Acquisition of Title by Operation of Law
1. Object and purpose
In contrast to derivative acquisition of title (transfer of title (movable goods)), original acquisition of title (by operation of law) is based on certain factual situations justifying a new allocation of title. It is ‘original’ because it does not depend on someone else previously having been vested with that title. The institution of original acquisition of title is, inter alia, designed to provide legal certainty (adverse possession/acquisitive prescription, combination, intermixture, processing), to lower the burden of proof and to protect bona fide acquisition (adverse possession/acquisitive prescription), to preserve values that have been newly created (combination), to reward manufacturing processes (processing), to protect beneficiaries or at least bona fide possessors (acquisition of products), and to reward initiatives that have the effect of bringing an object under human control and making it available for human use (appropriation, finding lost property, treasure trove).
2. Legal history
a) Acquisitive prescription
Classical Roman law did not recognize the possibility of acquisition of title in good faith from a non-owner and instead only entitled good faith possessors to acquire title through adverse possession or prescription (usucapio) of the object requiring only a relatively short period of time—one year for chattels and two years for real property. Apart from the requirement for the acquirer to be in good faith (bona fides) at the time of taking possession, additional requirements included the existence of a valid title of acquisition, possession of the object in question as belonging to him (proprietary possession) and the capability of the object to be acquired by adverse possession/prescription. After the Roman vulgar law had somewhat ambiguously merged the legal institutions of acquisitive and extinctive possession and prescription, Justinian established a three-year usucapio in respect of chattels and the possibility of acquisitive prescription for immovable property (longi temporis praescriptio) within 10 years in cases where the owner and the possessor had their legal residence in the same province (inter praesentes), otherwise within 20 years (inter absentes). Acquisition by prescription simplified the process of proving ownership due to the fact that in case of litigation the owner of a thing now only had to trace ownership (property, transfer of title (movable goods)) back to the predecessor who had acquired title by way of prescription (thus avoiding the later so-called probatio diabolica).
b) Combination, intermixture and processing
The physical combination or commingling of objects belonging to different owners was referred to as accessio in classical Roman law. (1) The combination of chattels with real property: in this instance the principle superficies solo cedit applied so that the owner of the land also became the owner of the building. Ownership in the chattel that had been combined with the land also remained in existence but was considered to be ‘dormant’. The owner of the building materials was thus prevented from exercising a rei vindicatio as long as the building still existed (dominium dormiens). This rule was supposed to prevent the economically unreasonable demolition of buildings. But the owner of the materials could demand compensation. (2) Upon combination of different chattels into a unified object, the owner of the principal object became owner of the new object (accessio cedit principali). (3) Upon combination of chattels into a compound object, the previous titles continued to exist and each owner could demand and execute separation and surrender of the various elements of the formerly compound object. (4) In the event that fluids or solid matters were commingled—an instance which was referred to as confusio, or (in the ius commune) commixtio—the bulk was owned in common proportionate to the amount of material supplied by the original owners. In cases where money had been indistinguishably commingled, a presumption in favour of sole ownership on the part of the possessor arose.
Processing or production (ius commune: specificatio) involves the manufacturing of new objects from materials belonging to persons other than the manufacturer. The classical Sabinian school of law gave preference to the act of providing materials and therefore granted ownership of the new object to the owner of the original materials. Conversely, the rival Proculian School granted ownership of the new object to the producer in his capacity as creator of that object. Justinian pursued a compromise according to which the new object was to belong to the owner of the materials if it could be re-transformed into its constituent materials. However, it is not quite clear for what reason a baker should become the owner of the bread he baked, whereas an artist who had created a golden vase should not become its owner.
According to classical Roman law, any person suffering a loss as a consequence of combination, intermixture or processing was granted compensation for the lost value.
c) Acquisition of benefits
While Germanic law proceeded from the principle that the fruits are the remuneration for the labour expended (‘he who sows, reaps’), the more developed Roman law differentiated according to the principle of substantiality: the owner of the land was entitled to the natural fruits grown thereupon. However, his rights were second to the rights of hereditary tenants and bona fide proprietary possessors. These persons were considered to acquire the benefit in question upon its separation from the fructiferous object (separatio), regardless of who had carried out that separation. Thereafter the bona fide proprietary possessor was entitled to keep only the fruits that had already been consumed and was only obliged to return those that were still available. Tenants and usufructuaries, in contrast, could acquire the fruits only when they had actually taken possession of them (perceptio).
The oldest form of acquisition is appropriation (occupatio) of an ownerless object (res nullius). Aside from the criterion of ownerlessness, the only additional requirements are actual control and the intention to possess the object as its owner (proprietary possession). As the world is essentially already apportioned, this form of acquisition no longer plays an important role today. The relevance of this legal institution for the Romans was above all grounded in the fact that there was no special game or fishing law so that title to animals could be acquired by way of appropriation. Wild animals became ownerless (and capable of being appropriated) whenever they regained freedom; tamed animals (doves, bees) became ownerless when they had abandoned their ‘will’ to return to a certain place; domestic animals never became ownerless without their owner’s consent. An object also became ownerless if the owner had relinquished possession with the intention of dereliction.
e) Finding lost property and treasure trove
There was no special law on finding of lost property in Roman times. Any object that was found was potentially subject to a rei vindicatio. This was different in respect of treasures (thesaurus), which had to have been concealed for such a long time that it was impossible to identify their owner. Hadrian decided that the discoverer and the owner of the land in which the treasure was found were to become equal co-owners of the object in question. If, however, the discoverer had been seeking the treasure on the owner’s land without the latter’s consent, the owner was to acquire the entire treasure. Germanic law, in contrast, recognized the Crown’s prerogative over treasures.
3. Regulatory structures and tendencies of legal development
The law on acquisition of title by operation of law is a rather non-dynamic area in which very few legal developments can be observed.
a) Adverse possession/acquisitive prescription
Adverse possession or acquisitive prescription no longer plays a major role in most European legal systems because of the possibility of acquisition of property in good faith. Furthermore, land registers have increasingly made acquisition of land by adverse possession/prescription more difficult. In contrast, according to Arts 1287 ff of the Portuguese Código civil, adverse possession/ prescription still serves the function of bona fide acquisition, whereas English law does not recognize adverse possession of chattels. Similarly, Art 2279(1) of the French Code civil, which excludes the rei vindicatio concerning chattels against bona fide possessors, leaves no room for the acquisition by adverse possession/prescription of chattels.
Most legal systems distinguish between acquisition by adverse possession/prescription of movable and immovable objects. Furthermore, a distinction is commonly made between acquisition by short-term (ordinary) and long-term (extraordinary) adverse possession/prescription: the latter poses fewer requirements as a result of the long period of possession required.
Many codifications, such as the French or Austrian civil codes, regard acquisition by adverse possession as a form of prescription and thus recognize praescriptio acquisitiva and praescriptio extinctiva. However, since Savigny, legal theory has drawn a distinction between the two institutions and considers acquisitive prescription to be a specific type of acquisition of title that is quite unrelated to (extinctive) prescription (apart from the fact that both institutions require the lapse of a certain period): §§ 194 ff, 937 ff of the Bürgerliches Gesetzbuch (BGB), for example, adopt that distinction. This has to be kept in mind if the term “acquisitive prescription” continues to be used.
According to § 937(1) BGB, direct or indirect proprietary possession is required. In addition, it is usually required that the proprietary possession must be uncontested, unequivocal and neither violent nor clandestine (eg Art 2229 Code civil; Art 1163 Italian Codice civile; §§ 1160 ff Austrian Allgemeines Bürgerliches Gesetzbuch (ABGB); Art 1941 Spanish Código civil). According to most codes, possession must be uninterrupted, although presumptions such as § 938 BGB often help the possessor.
Acquisitive prescription of real property requires an incorrect entry in the public register in addition to actual proprietary possession: § 900 BGB; Art 661 Swiss Civil Code (ZGB). As a form of acquisition by the proprietary possessor contrary to the land register, § 927 BGB as well as Art 662 ZGB provide for a public notice procedure if the owner cannot be determined on the basis of the land register or if the owner, though registered, is either dead or missing.
According to some legal systems all objects are capable of being acquired (Germany, Switzerland); in others, there are exceptions for, inter alia, goods incapable of being the object of a legal transaction (Art 2226 Code civil; Art 1936 Spanish Código civil; Art 1054 Greek Civil Code).
While the majority of European legal systems require a cause in the sense of a reason justifying acquisition (purchase, barter, donation etc), German and Swiss law, for example, no longer have such requirement.
All legal systems require good faith of the person seeking to assert acquisition by prescription without there being a consensus about the specific standard of the good faith requirement. Whereas according to § 937(2) BGB, §§ 326, 1463 ABGB, Art 1042 Greek Civil Code, and Art 728 ZGB, good faith concerning one’s own ownership status is necessary, in France and Spain good faith concerning the predecessor’s title or power of disposition is sufficient. Furthermore, some legal systems, following the Roman example, require good faith only at the moment in which possession is acquired (Art 2269 Code civil; Art 1161 Codice civile; Art 1044 Greek Civil Code); by contrast, others, following the example of canon law, require a continuous existence of good faith (mala fides superveniens nocet, see § 937(2) BGB; Art 728 ZGB; § 1463 ABGB; Art 1940 Spanish Código civil).
Often, a period of possession of three years (chattels) or of 10 or 20 years (real property) is required in accordance with the Justinianic model (see Arts 1955, 1957 Spanish Código civil; Art 3:99 Dutch Burgerlijk Wetboek (BW); Art 1041 Greek Civil Code; see also Art 2265 Code civil). § 1466 ABGB also provides in principle a period of three years in respect of chattels. In contrast, Arts 728, 661 ZGB require periods of five years (chattels) and 10 years (real property); § 937(1), §§ 900, 927 BGB require, respectively, 10 years (chattels) and 30 years (real estate). In all legal systems it is possible to take into account the predecessor’s periods of possession (Art 2235 Code civil) or acquisitive prescription (§ 943 BGB).
‘Long-term’ (extraordinary) adverse possession/acquisitive prescription dispenses with either the requirements of title and good faith or at least the requirement of title. Thus, according to §§ 1468, 1477 ABGB, the required period of time is 30 years for unregistered land plus good faith; title is not necessary. According to Art 1955 Spanish Código civil, extraordinary adverse possession/acquisitive prescription of chattels is possible after a period of six years without the fulfilment of further requirements, and of real property according to Art 1959 after a period of 30 years. Article 1045 of the Greek Civil Code and Art 3:105 BW also permit extraordinary adverse possession/acquisitive prescription after prescription of the rei vindicatio, that is after 20 years, and thus prevent the formation of a so-called dominium sine re, a bare right of ownership. Under French law acquisitive prescription of chattels by a person in bad faith is possible after 30 years have elapsed (see Art 2262 Code civil). In contrast, the prevailing opinion in Germany (incorrectly) rejects extraordinary acquisition of title after the prescription period for the rei vindicatio has lapsed according to § 197(1) no 1 BGB and thus allows the existence of dominium sine re. Adverse possession of real property after a period of 30 years according to §§ 900, 927 BGB requires neither title nor good faith. In England, 12 years are sufficient in respect of unregistered land without any further requirements needing to be satisfied. Nonetheless, there are certain qualifications regarding the character of possession, particularly that it must be obviously adverse to the owner’s right (acquisition of the freehold title to land by adverse possession).
b) Combination, intermixture and processing
In all three cases, either sole ownership or co-ownership arises. If as a result of combination, intermixture or processing (production) a person loses a right, compensatory claims in personam and potentially a right of repossession arise. Some codifications (Spain, Portugal) prevent acquisition of title by a person who combines, commingles or processes another person’s materials mala fide.
Many legal systems, following the Roman example, contain provisions for accretion in an imperceptible (alluvio) and perceptible (avulsio) manner, formation of islands, etc. As to the combination of chattels with real property, all legal systems (including England) proceed from the principle of superficies solo cedit. There are, however, restrictions, eg according to § 418 ABGB, in respect of a person building in good faith and using his own materials on someone else’s land, with the knowledge of the latter. In this case, the builder even acquires the land in question (see also Art 938 Codice civile). Moreover, according to Art 673 ZGB a judge may grant the land to the owner of the materials in exchange for compensation if the landowner built on his own land with the materials of another and if the building’s value obviously exceeds that of the land itself. Furthermore, particularly according to the Code civil, divergent contractual arrangements in favour of the owner of the materials (builder’s supplier, lessee or tenant) are permitted. Frequently, the principle of superficies solo cedit is also restricted (according to § 95 BGB and similarly by Swiss and Austrian law) by the device of so-called temporary fixtures in cases where a lessee or tenant temporarily adds an object to the building in question. Here the lessee or tenant does not lose ownership of the fixtures. Also under English law, the tenant has a right of repossession.
In the event of an inseparable combination of chattels as well as an inseparable intermixture of fluids or solid matters, sole ownership arises, if one element can be considered to be the principal object. Alternatively, co-ownership results, the share of which is determined by the value of the individual parts of the goods in question (§§ 947 ff BGB; §§ 415 ff ABGB; Art 727 ZGB; Arts 566 ff, 573(2), 574 Code civil; Art 5:14 BW).
Whereas under German law, only co-ownership arises in the case of intermixture of money, Swiss doctrine and § 371 ABGB (unlike the current prevailing opinion in Austria) still adhere to the ius commune rule that in such an event, sole ownership of the possessor is to be the consequence.
If, by virtue of processing (production), a new product is manufactured, the producer, in principle, acquires sole ownership. This is a reward for the manufacturing process. However, if the value of the processing is considerably lower than the value of the material used, the owner of the material becomes the owner of the new product (see § 950 BGB). Only a person who manufactures the product for himself (and not on account of a contract for someone else) is deemed to be a producer. According to §§ 415 ff ABGB, the owner of the material and the producer acquire co-ownership if—according to a criterion going back to Justinian—it is impossible to re-transform the product into its constituent materials. However, in practice the impossibility of such a re-transformation will be presumed if the restoration would result in a disproportionate loss of value. In addition, under Art 726 ZGB and Art 1061 of the Greek Civil Code the producer becomes the sole owner if the value of the labour invested exceeds that of the material. If the producer acts in bad faith a judge may, according to Art 726 ZGB, grant sole ownership to the owner of the material irrespective of the proportionate value of the manufacturing process. In contrast, Arts 570 ff Code civil leave the ownership question unresolved and provide for a compensatory regime between the producer and the owner of the material.
c) Acquisition of benefits
Until the point of separation from the fructiferous object, natural fruits belong to the owner of the fructiferous object and are not subject to special rights. Not until separation can they become the property of other beneficiaries. In this context, a distinction is commonly made between acquisition of title either due to separation or due to the taking of possession by the beneficiary. Under German law, beneficiaries in rem are deemed to be owners from the point of separation onwards, whereas persons merely entitled in personam become owners only once they have been granted possession of the fructiferous object; alternatively, acquisition occurs at the time of taking possession of the fruits (§§ 954 ff BGB). Greek, Austrian and Swiss law contain similar provisions. Furthermore, according to Art 585 Code civil, the usufructuary already acquires title at the point of separation, in what constitutes a deviation from Roman law doctrine. The Code civil contains no provisions for persons entitled by way of obligation only. Absent the requirement to hand over the benefit in question, transfer of title thus already becomes possible at the moment of separation. According to § 955 BGB, § 330 ABGB, Arts 549 ff Code civil, bona fide proprietary possessors of the fructiferous object acquire ownership of the benefit in question upon separation.
A person who seizes proprietary possession of an ownerless chattel acquires ownership in it (§ 958 BGB). Most legal systems recognize a freedom of appropriation. However, Arts 539, 713 Code civil and English law have decided differently. According to both legal systems, ownerless objects belong to the state, though this does not hold true for objects of little value abandoned for the purpose of dereliction. Exceptionally, a right to appropriate objects belonging to another person is also possible, eg in German law concerning wild-growing berries or mushrooms up to an extent that is customary at the place in question (see also Art 699 ZGB). If a beneficiary in the exercise of his hunting, fishing or mining rights is entitled to appropriation, he is comprehensively protected by a proprietary right in the object, according to the German concept of Anwartschaft (expectancy). In this case, English law refers to ‘qualified property’ concerning the animals subject to such rights, which becomes ‘absolute property’ if a third person seizes possession of such an animal.
Ownerless real property can be subject to appropriation. As a general rule, the state is entitled to appropriate; the possibility of freely appropriating occupiable property will only be presumed to exist once the state has waived its right of appropriation (§ 928(2) BGB). However, in most legal systems, the state is ipso iure considered to be the owner of all land not subject to private property rights (Art 713 Code civil; Art 5:24 Burgerlijk Wetboek (BW); Art 1345 Portuguese Código civil).
e) Finding lost property and treasure trove
If a person seizes possession of a lost, yet not ownerless, chattel, this is referred to as a find; an object is lost if it is without possessor. In some legal systems, the finder may acquire ownership of the object after the lapse of a certain period of time. In order for this to occur, it is often required that the find be reported (§ 973 BGB; Art 722 ZGB) and sometimes also that it be handed over to the competent authorities (§ 390 ABGB; Art 927 Codice civile; Art 615 Spanish Código civil). The period of time is one year according to § 395 ABGB and Art 5:6 BW, two years in Spain and five years in Switzerland, while in Germany a period of six months is initially applicable (but a claim based on unjustified enrichment may be asserted for up to three years thereafter (§ 977 BGB)). Nordic legal systems only provide for public auction of found objects: the finder and the state share the revenue generated through this process. As was the case in Roman times, there is no special form of acquisition in France; the finder rather has to ‘acquire’ the object by acquistitive prescription in accordance with Art 2279(2) Code civil. England protects the person who has lost the object in question and reserves a claim for delivery in his favour; the finder is only protected against third persons.
If a chattel has been concealed for such a long time that the owner can no longer be determined, it is referred to as a treasure. Whereas according to § 984 BGB the value of a treasure is irrelevant, English law only recognizes objects containing at least 10 per cent gold or silver as treasures; other legal systems confine the notion of treasure to objects of value (Art 723 ZGB; Art 5:13 BW). The question as to whether the treasure must previously have been the property of a person and whether it must have been deliberately concealed is answered differently. Often, following the Roman example, ownership is assigned in equal shares to both finder and owner. In contrast, the ZGB provides for sole ownership accruing to the owner together with a corresponding obligation on his part to provide remuneration for at most half of the object’s value. As a result of the general public interest concerning antiquities of considerable scientific value, the state generally has a right of expropriation (eg the German laws on the preservation of historical monuments); Art 724 ZGB even goes further by providing the canton with sole ownership in return for an adequate remuneration in the event of such a discovery. In England the Crown has the royal prerogative over treasures.
4. Plans for unification
Until now uniform laws and plans for unification have rather neglected the issue of acquisition of title by operation of law. According to Art VIII.-4:101 of the Draft Common Frame of Reference (DCFR) and, similarly, to §§ 937 ff BGB, a chattel is acquired by way of continuous possession for a period of 10 years provided that the possessor, throughout the whole period, possesses in good faith; good faith is presumed according to Art VIII.-4:101(2)(b) DCFR. In the absence of good faith the required period for continuous possession is 30 years. Due to the fact that in respect of cultural assets the applicability of adverse possession/acquisitive prescription has been subject to considerable debate over the past years, the requirements are stricter in this context: by way of a minimum standard, a period of 30 years of possession in good faith, otherwise possession for 50 years, is required (Art VIII.-4:102 DCFR). The predecessors’ periods are included in the calculation (Art VIII.-4:206). At the same time, a claim for unjustified enrichment is excluded (Art VIII.-4:302).
There are non-mandatory rules for combination, intermixture and processing. The producer acquires sole ownership; however, the owner of the material is assumed to acquire sole ownership if the value of the processing is of minor importance only, or (somewhat unconvincingly) if the producer has acted in bad faith. Bad faith is irrelevant if the value of the processing is much higher than that of the material. The owner of the material receives a right to claim compensation for his loss of property, which is secured by a proprietary security right in the new object (Art VIII.-5:201 DCFR). This is a remarkable innovation.
According to Art VIII.-5:202 DCFR if goods owned by different persons are commingled these persons become co-owners of the resulting mass or mixture, each for a share proportionate to the value of their respective parts at the moment of commingling.
In cases of inseparable combinations, the owner of the principal part becomes the sole owner (Art VIII.-5:203 DCFR). The claim for compensation is secured by way of a proprietary security right. If the commingler acts in bad faith, co-ownership exists unless the value of the principal part is much higher than that of the subordinate part.
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