Right to Use (RU)
1. RU - definition, nature and substance
The right to use is a limited property right to use another's property in accordance with its intended purpose and to receive yields thereof, without substantial alteration. The right to use is a real property right and can not be established over fungibles as it will affect their substance.
The right to use is a self-limited property right over another's property. RU includes the right to use the property in accordance with its purpose and to obtain yields thereof. But in order to use the property, the user is required to also exercise de facto power over it, i.e. they should be entitled to possession. Therefore RU includes two powers - the right to wield the property and the right to use, incl. to obtain the yields thereof. It is important to note that ownership rights do not cease to exist with the establishment of the right to use of another person over the same property. The owner still has the so-called "bare ownership", may still request their property from any person which possesses or holds it without grounds to do so under Art. 108 PA and may still dispose of their property as well as to restore their possession. The right to property is an absolute right in rem, i.e. it is enforceable against everyone, even the owner. On the other hand, it is a temporary right. Furthermore, it is established for the specific user and they can therefore not alienate the right. There are exceptions - for example, the right to use state property can be inherited.
2. Rights and obligations of the user
The substance of the right to use is expressed in the rights and obligations of the user. The power of possession is an essential element of the substance of the right to use. However, this is not possession within the meaning of Art. 68 PA. The user has custody over another's property without the intention of their property. They can defend themselves and their possession by filing petition claims if their right to possession has been breached. Another essential element of RU is the power to use. The economic effect of RU is to use the property and to obtain yields thereof, according to the intended purpose of the property. This purpose is determined at the time of establishment of the right of use. The user acquires all yields - both natural and civil. The right to acquire the yields arises from the moment the right to use is established and lasts until it is terminated. Art. 60 PA even allows rental yields of agrarian property to be acquired after termination of the right to use by the end of the current business year. The substance of the right to use includes additional legal actions. For example, the user can rent the foreign property, to conclude a deposit, etc. These are transactions of management and are eligible under the right to use. Transactions of disposal are not admissible (e.g. pledge and mortgage), because according to Art. 56 (2) PA, a user may not transfer their right to use. Any property is subject to alterations after frequent use, but the user is not responsible for the wear and tear of the property due to normal use. The owner in turn must refrain from actions that interfere with the exercising of the right to use.
Art. 57 and Art. 58 PA settle a number of obligations on the user. First, the user is obliged to pay the costs associated with maintaining and use of the property, as well as any related fees and taxes. Art. 57 PA concerns several types of costs. These are mostly the costs of maintaining the property. These are the necessary expenses - i.e. those without which the object would be destroyed or substantially damaged. These expenses would have been made by the owner of the property. The user draws benefits from the property, and they therefore bear the expenses associated with the yields of the same. Another type are costs related to the use. These costs will be most often in the category of improvements. The users themselves assess and make improvements in order to obtain the yields that remain in their property. The owner does not owe any compensation with regard to such costs. Under Art. 92 PA, after termination of the right to use, what has been done by the user belongs to the owner. In addition, the user also bears the expenses related to taxes and other charges. The taxable person within the meaning of the Local Taxes and Fees Act is usually the owner, respectively the person realising certain income. However, according to Art. 57 (1) PA, the user must pay taxes and fees such as property tax, water rates, garbage, etc. The user's obligation is to insure the property in favor of the owner and pay the insurance premiums. Upon loss of the property, the owner will be compensated with the amount of the insurance. When established, the right to use entitles the user to hold the property for the owner. That is why the user is obliged to inform the owner of any encroachment on the property. If they fail to disclose such encroachment, the user will have to pay compensation for damages resulting from this, since it is a culpable omission. The next obligation of the user to return the property after termination of the right of use. Property must be returned in the condition in which it was received, taking into account the wear course or depreciation that occurred in the course of its intended use. Therefore, upon delivery of the property, inventory should be drawn up.
3. Establishment and termination of the right of use
According to Art. 55 of the Property Act, property rights over another's property, to the extent that they are provided for by laws, may be acquired or created through a legal transaction, prescription or other methods provided for by law. These methods are also applicable to the right of use.
RU may be established by a separate agreement establishing the right to use or as a clause in an agreement, e.g. donation by retaining the right to use. If the subject of the transaction is real estate it must be made in the form of a notarial deed. RU can be also established by administrative act - e.g. on land by the state and municipal land fund by an act of the Minister of Agriculture. Right to use can also occur through court rulings. RU may also be established upon formation of a commercial company, cooperative, other legal entity or partnership under the OCA /Obligations and Contracts Act/. In these cases RU occurs only on real estates transferred to the company.
The right to use may be acquired through prescription, if a person enjoys the right to use within the prescribed term, e.g. using the property and yields therefrom, paying taxes, insuring it to the benefit of the owner, reporting any encroachments etc.
The right to use over real estate that is private state property is established whether for consideration or gratuitously by order of the regional governor, respectively, by decision of the municipal council for a period of 10 years, based on which an agreement establishing a right of use is concluded between the user and the regional governor, respectively mayor. The contract is subject to registration.
When the RU is constituted for a certain time period, expiry thereof is a legal fact, which leads to the termination of the subjective right itself. Discharge of the RU under Art. 59 PA due to failure to exercise within a specified period constitutes a limitation period, which is inappropriately settled as a special limitation period to which apply the rules for suspension and interruption of the limitation period covered in the OCA. The right to use is terminated upon expiry of the agreed period, after which the user is required to return the property to the owner in the state in which it was received.
Secondly, the right to use is terminated upon the death of the user, as it possesses a personal nature. The right to use created in favour of a legal entity (LE) is terminated with the winding up of the LE.
Thirdly, the right to use is terminated with the perishing of the property, as in these cases there is no subject of the right. If, however, only parts thereof perish and the rest of the property may still be used as intended, RU will not be terminated - it may still be exercised over that remaining part of the property.
Pursuant to Art. 59 PA, the right to use is terminated if it is not exercised for a period of 5 years.The law assumes that if the user does not exercise it, they have no interest in the right established in their favor and thus inaction is exalted in discharge of the legal right. This is a form of protection of the owner. This only concerns the loss of RU due to failure to exercise it. This is a distinctive feature of the right to use, unlike the ownership which cannot be lost on such grounds.
One of the important duties of the user is to not substantially change the foreign property, to exercise due care over it. Penalty for failure to fulfil these obligations is early termination of the right to use. If the user has committed acts which have endangered the property from destruction or significant damage or has not fulfilled any of its obligations, and the owner has delivered a warning, but the user still continues to use the property in an inappropriate manner, the owner may request the court to terminate the right to use prematurely.
After the expropriation of a property for state or municipal offices established on such property the right to use is terminated. RU may also be terminated under Art. 100 PA, if done in writing with notarially
Finally, termination of the right of use can be achieved through a merger - for example when the owner dies and user of the property is their only heir. In this case, the owner and user will be “merged” into one individual and therefore the right to use will be discontinued.