Right of surface: when the land and the building have different owners

The right of surface is a legal concept provided for in the Portuguese Civil Code that allows a person to build or maintain a structure on land belonging to another person, whether an individual or a company. It may also cover the making or maintenance of plantations on another’s land.

In simple terms, this right makes it possible to separate ownership of the land from ownership of the building, structure or plantation existing on it. Thus, although the land continues to belong to its owner, another person — the surface-holder (superficiário) — acquires a right of their own over the structure or plantation carried out or maintained on that land.

The general rule is that whatever is built on or incorporated into land follows the ownership of the land. The right of surface, however, is a significant exception to that rule. In these cases, two distinct legal positions coexist: that of the landowner and that of the holder of the right of surface.

This concept can be especially useful in various practical situations. It allows, for example, the owner of a plot to make it profitable without selling it, by authorising another person or entity to build on it. It is also frequently used in urban-development projects, housing developments, public concessions and municipal initiatives, especially where the aim is to keep ownership of the land within a public or private entity while allowing its use by third parties.

How it is created

The right of surface may be created by contract, will or acquisitive prescription (usucapião). It may also result from the separate disposal of an existing structure or trees, without transferring ownership of the land. In practice, the most common form is the conclusion of a contract between the landowner and the surface-holder.

That contract must clearly regulate essential aspects such as the term of the right, the purpose of the construction or plantation, the price, the parties’ obligations, the conditions for transfer, and the fate of the structure at the end of the right. As it is a right in rem over immovable property, its creation must be duly formalised and subject to land registration.

Temporary or perpetual

One of the most relevant features of the right of surface is that it may be temporary or perpetual. When temporary, it ends on the term defined by the parties. When perpetual, there is no previously fixed end date. This distinction is particularly important, as it may affect the economic value of the right, the possibility of financing, transfer to third parties and the security of the investment.

The surface-holder has the right to build, maintain and use the structure or plantation on the agreed terms. In principle, they may transfer that right, sell it or leave it by inheritance. In turn, the landowner retains ownership of the land and may also transfer it, though always subject to the right of surface already created. On the sale or dation in payment of the right of surface, the landowner generally benefits from a right of first refusal (preference).

Tax implications

There are also relevant tax implications. The creation or onerous transfer of the right of surface may have an impact for IMT (property transfer tax) purposes, and the existence of this right may also be relevant for IMI (municipal property tax) purposes. As a rule, once construction of the structure begins or the plantation is completed, IMI becomes payable by the surface-holder. Therefore, before creating or acquiring a right of surface, it is important to analyse not only the contract but also the tax effects of the transaction.

Extinction

The right of surface may be extinguished for various reasons, namely: the expiry of the term; failure to complete the structure or to carry out the plantation within the applicable period; the merger of the right of surface and ownership of the land in the same person; the disappearance or rendering unusable of the land; or expropriation for public use.

Where the right of surface is created for a fixed period and the term ends, the landowner generally acquires ownership of the structure or the trees, unless a different regime has been agreed. In that situation, the surface-holder may be entitled to compensation, on the terms provided for by law.

In short, the right of surface is a flexible legal solution that makes it possible to derive economic benefit from land without transferring its ownership. However, its creation requires care. The term, the registration, the tax charges, the transfer rights, the right of first refusal and the consequences of extinction must all be carefully analysed and clearly defined.

This is a topic that raises many questions and may give rise to significant issues in each specific case. VPA has a team experienced in this area and can help you clarify your situation and find the most appropriate legal solution.