Typically, property rights are acquired in one of two ways for the purposes of operating a business or developing a real estate project: by acquiring the property outright or by entering into a commercial lease for the property. A third method does exist, however, which combines some of the benefits of purchasing and leasing: the creation of a right of superficies1.
What is the right of superficies?
Simply put, the right of superficies is the ownership of an immovable property overlapping, or overlapped by, another immovable property. Despite the name, it can be located not only at surface level but also below or above surface level. In fact, superficies is ownership of a volume of property that can be located at any height or depth. Below ground, however, a right of superficies is subject to mining rights and the public rights regarding groundwater and subterranean rivers, and, above ground, it is subject to the public rights regarding the occupation of air space.
It might perhaps be more correct to refer to volumetric property, but Quebec's legislature chose to continue with the analogy of a superficial area or stratum by using the term "superficies" in Articles 1110 and following of the Civil Code of Québec.
In all cases, superficies is defined and limited by reference to another existing property, namely that of the subsoil owner 2. The subsoil owner owns the property above or below which superficies is contemplated. Since ownership of land includes what is above and below, every owner of land can become a subsoil owner: all he has to do is create a superficies.
How to create superficies?
Superficies is created in three ways. The first is the subsoil owner's alienation in favour of the superficiary of a specific portion of his immovable, which can either be a volume or a construction, while retaining title on the remainder of the immovable (the ground itself, the underground, but also the volume of air above the construction). The Civil Code of Québec refers to this as the division of the object of the right of ownership.
The second method is the transfer by the subsoil owner to the superficiary of the right of accession with regards to any future property3 that might be erected on or attached to the subsoil, which is referred to as the transfer of the right of accession. In principle, an owner automatically acquires, by accession, any property that is erected on his immovable or that is attached to it. Accordingly, by transferring his right of accession, the subsoil owner thus permits the future creation of superficies in favour of a third person.
Finally, the third way to create superficies resembles the second: it involves the subsoil owner's renunciation of becoming the owner of any future construction erected on or below the subsoil by the superficiary, which the Civil Code of Québec refers to as the renunciation of the benefit of accession. In this case, superficies will only be temporary, because it is coupled with a term, the consequences of which we will see below.
Regardless of the way in which it is created, in most cases superficies vests the superficiary with a right of full and complete ownership regarding his surface area. However, where superficies is created by a renunciation of the benefit of accession, the superficary will only be the temporary owner by virtue of a personal right only, and will have the obligation to turn over, or remove, his constructions to the subsoil owner at the end of the term.
The advantages of superficies...
In light of the nature of superficies, we can understand its appeal, for both the subsoil owner and the superficiary alike, compared to other possible forms of cohabitation between contiguous occupants. Creating a superficies coupled with a term may be preferable to signing a lease if one of the parties proposes to build on another person's land. The subsoil owner would be thus relieved of the legal obligations that he would normally have to assume as a lessor (or from the chore of having to contractually eliminate them to the extent possible) and the superficiary would benefit from having a real right over the property comprised in the superficies, allowing him, in particular, to hypothecate (mortgage) it for financing purposes, which, of course, he could not do as a lessee4. Seen in this way, superficies would constitute an absolutely net form of lease, to the complete discharge of the subsoil owner with regards to the superficiary's property, with, however, the inconvenience for the subsoil owner of not being able to grant a hypothec on the superficiary's constructions.
Similarly, parties might prefer to create superficies rather than real servitudes. The advantage for the subsoil owner is to transfer to the superficiary the responsibility for paying property taxes on the superficies. The advantage for the superficiary is to avoid the application by default of certain rights that the subsoil owner would have if the parties opted to go by way of real servitude, in particular, the right to transfer the location of a servitude of passage and the option to redeem such servitude. In addition, in the context of the construction of collector systems or distribution networks, servitudes are often put in place whereas it is only the creation of superficiary rights that can adequately protect the owners' rights by defeating the process of accession.
It is for these reasons that more and more business uses are being found for superficies. Communication towers and wind turbines are, for the most part, set up as superficies. The construction of convenience stores on gas station lands also routinely involves the creation of superficies. The airport facilities of Pierre-Elliott Trudeau International Airport stand on one or two layers of superficies.
... and its disadvantages
Despite numerous commercial applications, superficies remains an acquisition method that is difficult to master, requiring, in almost all cases, the meticulous involvement of a land surveyor and a lawyer or notary specializing in this field.
In particular, the superficiary and the subsoil owner must overcome three challenges when creating superficies. The first is to meet all the legal requirements in matters pertaining to legal publication. A right of superficies could be compromised, or even terminated, if the instrument creating it is not published. Under certain circumstances, an act of recognition must also be published to perfect the right of superficies. Lastly, on land where the cadastre has been renewed, the creation of superficies requires the prior formation of a new lot corresponding to the volume in which the superficies will be contained.
The second challenge is to appropriately set aside the provisions of the Civil Code of Québec respecting the right of accession. Too many superficiaries have realized that they have, in fact, lost ownership of their constructions to the subsoil owner because the instrument creating their superficies did not appropriately suppress the right of accession. The superficiary's only recourse in such extremely embarrassing cases is to appeal to the subsoil owner's goodwill to re-assign ownership of the constructions to him. To add insult to injury, the superficiary will also have to pay the transfer duties following that re-assignment!
The instrument creating the superficies must also spell out what will happen to the constructions, works and plantations at the end of the superficies. Can the superficiary's constructions be dismantled and removed from the subsoil? Or, on the other hand, must they to be maintained, at whatever cost, to be eventually owned by the subsoil owner with or without consideration? It should be noted if there is no specific agreement between the parties on this subject, the provisions of the Civil Code of Québec will apply by default, thus providing, through the process of accession, that the subsoil owner will become the owner of the superficiary's constructions and will have the obligation to pay the superficiary at their market value, unless such market value is greater than the value of the subsoil, in which case it is the superficiary who will have the option of acquiring ownership of the subsoil from the subsoil owner.
Lastly, the third challenge is to properly apply the provisions of the Act respecting duties on transfers of immovables. Two of the three methods to create superficies, namely the division of the object of the right of ownership and the transfer of the right of accession, entail a transfer for the purposes of this act, and trigger the obligation to pay transfer duties.
A sound understanding of superficies as an acquisition method offers real estate developers, owners and lessees a greater degree of contractual creativity.
In a business context where sales remain relatively weak and possibilities to finance the purchase of real estate property are still limited, recourse to superficies may offer an advantageous opportunity.
In addition, the increase in urban center density is inevitably bringing about a vertical impetus in urban planning, characterized by a stratification of constructions and a vertical "stacking" of owners. This vertical impetus is a natural opening to an ever-increasing use of superficies.