succession vary markedly from jurisdiction to jurisdiction in the West, although the differences tend to be ones of detail and not of principle. The typical Anglo-American intestacy statute gives the surviving spouse a half or a third of the property, with the remaining half or two-thirds going to the children of the deceased, the children of any deceased child dividing their parent’s share among them (representation). In the absence of a surviving spouse, the children (or their representatives) take all. In the absence of children, the surviving spouse takes all or shares his or her portion with the deceased’s parents. Beyond that the patterns vary, but almost all provide for succession by the deceased’s next of kin, at least so long as he left grandparents or descendants of grandparents. If no one survives in these categories, some modern systems give the property to the state; others continue the search for blood relatives of the deceased.
Civil-law patterns do not vary greatly, though they tend to give less to the surviving spouse because he or she is presumed to have a share of the community property (see above Marital owners). The French system is notable for the fact that it divides the deceased’s property between his maternal and paternal kin if there are no descendants. The German system is more like the Anglo-American.
Historically in the West illegitimate children were totally excluded from inheritance. Modern Western legal systems have come increasingly to recognize inheritance rights of illegitimates, although not all systems give them equal rights with legitimates.
English law did not recognize adoption until 1926. Modern Anglo-American law has come to recognize adopted children as, in most jurisdictions and for the most part, equal in inheritance rights to natural children. The civil law has had less difficulty recognizing the rights of adopted children because Roman law freely allowed adoption.
Charles Donahue Gregory AlexanderAspects of property law in communist and postcommunist countries
With the fall of communism in most of the world, private ownership gained ascendancy as never before. Even in a number of countries that remained politically dominated by the Communist Party, such as China, private ownership of some form of property became permissible and was in some cases encouraged.
The property picture that has emerged in the postcommunist world is fluid and highly complex. Postcommunist countries do not share any single regime of private property ownership. Indeed, within each country different forms of property may be subject to different regimes of ownership, including purely private ownership, various hybrid forms of private ownership, and state ownership. Foreign individuals and entities may or may not be permitted to own property depending on the country and the asset in question. The following discussions of Russia, Romania, and China exemplify some of the changes occurring in countries that have loosened the restrictions on private property ownership.
Russia
The problem of land ownership
Although the Russian Federation’s constitution (1993) and Civil Code (1995) clearly recognize the right to private ownership of land, the law on that topic, including the Land Code (2001) and laws on the sale of farmland (2002), took several years to resolve. At the turn of the 21st century, virtually all of Russian land was still publicly owned. Privately owned land was subject to regulation by presidential decrees, which strictly limited a landowner’s rights. In this era, Russian law recognized only three circumstances in which land could be privately owned: (1) the land is used for new construction of individual housing or is located under an existing building that is already privately owned; (2) the land is used for personal subsidiary farming or country-house gardening; and (3) the land is used for agricultural purposes. Non-Russians are barred from owning land, but they are permitted to lease it. Transfers of land and other natural resources may take place only within the guidelines established by the Russian Civil Code. All land transactions must be registered with a federal governmental body, and any failure to register a transaction will nullify the transfer. For transfers of nonlanded property, however, the registration of transactions is not required.
The right of perpetual use of a state-owned plot of land can be granted to persons by a state-authorized agency. The person to whom the use-right has been granted also has the right to lease the plot to another for a fixed term, but any other transfer of the plot is prohibited. If a building or other immovable object on a state-owned plot of land is transferred, the right of perpetual use of the land under the building goes with the building.
In some cases individuals may have another kind of property right in land known as inheritable possession for life. A citizen who possesses land through the right of inheritable possession may gratuitously lease it to another for a fixed term, but he is not permitted to sell or pledge the land or enter into any other transaction that involves the transfer of the land plot. By virtue of these restrictions, perpetual use and inheritable life possession interests do not constitute private ownership. Accordingly, they are not constitutionally protected against government actions that infringe upon them. Moreover, the rights can be terminated by the state without due process procedures.
Mortgages and pledges
The Russian Federation’s Civil Code permits mortgages and pledges to be used as devices for securing the performance of legal obligation, notably loan agreements. Although mortgages and pledges are very common in the West, they are quite rare (and quite complicated) in Russia.
Russian law distinguishes between the general rules that apply to all pledges and the special rules that apply to real-estate mortgages and pledges of movables. With respect to real-estate mortgages, the mortgagee holds the right to satisfy his money claim against the debtor from the debtor’s real estate. This gives the mortgagee priority, with respect to the real estate, over the mortgagor’s other creditors. In simple terms, a mortgage in Russia represents the mortgagee’s right of a priority claim upon the secured land if the mortgagor defaults on the loan. Yet the mortgaged property remains owned by the mortgagor. Russian law expressly prohibits the mortgagee’s acquisition of ownership of the mortgaged property. (In the United States, whether the mortgagee or the mortgagor holds title to the property depends upon the theory of mortgage followed in the relevant state. Under the title theory the mortgagee holds title, while under the lien theory the mortgagor does.)
A mortgage may be established to secure a financial obligation under a credit agreement, loan agreement, lease, contract or other agreement. It may be established only with respect to property owned or leased by the mortgagor.
Two features of Russian mortgage law make mortgaging less attractive than it is in the West. The first is the cost. Mortgage agreements must be notarized—a process that is far more complex in Russia than it is in the United States. Mortgage agreements must also be registered with a state agency, which can be expensive. Registration alone costs 3 percent of the mortgaged property’s value.
The second feature is a highly complex foreclosure procedure. A mortgagee may foreclose on the mortgaged property only pursuant to a court order. Foreclosure may be postponed, for up to one year, in two circumstances: first, where a private person pledges real estate for purposes not connected with commercial activities; and second, where the mortgaged property is used for agricultural purposes. Upon foreclosure the mortgaged property is sold by public sale or auction. Public sales are organized and conducted by special state agencies, while auctions are conducted by a special organization chosen by the mortgagee with the mortgagor’s consent. Together with the cost problem, the inflexibility of these procedures deters widespread use of the mortgage.
In 2005 Russian mortgage law adopted the mortgage bond (also known as an encumbrance), a security that has been common in most legal systems outside Russia. A mortgage bond certifies the rights of its legal owner to fulfillment of a financial obligation secured by the property listed in the mortgage agreement; no other proof of the obligation’s existence is needed. The primary aim of the mortgage bond is to facilitate the turnover of mortgage rights and refinancing by banks and other lending institutions.
Inheritance law
The post-Soviet Russian constitution expressly guarantees the right of inheritance. (By comparison, the U.S. Constitution does not uphold any such guarantee.) Several provisions of the Russian Civil Code define the country’s inheritance system.
Like its Anglo-American and continental European counterparts, Russian inheritance law recognizes two methods of inheritance upon death: by will and by operation of law (known in the Anglo-American world as intestate succession). Testators are free to bequeath their property by will to anyone they wish. However, as a civil law system, Russian law limits the testator’s freedom of testation by recognizing the so-called legitimate portion (the legitim) of the estate. The persons entitled to this share of the estate are the testator’s minor or dependent children (including adopted children), parents, and other persons who were financially dependent on the testator. Regardless of what the will provides or fails to provide, these persons are entitled to receive half of what they would have received had the testator died without a will—i.e., through intestate succession.
If an individual dies without a will, the qualified heirs are identified and ranked according to their relationship to the decedent. The relational groups are categorized in the following way, with priority accorded in succeeding order: (1) the decedent’s spouse, any biological and adopted children, and any biological and adoptive parents; (2) the decedent’s siblings and grandparents as well as any nephews or nieces; (3) the decedent’s uncles and aunts; (4) the decedent’s great-grandparents on either or both sides; (5) children of nieces and nephews of the deceased; (6) grandchildren of nieces and nephews of the deceased; and (7) stepchildren and stepparents. Those having a more remote relationship to the decedent are not entitled to a claim as heirs. This pattern of priority is similar to the pattern prevailing in the United States. Either the heirs or a notary serves as the estate’s executor or administrator. The decedent may nominate an executor in the will.
Trusts
The Russian Civil Code establishes the concept of trust management, under which an owner may transfer one or more assets in trust to another person, known as a trust manager, who assumes a legal obligation to manage the property in the interests of the owner (or those of a designated third party). Transfer of the asset to the trust manager neither entails nor implies a transfer of legal ownership. Trust management relations are regarded as strictly contractual in nature, and the arrangement lacks the fiduciary aspect that is at the core of the Anglo-American trust institution. Under Anglo-American law, the core of the trust is the transfer of legal title in an asset to a party, A, who acts in a strictly fiduciary capacity for the beneficiary, B. Although A is the legal owner of the asset, he must act for the benefit of B.
Private land-use servitudes
As is the case in civil-law countries, Russia recognizes and accords some rights to private land-use interests that fall short of ownership. Notably, Russian law recognizes land-use servitudes as devices by which private owners may restrict or otherwise control the use of their land. The Civil Code defines the single condition under which a servitude may exist: it permits a landowner to acquire the right affirmatively to use another’s land in some way, such as access across a neighbor’s land or the right to lay pipelines across another’s land. (In American property law such servitudes are called easements.) A landowner may acquire a servitude by mutual agreement or by court order following a demonstration of necessity. Such servitudes are property interests that run with the land, as opposed to mere contractual rights. As such, their benefits and burdens are transferred with the affected land as ownership of the land itself changes hands.
Romania
The legal land regime in general
The postcommunist legal land regime in Romania is governed by the 1864 Romanian Civil Code. As is the case in the post-Soviet land system, Romania follows what is basically a civil-law system. Some features, however, are strikingly different from the more typical civil-law land system. Most notably, the 1991 Romanian constitution, together with various pieces of enacting legislation, expressly restricts land ownership to Romanians. No foreign citizen or stateless person may own Romanian land. However, companies incorporated in Romania that are partially or even entirely owned by foreign individuals or legal entities may own Romanian land.
The Romanian constitution and Civil Code recognize two forms of ownership: private and public. Public property belongs to the state, meaning that while the state may lease the property, it is not authorized to sell it. The term private property does not imply that such a property is never owned by the state (it may be so owned). Rather, the term indicates that the property in question may be sold, unlike public property. The Civil Code provides that public property applies to assets that, either according to positive law or by their very nature, “are of public use or interest.” Resources that are public property include minerals, water with energy potential, territorial waters, and beaches. In the years since the end of communism in Romania, there have been reports of the state selling state-owned industries for excessively low prices. The perception by some Romanians is that private entities are unfairly taking property from the state and in this way “stealing” from them.
Land-transfer transactions
While Romanian law recognizes private ownership of land, certain features differ significantly from land transfer. Agricultural land is given special treatment (as is the case in several other postcommunist legal systems) by virtue of the restrictions placed upon its acquisition. Only families may purchase land, and the amount that a family may purchase is limited to 500 acres (about 200 hectares). Moreover, the transfer of agricultural property may be subject to special preemptive rights of neighbors or leaseholders who are able to claim an interest in the same land.
Land transfers in Romania occur most commonly through sale, gift, inheritance, or prescription. All transfers must be registered with a special state agency.
Landlord-tenant law
Laws governing landlord-tenant relationships in Romania resemble laws existing in most other countries in that the statutes regulating the relationship between landlord and tenant combine aspects of contract and real property law. The duration of a lease, for example, is established by a contract, and Romanian law recognizes different sorts of leasehold interests, including fixed-term interests and interests terminable at will by either party. Leasehold interests may be assigned or made subject to a security interest.
The landlord’s and tenant’s respective obligations are similar, in broad terms, to those defined in American law. The landlord has an obligation to deliver possession of the leased premises to the tenant and to ensure the tenant’s quiet enjoyment of the premises. The landlord is also under an implied, though waivable, obligation of suitability for the intended use. This means, for example, that in the case of a residential lease, the landlord is implicitly obligated to deliver the premises in good, habitable condition. However, this obligation may be waived by a contrary term on the lease. The tenant is required to avoid waste, meaning that it is the tenant’s responsibility, not the landlord’s, to make necessary repairs. Although the law permits a tenant to assign or sublet the premises, a lease may restrict the tenant’s right to do so.
China
General background
From approximately 1955 to 1980, Chinese private law was modeled after the private law system of the former Soviet Union (see Soviet Law). Because Soviet civil law had been greatly influenced by the German Civil Code, this meant that China was, by and large, a “civil law” country. It was not until 1998, however, that China made a serious effort to develop a civil code. The first draft of the legal texts was based on a single legislative act, which combined government regulations with judicial decisions that interpreted legislation and regulations. (Although in theory judicial interpretation is not binding, in practice it is, as lower courts routinely draw upon judicial interpretations to guide their decisions.)
In 2007 the National People’s Congress of the People’s Republic of China promulgated its first property rights law. Following the transition made more than a quarter of a century ago to market-oriented economic policies, the Chinese government sought to provide a more secure legal foundation for the country’s growing urban middle class and for private entrepreneurs. The law does not cover every aspect of what Western lawyers consider to be part of property law. Article 3 of the new property law clearly signaled the purpose of developing a legal property regime designed to fit the country’s hybrid socialist-market economy. It declares, “During the primary stage of socialism, the State shall adhere to the basic economic system, with public ownership playing a dominant role and diverse forms of ownership developing side by side.” Such wording, along with the dynamic nature of China’s economic order, suggests that changes to the property rights law will follow.
Gifts
One area not covered by the 2007 property rights law was the law regarding gifts. Chinese law classifies gifts as contracts. On the basis of the body of contract law that was adopted in 1999, a gift is defined as a contract under which the donor promises the gratuitous transfer of a gift to the donee and the donee agrees to accept the gifted property. The donor is permitted under certain circumstances to rescind the gift before the rights are transferred, but if the contract has been notarized, or if the gift is designated for the relief of poverty to aid victims of a disaster, it is not revocable. In these cases the donee may enforce the gift if the donor fails to transfer the property. Finally, the donor may impose conditions on the gift, making the contract resemble what Anglo-American law regards as a contract of sale. Conditions are not necessary, however, so the contract of gift is, in the Anglo-American lawyer’s eyes, an unusual type of contract. (It seems odd to the Anglo-American lawyer to characterize a gift as a contract because Anglo-American law normally draws a clear distinction between the two. Contracts normally are legally enforceable only if consideration—a quid pro quo—has been provided, whereas gifts require no consideration to be enforced. They are strictly gratuitous.)
Under the 1999 law, the contract may be written or oral, and it also requires that the donee make some affirmative indication of acceptance. There is no need for an intention to make an immediate transfer of ownership to the donee. If the donor intends the gift to take effect in the future and the donee accepts, the donee thereby holds a legal right to enforce the gift as a matter of contract law. This is a significant departure from the common law of gifts, which generally does not permit gifts to take effect in the future.In another departure from the common law, delivery to the donee is not required for the gift to be enforceable. Although delivery is a central feature of the contract of gift, in that it effects a change in ownership, delivery is not necessary for the validity of the contract of gift.
Succession at death
Chinese law permits an owner of property to dispose of it at death either by will or by intestate succession. Chinese intestate succession law resembles the basic pattern established in common-law countries. It gives fixed shares of the intestate estate to relatives according to a statutorily designated order of priority. The first priority is given to the decedent’s spouse, children and other descendants, and parents. Any deceased children may be represented by their surviving children or more remote descendants. The next order of priority includes siblings and grandparents.
Chinese and American intestate succession laws differ markedly in a few areas; for example, Chinese courts have discretion to deviate from the statutory pattern if the change is structured to provide more for those persons with whom the decedent lived or otherwise supported. Another major difference is that Chinese law requires that any designated beneficiary under a will, other than a person who is an heir under the intestacy statute, must give notice of the intent to accept the bequeathed property within two months after receiving notice of the bequest. Any beneficiary who fails to give such notice is deemed to waive rights under the will. By contrast, Anglo-American law reverses the presumption: a devisee under a will must disclaim any bequeathed property; otherwise, the law presumes that the devise is accepted.
The formalities required under Chinese law for a valid will closely resemble those prescribed by American law. Generally, wills must be written and witnessed, although an unwitnessed will is valid if it was handwritten by the testator. Oral wills are permitted only in case of an emergency; once the emergency has ceased, the will is no longer valid, making oral wills in China quite similar to what Western law calls a “gift causa mortis.”
Chinese law permits individuals to enter into legacy-support agreements with others. Under such an agreement, one person is obligated to provide for the other’s maintenance, and this duty entitles the maintained party to a legacy (or bequest) under the promisor’s will. To the extent that the will is inconsistent with or does not meet this obligation, it is invalid.
Like other non-common-law legal systems, China’s succession system has no device corresponding to the common-law trust. While one can create a valid contract with a beneficiary of one’s estate, Chinese contract law does not recognize any sort of contract that serves as the equivalent of a trust.
Sales of land and landed assets
In general, land ownership in China cannot be privately transferred, since all land is owned by the public, either the state or the community. Only the right to use land and assets situated on the land are subject to market transactions.
In order for the owner of assets situated on land (landed assets) to be able to sell them, he must have the right to use the land as well as ownership of the asset and certificates of registration for both. Both the use-right and asset ownership must be transferred together; the two cannot be separated. Sale of landed assets is based on and governed by contract and contract law. Contracts are required to be in a writing signed by both parties. A contract signed by one party only is unenforceable, even against the party who signed it.
Full performance of a contract of sale does not itself transfer ownership of a landed asset. Even though the buyer has paid the full purchase price, he does not gain ownership of the asset until and unless the transaction has been registered with the appropriate local governmental agency.
All sales of landed assets are subject to an implied warranty of quality. The seller must provide a certificate of quality when selling the asset. In cases where the landed asset is commercial (as opposed to single-family residential) housing, a government licensing system is in effect. The housing department will inspect the housing project, evaluate it, and determine whether to issue the certificate. The buyer may also inspect the property before or after closing the deal. If the buyer discovers major defects after closing the transaction, he still has the right to void the contract and seek damages.
Gregory Alexander