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A right of preference, a right to private property and a decision of unconstitutionality. Now what?

By Thursday July 23rd, 2020 July 27th, 2020 Artigo, Direito Imobiliário, Direito Português, News
O Tribunal Constitucional declarou inconstitucionalidade
On the 26th of June 2020 and by Ruling No. 99/2020, the Constitutional Court declared “with general binding force, the unconstitutionality of the rule contained in no. 8 of Article 1091 of the Civil Code, as amended by Law No. 64/2018 , 29th of October for violation of no. 1 of Article 62, in conjunction with no. 2 of Article 18 of the Constitution.

In short,

No. 8 of Article 1091 of the Civil Code allowed the urban tenant of part of a building not constituted in horizontal property to exercise the right of preference in the acquisition only of the part that he inhabited, without having to exercise that right in regard to the whole building.This rule was introduced by Law nr. 64/2018, 29th of October, integrated in a set of measures aiming at the preservation of the right to housing. However, the Constitutional Court is now declaring the unconstitutionality of the provision as it offends the right to private property provided for in no. 1 of article 62 of the Constitution.

 

To reach such a conclusion,

the Court cites several reasons. Possibly the most relevant is that the possibility for a tenant to exercise the right of preference over part of the building results in a strong devaluation of the building since the attractiveness of the property depends on the possibility of it being sold as a unit.

Thus, the Court’s reasoning is as follows: the freedom to sell the property and the integrity of its value constitute one of the most relevant faculties of the right to private property. If this is affected without there being any significant reasons for such an allocation, then the rule violates a constitutionally established right in an inadmissible manner.

Such weighty reasons can only relate to the grounds on which this rule was approved: housing stability as part of an idea of the right to housing.

However, the Court found that subjecting the disposal of the property to the prior constitution of horizontal property would be a much more suitable means of achieving housing stability than the rule now purged.

 

This position was not, however, peaceful,

since several votes were cast, in the sense that the decision now made does not look at the social function of housing, but only at its economic function. On the other hand, it states that such solution places tenants of autonomous fractions in a different situation from tenants of parts of a building in full ownership, when there is no justification for such distinction.

 

Now what?

First, it is necessary to clarify that the position of the tenant in regard to the lease does not change. That is, by transferring ownership of the building, the acquirer inherits the contractual position in the lease as it was in effect.

On the other hand, the tenant who wishes to acquire ownership of the property where he resides will have to prefer the total price of the property and the landlord will also have the obligation to give preference in this case. However, the possibility of preferring only the value of the part of the property where the tenant resides disappears.

Finally, it should be noted that the Constitutional Court has not safeguarded the relations already constituted since the entry into force of no. 8 of article 1091 of the Civil Code. Therefore, we anxiously await the judicial repercussions that this decision may have in the cases that have occurred during almost two years.

 

Thanks for being in that side.