A building right in the land register: ground rent, term and reversion

Section 1 of the Building Rights Act defines the building right as a right in rem that can be transferred and inherited, allowing a building to exist on or below the surface. It is recorded in the land register and remains time-limited. Ownership of the land and the right connected with the building must therefore be described separately.

For the review, the land-register extract, building-right deed and plans must describe the same area and building. A building-right deed also does not replace a public building permit. The construction project risk assessment helps organise the legal and factual review axes of a project.

Start with the building-right entry, the holder, ranking and registered encumbrances. Then read the original deed and every amendment. They may contain rules on use, consent, transfer, encumbrance, maintenance or termination.

The file should also contain current plans, agreements with the landowner and records of ongoing payments. If the entry, contract and actual use do not match, the discrepancy should be clarified before the agreement is signed. In a construction conflict, the evidence-preservation topic complements the land-register review with the actual condition.

Section 3 of the Building Rights Act limits the term to at least ten and at most one hundred years. Where ground rent is paid periodically, its amount and due dates must be determined. Any contractual indexation must be assessed within the statutory framework.

The current amount alone is insufficient for the financial assessment. Record the beginning and end of the building right, due dates, adjustment mechanism, payment history and outstanding amounts. Calculate the remaining term from the original beginning and agreed duration. It forms a separate timeline alongside leases, financing and the planned useful life.

The result should be a traceable overview of ground rent, possible adjustments, maintenance, insurance, charges and the value at the end of the term. The construction contract and remuneration topic concerns a different contractual core, but can help distinguish building-right costs from construction costs.

A building right can generally be transferred and encumbered. A particular financing structure depends on the remaining term, ranking, realisability, ground rent and contractual consent provisions. A positive preliminary discussion with a bank does not replace this alignment.

The loan term, security package and repayment should be related to the expiry of the building right. Clarify which consent or information the landowner must provide for a transfer, encumbrance or structural change. The result belongs in the financing and contract draft before the purchase price or construction start is finally fixed.

Under section 9 of the Building Rights Act, the building passes to the landowner when the building right expires. Unless another agreement applies, compensation is set at one quarter of the existing building value. The specific contract may provide a different arrangement.

Before deciding on an investment, read the expiry date, contractual reversion clause, valuation basis and treatment of investments together. A reliable plan includes an expiry scenario and a scenario for transfer or financing before expiry. An expectation that the landowner will extend the right is not a secured agreement.