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

Amendments to the Agricultural Leases (Reletting Act) with the introduction of Act XXII of 2022: A step forward?

On 8 February 2023, the Agricultural Leases (Reletting) (Amendment) Act, 2022 came into force, bringing significant changes to the Agricultural Leases (Reletting Act) (Chapter 199), which has at times been described as an outdated law.

The principal change brought about by this Act is the possibility for landlords to request a rent increase by opening a court case before the Rural Leases Control Board. This increase cannot be more than 1.5% per year of the value of the agricultural land meaning that the Board can award less than this 1.5% if it deems fit. Therefore, if for example a piece of land is valued at EUR 10,000, the maximum rent that may be awarded by the Board is 1.5% x EUR 10,000 = EUR 150 per year.

However, this increase is not based on the value of the land as free and unencumbered on the open market. Rather, it is based on the value of the land as agricultural land used for agricultural purposes. An arbitrary formula to determine the agricultural value of the land in terms of the law was also introduced, establishing the base rate per tumolo at EUR 2,570. This is the lowest value that the land can be attributed as the law sets a number of guidelines that must be followed when determining the value of the land as "agricultural land".

If the land includes a farmhouse that the farmer uses as his primary residence, the rent for the farmhouse alone can be revised annually by up to 2% of the free and unencumbered market value. Tenants of lands including a farmhouse used as their sole residence, will be given the possibility by the Board to terminate the lease of the farmhouse but retain the lease of the land at the rent established by the Board.

Landlords can request the rent increase by filing an application before the Rural Leases Control Board.  The Board will consider four factors when calculating the increase:

1. The value of the land as “agricultural land”

2. The means of the farmer

3. The conditions and circumstances affecting the land

4. Any burden that is unfair to the lessor

Whilst these amendments are a step in the right direction, it would appear that they shy away from addressing the core issues. However, it appears to be in the landlords’ best interests to avail themselves of this ordinary remedy to avoid jeopardising their judicial position and rights in the future.

For further information on agricultural leases and the new amendments, feel free to contact us on info@amaadvocates.com.

Dr Samira Briffa