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Rights and registration

Rights

What types of holding right over real estate are acknowledged by law in your jurisdiction?

Under Swedish law, the ownership of real estate carries with it the right to occupy and dispose of the property. However, the owner’s right to use the property freely is restricted. For instance, the right to develop land is limited by planning and building legislation. The usual types of holding right over real estate are as follows.

Site leaseholds In Sweden, it is common for the real estate owner to grant a site leasehold right in the property. A site leasehold right may be granted only on publicly owned land. The site leaseholder essentially has the same legal status as an owner of the property. For example, the site leaseholder has the exclusive right to use and occupy the property. The main difference compared to (freehold) ownership is that the owner of the site leasehold right has no right to transfer the ownership of the property, only the leasehold right. The leaseholder has the right to transfer the site leasehold right freely to any person or entity.

A site leasehold right is generally granted for a long period against an annual fee, normally calculated as a percentage of the land value. The agreement between the parties (the landowner and the holder of the leasehold right) can be terminated only by the landowner, but not until a 60-year period has expired. For commercial properties, a shorter period may be agreed between the parties.

The landowner is barred from discontinuing the agreement unless it has a strong reason for termination. In practice, such strong reasons are similar to grounds for expropriation. In case of termination, the landowner has an obligation to compensate the leaseholder, also on grounds similar to expropriation, for the value of the site leasehold at the termination of the lease, including the value of buildings and anything else owned by the leaseholder and placed on the leased land. The valuation will be made on the assumption that the site leasehold will remain with the existing buildings and existing use.

Land leaseholds Land leaseholds are lease agreements for the use of land and can be entered into for different purposes (eg, residential and agricultural) and different rules apply depending on the use of land. All land leaseholds give the holder an exclusive right to use the land for a period of time against payment of rent to the land owner. Leaseholders may also have a right of first refusal if the land owner wishes to sell the property. With the exception of residential properties, the rent is normally based on the prevailing market terms (under freedom of contract).

Leases are lease agreements for the use of buildings (both commercial and residential). Chapter 12 of the Land Code governs both commercial and residential lease agreements. Some of its provisions apply only in relation to residential or commercial lease agreements, but several provisions apply to lease agreements in general. To some extent there is freedom of contract, in particular for commercial leases, where the rent is based on the prevailing market terms when a lease agreement is entered into. Lessees are provided with security of tenancy, which means that lease agreement can be terminated only if the landlord has cause for such termination. Commercial leases may be terminated without cause, but this will result in the landlord being obliged to compensate the tenant for all damages.

Easements A right that is necessary for the use of a property may be secured by an easement. An easement gives the right for the dominant estate (in this case, the real estate which has the benefit of the easement) to use the servient estate (the real estate on or through which the easement is used) for certain purposes (eg, to construct and maintain a cable or use an existing road on the property). The easement must be established for a permanent purpose.

One advantage of an easement compared to other rights of use is that an easement can, and usually does, have a perpetual term.

Are rights to land and buildings on the land legally separable?

The rights to land and buildings are legally separable. For instance, buildings on non-freehold land will be regarded as movable assets (and not as real estate assets as such). The ownership of such buildings is partly governed by legislation other than the Swedish Land Code.

Which parties may hold and exercise rights over real estate? Are there restrictions on foreign ownership of property?

Swedish law imposes no restrictions on foreign investment in Swedish real estate, except in relation to agricultural and forestry estates, where general restrictions apply. Despite this, most foreign investors in Swedish real estate make their investments through Swedish limited liability companies. 

How are rights, encumbrances and other interests over real estate prioritised?

The priority is determined on the basis of the date of registration at the Land Registry.

Registration

Must real estate rights, interests and transactions be registered in your jurisdiction? What are the legal effects of registration?

The ownership of land and the holding of site leasehold rights must be registered in the Land Register, which includes information regarding ownership, mortgages, site leaseholds and easement agreements. The Land Register is maintained by the National Land Survey Authority. When a real estate or a site leasehold right is transferred, an application for registration must be sent to the National Land Survey Authority within three months of the date of completion of the transfer. If the application is not submitted on time, the National Land Survey Authority may issue an order and a fine. The registration has no legal effect between the seller and the buyer in relation to the registration itself – that is, the transfer will not be invalid if the registration is not done within a certain time.

Usufructs may also be registered, although registration has no legal effect as to the validity of the agreement between the parties. The registration of rights is mainly done to procure and maintain the right against a new owner of the real estate in certain circumstances. Lease agreements are not usually registered.

What are the procedural and documentary requirements for entry into the national real estate register(s)? Can registration be completed electronically?

An application for entry to the Land Register is made in writing. The application must include a copy of either the contract or the bill of sale. Registration cannot be made electronically, but an investigation is ongoing as to whether this should be allowed in the near future.

What information is recorded in the national real estate register(s) and to what extent is such information publicly available?

The Land Register contains information about all real estate in Sweden. The register includes information on:

  • ownership and boundaries for all real estate;
  • mortgages;
  • tax assessments;
  • easements (and other registered rights of use);
  • ongoing matters at the National Land Survey Authority involving the relevant property; and
  • the purchase price of the latest transfer of the property.

This information is publicly available.

Is there a state guarantee of title?

Swedish law protects a buyer that relied on the information in the Land Register in good faith and, based on that information, acquired real estate. The purpose of this principle is to make the Land Register reliable and trustworthy, and thus to promote and simplify business. Some conditions must be met before a buyer will be granted title assurance. The buyer must act in good faith and the seller must be registered in the Land Register as the holder of the title to the real estate. The effect of these rules is that the rightful owner loses its title and instead will be reimbursed by the state for the loss (except in certain specific cases, such as forgery or duress).

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