Is a right of usufruct on claims a meaningful alternative?
A right of usufruct gives the right to use goods belonging to another person and enjoy the fruits thereof. The Supreme Court recently handed down a judgment on the question whether a usufruct on receivables can serve to appropriate what has been collected. The case involved claims relating to rent payments. The Supreme Court is of the opinion that this is not possible. After all, that would be tantamount to the collected property being both the asset on which the usufruct rests and the usufruct at the same time.
What is a right of usufruct?
A literal example is if I establish a usufruct on my apple tree (the usufruct object) for the benefit of someone else. The holder of the usufruct (the usufructuary) may then use my apple tree and have the apples growing on the tree.
Suppose you want to put your property in the name of your children, but you yourself still want to continue living in the property, you can arrange this right of use by having a usufruct established.
What is a usufruct on a let property?
With a usufruct on a rented property, the usufructuary is entitled to the rental payments arising from it. In that case, the rental payments are the fruits.
Case of right of usufruct on claims
Simplified, the case that led to the Supreme Court’s judgment was as follows. KPN sometimes places telecom antennas on land belonging to landowners. In return, KPN must then pay rent to the landowners. Telecom Vastgoed has concluded agreements with the landowners whereby, in exchange for a one-off surrender sum, a usufruct is established for the benefit of Telecom Vastgoed on the rent payments owed by KPN.
The relevant article in Telecom Realty’s agreement with the landowner read:
“The right of usufruct rests on the periodic rental payments, as well as on all other pecuniary obligations arising as rights of claim of the Owner under the Lease.”
It is clear that it was intended that Telecom Realty would obtain a right to collect claims against KPN itself.
Telecom Vastgoed charged the rental fees to KPN. KPN, however, refused to pay Telecom Vastgoed and transferred the rental payments to the landowners.
Court and Supreme Court rule on usufruct on claims
According to the Court of Appeal, the manner in which Telecom Vastgoed has established usufruct, or at least wishes to implement it, cannot stand the test of criticism. The Supreme Court follows the Court of Appeal’s view. The main consideration of the Supreme Court is:
“Art. 3:201 BW stipulates that usufruct gives the right to use goods belonging to another person and to enjoy the fruits thereof. Whatever is received by collection of claims subject to usufruct belongs to the principal beneficiary and is also subject to usufruct (Art. 3:213 paragraph 1 of the Civil Code). It follows from these provisions that the usufruct on claims cannot serve to appropriate what is received by collection of those claims. After all, that would be tantamount to saying that what is collected is simultaneously the property on which the usufruct rests and the usufruct. The closed system of rights in property law entails that no usufruct can be created that does not meet the legal description.”
Thus, a usufruct on claims cannot serve to appropriate the collected. Going back the literal example of the apple tree: The usufruct on my apple tree gives the usufructuary the right to enjoy the apples of my apple tree. It does not give the right to appropriate my apple tree. The usufruct object cannot also be the fruit.
But what about the example of usufruct on the rental property? The important difference is that the usufruct object in that case is the house and not the rental payments themselves.
Claims can simply be assigned, right?
The case raises the question of why Telecom Realty did not simply have the claims of landowners transferred to it by deed (or assignment). Claims can, in principle, simply be sold and transferred, including future claims. It is conceivable that KPN, in its leases with the landowners, excluded (as a matter of property law) that the landowners could transfer their claims against KPN to another party (within the meaning of Article 3:83(2) of the Civil Code).
Lifting of Pledge Prohibitions Act
Incidentally, a bill is currently under discussion to make the non-transferability of receivables largely impossible (Lifting of Pledge Prohibitions Act). The idea is that there will be wider opportunities for (bank) financing of companies if companies cannot be restricted in transferring / pledging receivables to financiers.
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Thus, the Supreme Court has made it clear that usufruct on claims cannot serve the purpose of transferring the collected to the usufructuary. This made it clear that establishing a usufruct on claims is not a good alternative to the ordinary transfer of claims (assignment).
If you need advice or legal assistance in the area of property law, such as the transfer of property or the creation of security, please contact Peter de Graaf.
The judgment discussed can be found here.
