Redemption of Government-owned Land held under a Title of Revisable Perpetual Emphyteusis

On 27^th August, Legal Notice 216 of 2019 was published, which grants any person who holds a property of the Government or of the Lands Authority, under a title of revisable perpetual emphyteusis, the right to request the Authority to redeem that property at any time.

An emphyteusis is a juridical relationship created between the dominus (owner of the property) and the emphyteuta (tenant of the property). A unique characteristic of emphyteutical contracts is that, amongst other conditions, the emphyteuta is bound to pay a ground rent to the dominus. Furthermore, in the case of a perpetual emphyteutical grant, the emphyteusis may be redeemed by the emphyteuta by paying 20 times the amount of the ground-rent to the dominus.

Revisable ground rent means that the ground-rent will increase at periodic intervals as agreed between the dominus and the emphyteuta. By default, in the case of perpetual emphyteusis subject to revisable ground-rent, the emphyteuta does not have the right to redeem the land at any time he wants to, but only within a one-year period starting from every revision, with the value of the redemption being calculated on the increased ground rent.

Therefore, while the rule prior to Legal Notice 216 of 2019 was that property belonging to the Government or the Lands Authority and held under a title of revisable perpetual emphyteusis could only be redeemed within the one-year period in which the revision is made, the introduction of the Legal Notice has given individuals possessing property under such title the right to redeem the property at any time, thus creating an exemption to the general rule.

In order to benefit from the above-mentioned exemption, and therefore to redeem the land at any time, the applicant must satisfy three conditions:

• the applicant must be a citizen of the European Union
• the applicant must be recognized by the Authority as an emphyteuta of the building or have applied to be recognized as such. The application process cannot start prior to recognition of the applicant by the Authority; and
• the applicant must prove that there are no arrears due to the Authority of ground rent payment on the property

Eligible applicants are to submit, together with the application for redemption of ground rent, the following documents to the Authority:

1. a copy of the latest receipt of payment of ground rent made
2. in the case of an applicant who has not yet been recognized as emphyteuta of the property, a copy of all contracts made since the last emphyteuta recognized by the Authority
3. a detailed plan on a scale of 1:100 showing the interior of the property at every level and distance from the nearest street corner. This is to be submitted in accordance with the Authority’s template and must also be accompanied by a scanned plan, duly certified by an architect
4. a copy of the property or site plan issued by the Land Registry, duly certified by an architect
5. a survey showing the property and the existing road alignment
6. a copy of the identity card of the applicant
7. photographs bearing the date and time showing the present condition of the building or site
8. a sworn statement declaring that the content of the application is truthful and complete

A number of restrictions have been imposed by the Legal Notice. Any contractual agreement between the dominus and the emphyteuta restricting the manner in which revisable perpetual emphyteusis may be redeemed shall prevail over the Legal Notice. Furthermore, all redemptions made in accordance with the Legal Notice shall be made through a public contract. The Authority reserves the right to refuse and reject applications, however this must be done in writing, including detailed reasons for its decision. The Authority also reserves the right to terminate the process of an application made to redeem the ground rent if it is of the opinion that such property is located at a site of national importance.

An amount of €500 or otherwise, as stated by the Authority in the Government Gazette shall be paid with each application, and the Authority shall also ensure that all costs involved in effecting the redemption of the perpetual revisable ground rent are borne by the applicant.

Where no method for the redemption of ground rent is stated in the emphyteutical contract, the ground rent  to be paid for the redemption shall be equal to the sum of the ground rent revised according to the index of inflation taken from the year preceding the submission of the application, and the rate of ground rent from the year prior to the creation of the contract capitalized at the rate of 5%.

For further information about how GVZH Advocates can help you with your real estate query, email us on  [email protected].