Law Firm Novelconsult

Acquisition of rights in rem through the positive prescription method

Aughtor Petia Kolcheva

March 22, 2012

The aim of the present legal opinion is to reveal the cases where it is possible to acquire rights in rem of immovables (real estates) through the method of positive prescription.

Generally, positive prescription is one of the most unpopular methods for acquisition of rights in rem. Recently, however, the method has been quite widely used in Bulgaria by reason of the privatization process of large enterprises. Often, privatized companies do not have proper title documents of their rights in rem and therefore, the positive prescription method is one of the main methods for such companies to acquire rights in rem over former state or municipal company’s property.

The acquisition of rights in rem through the positive prescription method is based on the grounds of article 79 of the Property Act. There are basically two preconditions for this. The first is to have a continuous and regular possession without interruption by third parties and the second is the expiry of a given period of time determined by the law. The period of possession shall be suspended if the possessor loses possession for more than six months. There is a presumption prescribed by the law that the one that possesses in different periods of time, possesses during the whole period unless proven otherwise.
It is important to say that prescriptive possession can be accumulated between transferor and transferee on perpetual succession. Positive prescription has no automatic effect. The person who wants to acquire rights in rem through positive prescription shall rely on it and he can do this by: i) a procedure of circumstantial verification performed by the notary public for acquisition of property by means of examination of three witnesses; ii) an ascertainment action pursuant to article 124 (1) of the Code of Civil Procedure; or iii) as a defendant in initiated real action to oppose the statement that the rights in rem have been acquired on the grounds of the expired positive prescription. Although the use of one of these three ways is necessary for the acquisition of rights in rem through positive prescription, they are not elements of it, but only a legal manner for the consequences of expired positive prescription to occur.
Pursuant to article 79 of the Property Act, the right of ownership over immovable property through positive prescription is acquired through continuous possession for a period of 10 years. If the possession has been in good faith, ownership is acquired with continuous possession for a period of 5 years. According to article 70 (1) of the Property Act, “the possessor shall be deemed to possess in good faith when he possesses the property on a legal ground fit to make him an owner, without knowing that the transferor is not the owner or that there is a defect in the form prescribed by the law.”
The prohibition for acquisition of rights in rem of state and municipal ownership through positive prescription has been in force since 1996. Pursuant to the amendments made in the Property Act in 1996, the prohibition remains as regards public state and municipal property. The State Property Act and the Municipal Property Act were passed in 1996. Nevertheless, the issue regarding the acquisition through positive prescription is settled by different means in respect to state and municipal ownership. According to the State Property Act, the earliest date for beginning of the positive prescription period for acquisition of a real estate which is private state property is 1996, while pursuant to the Municipal Property Act the earliest date for beginning of the positive prescription period for acquisition of a real estate which is private municipal property is 1999. The latter conclusion is made on the basis of article 7 (1) of the Municipal Property Act in its initial wording (promulgated State Gazette No 44/1996) which had the following meaning: “Real property and chattels in municipal ownership cannot be acquired through positive prescription”. The latter article was amended and supplemented (SG No. 96/1999) with the following content: “Real property and chattels in public municipal ownership cannot be acquired through positive prescription”, consequently, real property in private municipal ownership can be acquired through the method of positive prescription except for (pursuant to the supplementation in SG No 54/13.06.2008) the land included in the municipal land fund and the land and forests included in the municipal forest fund.

From 1 June 2006 till 31 December 2011 the statutory limitation term for acquisition of private state and municipal real estate properties shall still exist pursuant to the Act Supplementing the Ownership Act (Promulgated SG No. 46/06.06.2006, effective 01.06.2006, amended SG No. 105/22.12.2006, amended SG No. 113/28.12.2007 effective 31.12.2007. § 1 (Amended NG No. 105/2006, amended NG No 109/23.12.2008, effective 31.12.2008).
Although in most cases a company usually has been in possession of the real estate before 1996 and respectively 1999, taking in account the fact that the earliest date for beginning of the positive prescription period regarding state and municipal property is from these years, possession up to 1996, respectively 1999, is irrelevant for the acquisition according to article 79 of the Property Act. Therefore, a company may evidence a maximum period of possession commencing from 1996 or respectively 1999 till 1 June 2006 when the moratorium for acquisition of state and private municipal ownership took effect. After expiry of the term of the imposed moratorium with deadline 31 December 2011, a company shall acquire real property through the positive prescription method when and if all requirements of the law for such acquisition have been fulfilled by the said company. The possession period elapsed before the imposition of the moratorium would not be lost and shall be prolonged with the period after the expiry of the term of the moratorium.
Positive prescription is a method for acquisition not only of rights of ownership, but also of rights of construction, rights of use and easements.
We shall explain the connection between the acquisition of the right to construct and real estate which constitutes self-contained property, located within a building completed to the stage of rough construction work through positive prescription. Possession of the right to construct transfers to possession of the real estate which constitutes self-contained property, located within the building completed to the stage of rough construction work when this circumstance has been certified by the competent municipality with the issuance of a certificate pursuant to article 181 (2) of the Spatial Development Act. The date when the right of construction is transformed into right of ownership of the building completed to the stage of rough construction work is important because till that moment the object of possession can only be the right of construction. The permanent judicial practice regarding the issue of acquisition of right of construction through positive prescription considers that the possessor shall evidence prescription possession only when he builds for himself and the building is commenced. After the date of issuance of the certificate pursuant to article 181 (2) of the Spatial Development Act, the possession over the real estate which constitutes self-contained property within a building completed to the stage of rough construction work shall be considered transferred. However, it is difficult to prove such possession because the use of the building would not have been allowed yet and physical possession is possible but inadmissible. Consequently, the possessor should once again prove that he builds for himself. Nevertheless, we should say that the construction process is strictly formal. Therefore, if someone builds for himself, he must be provided with the necessary documents for the construction process. These documents are issued only to the person who is: i) owner of the land estate; ii) owner of the right to construct; iii) owner of the self-contained property within the building. If the possessor is all of them, he does not need to acquire the rights in rem through the positive prescription method. Therefore, the construction documents shall be issued to another person who is not the possessor, so it is very difficult for the possessor to prove that he builds for himself. On the other hand, if the possessor does not have the construction documents, it follows that the building is being constructed unlawfully and shall be subject to demolition.

Finally, we shall conclude that the positive prescription method is used when the possessor cannot legitimize himself as owner of the real estate through written evidence. At the present moment it is impossible to acquire the rights in rem of real estates which are state or municipal property through positive prescription, because the moratorium for the acquisition of such property is still in force. We shall mention the fact that till 1 January 2010 the acquisition of real estates on the grounds of positive prescription was not taxable. However, with the latest amendment of the Local Taxes and Fees Act was amended, pursuant to article 44 (3) thereof (New – SG No. 95/2009 effective 01.01.2010) tax for the acquisition of real estates on the grounds of positive prescription is now due.
For further and more detailed information in relation to the transformation of companies, please contact our office.