Construction Law and Superstructures

Building on Foreign Land

In Austria, the principle of “superficies solo cedit” (the superstructure yields to the ground) prevails. All things (for example: a house) that are firmly connected to the ground belong to the owner of the developed property. However, caution is advised with regard to structures that are or have been erected on foreign land. Without a separate agreement, the owner of the foreign land also becomes the owner of the constructed building. The good faith of the builder is decisive here. The builder is in good faith if he is mistaken about being allowed to build on foreign land. Slight negligence is detrimental to good faith. If the landowner knows nothing about the construction, he generally acquires the building. The builder in good faith has a claim for compensation for the useful and necessary costs. Under certain circumstances, he is also obliged to demolish the building, i.e. to remove it. However, there is an exception. If the landowner knew about the construction and did not immediately prohibit it to the builder in good faith, the builder can acquire ownership of the foreign property. The landowner can only demand the common value of the property. If, on the other hand, the builder is in bad faith, the constructed building falls to the landowner. The builder is entitled to compensation for the costs, but only for those costs that are of overriding benefit to the landowner. The builder may also be obliged to remove the building.

In order to acquire secured ownership of a building erected on foreign land, Austrian law provides for 2 constellations: The superstructure and the civil law building right.

The Superstructure

The superstructure is a building that was erected on foreign land, but is not intended to remain in place permanently. Superstructures are considered movable property, even if they are by nature to be qualified as immovable property.

As with the building right, the landowner differs from the owner of the item. In most cases, there is a usage agreement between the landowner and the builder regarding the property with the additional right to erect a building on the property. However, this right is limited by the fact that the building may only remain on the property temporarily, i.e. it should not remain permanently. The first owner of the superstructure acquires ownership with the construction, a document deposit is not required. If the superstructure is sold, only this is sold and not the property. A separate usage agreement for the property is therefore additionally recommended. Ownership is not acquired by registration in the land register, but only by depositing the document.

If the usage agreement for the property expires, the circumstance agreed in the usage agreement regarding the superstructure is decisive.

The Building Right

The building right is the real, transferable and inheritable right to have a building on or under the surface of a foreign property. It is a temporary right and can be ordered for no less than 10 years and no more than 100 years. With the building right, the constructed building should remain in place permanently, whereas with the superstructure it is demolished again.

The landowner grants a person the right to build on his property. The building right is entered in the C-sheet (burden sheet) and in the B-sheet (building right deposit). The landowner remains the owner of the property, the building permit holder has the right to erect a building on the foreign property, is then the owner of this building and has a right of usufruct on the property. Regularly, the building right is granted for a fee, the building permit holder must then pay the so-called building rent to the landowner.

After the expiry of the period, the building right expires and the constructed building falls to the landowner. However, unless otherwise contractually agreed, the latter must pay compensation in the amount of a quarter of the building value. The building right can also be terminated by mutual agreement.

The termination is also possible if the building permit holder is in arrears with the building rent for at least 2 consecutive years or both parties mutually wish to terminate the building right.