Inheritance: The Reserved Portion (‘sehem rizervat’) Due to Children and Other Descendants

In general, an individual is free to decide what to do with his property and who inherits his assets after death by drawing up a will. However, this is subject to a number of legal limitations and exceptions.

One such limitation is the reserved portion (‘sehem rizervat’) due to children and other descendants. This was previously known as the legitim (‘legittima’). This article explains the main principles regarding the reserved portion.

The reserved portion due to children is a part of the estate of a deceased person that is protected and reserved in favour of the children (and descendants). This amounts to one-third (1/3 or 33.3%) of the estate if there are up to four children, and half (1/2 or 50%) of the estate if there are five children or more.

The reserved portion is calculated on the whole estate, after deducting debts of the deceased and funeral expenses. Interests may be awarded to the children, on the reserved portion due to them.

Consider the following example-

Let us say that John has just passed away and has been survived by his two children named Mark and Lara. In his will, John did not leave anything to his children, and instead named his best friend Frank as his heir.

Although John did not leave anything to his children in his will, they are still entitled to claim the reserved portion due to them.

Let us say that John had property worth €100,000 and left €10,000 in debts and funeral expenses. The reserved portion is calculated on the estate of €90,000.

Since John has two children, the reserved portion is one-third (1/3) of €90,000, that is €30,000. This reserved portion of €30,000 is to be split between Mark and Lara, so they are each entitled to €15,000.

If John had five children, the reserved portion would be one-half (1/2) of €90,000, that is €45,000. This reserved portion of €45,000 would be split between the five children, so they are each entitled to €9,000.

If any of John’s children had died before John, they would not be included in the calculation of the reserved portion, unless they had children of their own.

Therefore, if Lara had passed away before her father and did not have children of her own, the reserved portion of €30,000 would be due in full to her brother Mark. But if Lara had two children of her own, then the reserved portion due to her would be split between her children. Mark would therefore be entitled to €15,000 whilst Lara’s children would be entitled to €7,500 each.

In calculating the estate of the deceased person, generally we must also include any assets that had been donated by the person during the lifetime.

Therefore, going back to John; say John had donated €20,000 to a friend of his before passing away, then his estate would be €100,000 (assets) + €20,000 (donations) - €10,000 (debts and funeral costs) = €110,000. The reserved portion would be calculated on this €110,000.

Furthermore, in general, the children must impute and deduct from their reserved portion anything that they were gifted from their deceased parent, whether as donations during their lifetime or as part of the will.

Therefore, if John had donated €10,000 to his daughter Lara during his lifetime, Lara must deduct this €10,000 from the reserved portion due to her.

Children have a time limit of ten years after the death of their parent, to claim the reserved portion due to them.

These are some of the general principles regarding the reserved portion. In practice, the situations vary and each case must be seen individually.

Dr Douglas Aquilina

Ground-rent ("cens"): When and How can it be Redeemed?

When a property is granted in emphyteusis, a legal relationship is formed between the property owner (known as the "dominus") and the person acquiring the property (the "emphyteuta"). One of the conditions in the relative deed of transfer is the obligation imposed on the emphyteuta to pay the dominus a ground-rent ("cens").

There are different types of ground-rents, with the most common being perpetual and non-revisable. This type of ground-rent is payable for an indefinite period but the obligation to pay can be redeemed ("jinfeda") at any time. Redemption can be done by depositing payment through a schedule of redemption (cedola) in court, or by doing a notarial contract with the dominus or his successor/s in title. If the ground-rent is perpetual and non-revisable, the redemption is calculated by capitalizing the ground rent at a 5% rate, unless the original contract of emphyteusis specifies otherwise. The capitalisation at 5% means that an annual ground-rent of €100 can be redeemed for €2,000.

In contrast, if the emphyteusis is granted in perpetuity but is revisable, the ground-rent can be increased periodically as agreed in the original contract. A revisable ground-rent can also be redeemed, but this redemption can only be done within one year following each revision. Furthermore, the capitalisation rate is variable and is calculated on the average rate of interests payable by a commercial bank on deposits of a fixed nature at the time of the redemption.

Another type of ground-rent is temporary ground-rent, as opposed to a perpetual ground-rent. Ground-rent is temporary when the emphyteusis is to last for a specific period. A temporary ground-rent cannot be redeemed. Generally, once the temporary period expires, the property reverts to the dominus or, in the case of his death, to his successor/s in title. However, this is subject to the exceptions emanating from Chapter 158 of the Laws of Malta which may allow the emphyteuta to continue occupying the property by converting the temporary emphyteusis into a perpetual emphyteusis or into a lease.

It should be also noted that if the ground-rent is payable to a government authority such as the Lands Authority, the redemption can still be carried out by means of a cedola or a contract. In order to proceed with a contract, an application would need to be made with the Lands Authority. Furthermore, the Lands Authority often issues schemes which allow the emphyteuta to redeem the ground-rent in circumstances that are not specifically covered by law. For example, the Lands Authority to date has a scheme allowing the emphyteuta to redeem a perpetual revisable ground-rent at any time (and not just within the first year of revision) subject to a number of conditions.

As part of any redemption or application with the Lands Authority, the Lands Authority requires that the emphyteuta is officially recognised by the Authority as the emphyteuta, before it processes a redemption application. If the emphytueta is not yet recognised, an application for recognition must be submitted according to the procedures set out by the Authority.

Dr Samira Briffa & Dr Douglas Aquilina

Expropriations – Claiming compensation for expropriations done prior to 2017

The Government Lands Act (Chapter 573 of the Laws of Malta, hereinafter ‘the Act’) came into effect in 2017, repealing the Land Acquisition (Public Purposes) Ordinance (Chapter 88 of the Laws of Malta) and implementing a new regime regarding expropriations by Government.

With regard to expropriations done prior to 2017, The Act has established a peremptory deadline to submit a court case to claim compensation. The claim must be submitted within thirty years of the Presidential Declaration's publication.

Does this mean that it is no longer possible to file a court case for compensation for all property expropriated prior to 2017?

The answer depends on the title under which a property was expropriated.

If the property was expropriated through absolute purchase, the date of the Presidential Declaration is crucial. If the Declaration was issued after 1995, there is still time to file a claim for compensation as the deadline is thirty (30) years from that date, being 2025.

Where the government had taken possession of or administered property prior to 2017 without issuing a Declaration, the owner had to bring a claim for damages within five years of the Act's implementation. Therefore, for property that was occupied by the government but was never officially subject to a declaration, the deadline to claim compensation expired in 2022.

However, there is no deadline for lands acquired by the Government for possession and use as well as those held under public tenure. This means that the owners of immovable property that has been held by possession and use and/or public tenure are still in time to file for compensation. In this regard, it is important to note that to receive compensation, it is very likely that two separate court procedures need to filed as -

1. First, the owner must request the Land Arbitration Board to order the Government to acquire the property by absolute purchase in accordance with the Act's provisions, including issuing a relative declaration and declaring the amount of compensation it is willing to pay.

2. Secondly, if the owner is not satisfied with the compensation being offered, the owner would need to open a second court case to contest the amount of compensation offered by the Government.

With regards to public tenure, it is worth noting, that the Act completely removed this as a method of expropriation, and bound the Government to acquire all lands held by such title through absolute purchase or possession and use as established in the Act, or else to relinquish them to the owner.

It is crucial for owners to understand their rights in expropriation related cases. We are available to guide you through the process to obtain the compensation to which you are entitled.

Dr Samira Briffa