Emphyteutical grants: Should I redeem the Ground-Rent (ċens)?

What is Emphyteusis?

The concept of ground-rent (ċens in Maltese), technically known as emphyteusis, was once a very popular contract condition in the transfer of property in Malta. Although still fairly common on the property market, as years go by it is slowly falling into disuse.

 Generally speaking, emphyteusis is a contract where one party in an agreement grants to the other a property against payment of a yearly ground-rent. It can be granted temporarily (for a limited period of time) or perpetually (forever).

 Can my ground-rent (ċens) be redeemed?

 Article 1501 of the Maltese Civil Code provides that where a grant in emphyteusis is made in perpetuity, the emphyteuta, even though the ground-rent may be revised at stated intervals of time, shall have the option to redeem the ground-rent.

Where there are more than one dominus, the emphyteuta may elect to redeem from all of them or from one or more of them separately. Furthermore, where the property is held in sub-emphyteusis in perpetuity, the sub-emphyteuta shall be entitled to redeem the original ground-rent and the increase in ground-rent by the payment of the sum due for the redemption.

This provision entitles the perpetual emphyteuta or the perpetual sub emphyteuta to redeem the ground-rent from the power of the perpetual dominus or sub-dominus. It is also clear that the perpetual sub-emphyteuta has the right to redeem not only that ground-rent which was the consideration for the sub-emphyteutical concession payable to the sub-dominus but also has the right to redeem the original ground-rent too, thereby consolidating ownership of the property.

It is important to note that the right of redemption can generally only be availed of when the emphyteusis is a perpetual. This was confirmed by the Court of Appeal way back in 2002 in the case in the names "Nobbli Baruni Salvino Testaferrata Moroni Viani et vs Evelyn Portaniet noe et". 

Such redemption of the ground-rent is to be made by the payment of a sum equivalent to the amount of the ground-rent capitalised at the rate of five per cent, unless the contract itself, being a contract entered into before the 15^th August, 1981, provides for a different manner in which the redemption may be effected.

Where the contract provides that the ground-rent may be revised at a specified time or on the happening of a specified condition, the redemption may be opted for by the emphyteuta within the first year of the date of any such revision, or the happening of such condition, and the sum payable for the redemption of the ground-rent shall, in such case, be equivalent to the amount of ground-rent so revised capitalised at the average rate of interests payable by a commercial bank on deposits of a fixed nature at the time of the redemption.

It is also of interest to note that by means of Legal Notice 216 of 2019, as amended by Legal Notice 249 of 2020, any person who holds a property of the Government or of the Lands Authority under a title of revisable perpetual emphyteusis may now apply to redeem such perpetual revisable emphyteusis insofar as the the Government of Malta or the Lands Authority even prior to the first year of the date of any such revision. Such redemption however is only permitted subject to the filing of all appropriate documentation and the fulfilment of certain conditions however it  can only be made by means of a public deed. 

Where there are more than one dominus, the emphyteuta may redeem from one or more of them separately and where the tenement is held in sub-emphyteusis in perpetuity, the sub-emphyteuta may redeem the original ground-rent and the increase in ground-rent by the payment of the sum due for the redemption.

Where the redemption is not made by public deed, the emphyteuta may effect such redemption by filing a schedule of redemption in the court registry court and at the same time depositing the sum due for the redemption.

Who should have their ground-rent redeemed?

Most people are happy to continue to pay their ground-rent year after year, rather than to have it redeemed. Increasingly however both buyers and lending banks are insisting that ground-rents are redeemed and full ownership rights are consolidated in the actual owner of the property. Redeeming by means of a schedule of redemption in court is often considered as preferential since it can be completed in circumstances where redemption by notarial deed cannot always be availed of. This means that, bar a few instances resulting from pre-15^th August 1981 contracts, almost any person who owns property subject to perpetual emphyteusis can redeem the ground-rent by means of a written court procedure that can be taken care of by an advocate.

N.B. The information provided herein does not constitute legal advice. For further information, please feel free to call +356 99491230 or send an email to avukatdemaria@gmail.com.