Property Law Theory and Building Encroachments from a Comparative Perspective
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Jan Felix Hoffmann
Abstract
Conceptualism has a difficult standing in contemporary private law theory. This also affects discussions in property law, where the research agenda often seems primarily interested in deconceptualization. From a comparative perspective, this complicates the discourse, as many national codifications of property law still adhere to strong concepts. This anti-conceptualist bias also leads to the development of distorted narratives about concrete issues in property law. According to this narrative, property is a conceptualist barrier that prevents each case from being decided on its own merits. Accordingly, not only must property be broken down into a “bundle” of inter partes relations. The law should also focus on the outcome of disputes, which is best achieved at the remedial level. It is also in this sense that the prominent distinction between property rules and liability rules has been understood and applied. While realism serves the important purpose of preventing overly conceptualist tendencies, these narratives do not stand up to closer scrutiny of how property law concepts actually work. They also run the risk of destroying concepts where they are needed to decide cases. This essay will use the example of building encroachments in comparative property law to illustrate that anti-conceptualism often fights against the clichés created by its own protagonists. Building encroachments are, from a comparative perspective, a very concrete example of the adaptability and flexibility of property.
1. Introduction
219In contemporary discussions of private law, there is a tendency to reduce complexity by creating prominent theoretical antagonists. According to one narrative, conceptualism is attributed with working through abstract legal concepts whose es220sence is believed to be mostly contingent and not accounted for.[1] In contrast, realism is seen to be the clear-headed and pragmatic mode of addressing the issues at hand directly and straightforwardly in the complex societies of the (post)modern age. The concepts of “form” and “substance” are a closely related antagonism, and in the German-speaking world, they are represented by “Begriffsjurisprudenz” and “Wertungsjurisprudenz.”
The reasoning of legal scholars has been classified according to this schema, as has the way that the law itself functions. When regulating conflicts, one can either use “rules” or “standards”.[2] “Rules” set clear boundaries that will inevitably appear formalistic in difficult cases. “Standards”, on the other hand, are open to reasoning in close contact with the concrete case at hand. This schema postulates that while “rules” may provide greater legal certainty, they do so at the cost of potentially unjust decisions in challenging cases. To avoid such outcomes, reliance on “standards” is necessary.
Another distinction is made between legal scholars or legal systems that prioritize the concept of substantive rights and those that approach legal conflicts primarily through the category of remedies.[3] The concept of pre-remedial substantive rights must, to some extent, be more abstract and therefore more formal than remedies a judge will grant considering a concrete case, especially when judicial discretion is in place.
It is relatively apparent which side of the divide the concept of property law is being placed on. Property law is perceived to be the prime example of a conceptualized and rule-based field of law. Indeed, much of the modern research on property law conducted in the English-speaking world has been dedicated to “curing” property law of its supposedly overly conceptualist alignment.[4] A considerable proportion of the classical body of property law has been entirely separated into a distinct field of law of secured transactions in order to facilitate a more “functional approach” in accordance with legal realism.[5] The deconstruction of property into a 221“bundle of rights”[6] is also intended to bring this abstract concept closer to the actual and “real” legal questions in property law between persons – as opposed to those between things and persons. Furthermore, discussions have been significantly influenced by the proposed differentiation between “property rules” and “liability rules”.[7] This approach to conflicts about property primarily focuses on remedies. Under a property rule, the proprietor is able to defend his property right against encroachments. In contrast, under a liability rule, the proprietor is only compensated for damages.
These antagonistic classifications serve an important function in simplifying complex discussions and in identifying excessive trends in either direction. It is important to remind conceptualism from time to time that every concept must be rooted in substance. Conversely, it is necessary to inform realism that no body of law can function reliably without some form of conceptualization at one level or another. Nevertheless, these simplifications can also give rise to distorted perceptions, which is particularly evident in the discourse on property law.
One need not be a property skeptc to concede that property law is also about formalism. An important feature of property law is simplification at a general level. Many principles of property law[8] serve the purpose of formalizing legal relations, be it the numerus clausus or the requirement of transparency. However, in general this conceptualism is not decisive for the outcome of the legal conflict in its entirety. Property law concepts address relations erga omnes, ie, relations between the individual and the world. This does not predetermine the consequences in every relation inter partes. For example, determining that title between seller and buyer only passes with delivery (traditio) is indeed to some extent formalistic. Without delivery, the buyer will have no proprietary protection against the world. Nevertheless, in substance, he will not be deprived of contractual rights against his seller. Furthermore, it is formalistic to deny legal transactions erga omnes effects due to the principle of numerus clausus. However, this has no relevance for freedom of contract inter partes in substance.
The prevailing perception of property law as a formalistic field of private law extends beyond the described division of tasks on the property/contract divide. The manner in which property rights are initially allocated is sometimes regarded as overly general, abstract, and conceptualized. This is why the “bundle of rights” deconstruction is deemed necessary. However, this does not necessitate the intro222duction of further nuances into the debate on form versus substance. It is a cliché that property as such would be incapable of generating just solutions in diverse and difficult situations of conflict. Recognizing that property law as the law of erga omnes effects also comprises intellectual property,[9] one prime example of the adaptiveness of property rights is the fair use doctrine in copyright law.[10] The divide between conceptualism and realism does not become visible in the question of whether such exemptions from copyright should be made at all but on how they should be implemented in a legal system. Two approaches to the question of how to balance the rights of copyright holders with the rights of users can be identified. One is to formulate standards in an open and general way, while the other is to attempt to predictably delimit the position of the copyright holder through rules.[11]
Those who are skeptical of property law doctrines might argue that the situation in intellectual property law is inherently different. Due to the lack of physical substance, a primarily conceptualist assignment of an intellectual property right would simply be impossible, even for the most stubborn conceptualist. A conceptualist approach to property would therefore be forced to look at matters of substance when dealing with intangibles.
However, the law of real property, which is arguably the most static and formalistic body of property law in general, frequently resolves conflicts about the content and scope of the property right in a flexible manner, drawing on criteria that are closely related to the concrete cases to be decided.[12] One such prominent example are nuisance conflicts. The problem with nuisance is that it also frequently serves as an illustration of the dichotomy between form and substance in property law. Instead of seeing the development in the field of nuisance as an example of the adaptiveness of property law, it is used to demonstrate how the rigidity of classicism supposedly had to be softened by the fluidity of modernity[13] in order to accommodate the changed necessities of reality.[14] Moreover, it is often asserted that nuisance is a matter of intangibles rather than of hard real property law.
223This article will examine one of the most fundamental and tangible proprietary conflicts in the law of real property, which has historically[15] exhibited a certain degree of flexibility with regard to the scope of property rights. When a landowner (henceforth “the encroacher”) erects a building on his plot of land and the building also encroaches upon the neighbor’s plot of land, the form/substance dichotomy will suggest that property law itself is too rigid and unfit to find just solutions for individual cases. In such instances, rules would lead to clear, albeit at times unjust, solutions. This essay will compare in detail of how different national property laws deal with this conflict and reflect this in the broader context of the conceptualism/realism, right/remedy, “property rule”/”liability rule” divide. The aim is to further the understanding of building encroachment conflicts in detail as an aspect of comparative property law and to provide an example for the oversimplifications that sometimes occur in discussions on property law theory at a general level.
2. Comparing Property Laws
2.1 The Relevant Questions
In order to be able to adequately evaluate and analyze national property laws, it is necessary to specify and focus on the relevant questions regarding the encroachment problem. The conflict will be considered directly when the encroaching building is completed. While the passing of time might also lead to consequences from a 224proprietary perspective,[16] these are not a specificity of encroachment conflicts. Consequently, institutes such as acquisitive prescription or adverse possession will not be examined.
With regard to the highly conceptualized field of property law, it is important to undertake comparative endeavors from a primarily functional perspective, eschewing recourse to property dogmas or concepts. In order to avoid misunderstandings, the comparatist should approach the issues at hand from the perspective of a legal realist. Such misunderstandings could arise when the focus is solely put on the question of who is considered the proprietor of the building encroachment by comparing the respective regulations on accessions to land. It is important to note that just because the encroacher may be deemed the proprietor of the building encroachment does not necessarily mean that the neighbor must tolerate the encroachment. Similarly, the pertinent inquiries are not definitively resolved by the ownership of the encroached plot of land. The fact that the neighbor retains ownership does not inevitably result in the removal of the building encroachment.
The most pressing question in an encroachment conflict is whether the neighbor has a right to the removal of the building encroachment as far as it extends to his plot of land. A national property law will only decide to leave the building intact under certain requirements, which will be subject to a comparative analysis. What are these requirements, and how are they implemented in the national property laws? Further issues must be addressed in case the neighbor has to tolerate the encroachment. It is necessary to determine whether the encroacher will have to compensate the neighbor. The type and manner of such compensation must be specified. In the case that the property over the encroacher’s or the neighbor’s plot of land is transferred to a third party, it must be ascertained whether the respective transferees will also be subject to the encroachment regulation. What are the consequences of a destruction of the encroaching building, for example as a result of a natural disaster or due to a decision of the encroacher?225
2.2 Reluctance Towards the Protection of the Encroacher
2.2.1 France – Le droit sacré de la propriété
French property law does not specifically regulate building encroachments (empiètements).[17] The Cour de cassation has consistently[18] held that a neighbor has a right to the demolition of an encroachment, regardless of the encroacher’s good faith,[19] the extent of the encroachment,[20] or the encroacher’s interests.[21] This right is not limited to cases where the encroachment is significant or affects the neighbor’s interests significantly.[22] The encroacher will only be protected by the general rules on acquisitive prescription.[23] The Cour de cassation considered whether the encroacher could be protected by taking recourse on the abuse of rights doctrine. Despite the existence of this doctrine in French property law,[24] the Cour de cassation explicitly refused to apply it to encroachment conflicts.[25] After the reform of contract law in 2016, specific performance has been explicitly limited by relative hardship in Art. 1221 Code civil. The Cour de cassation did not invoke this provision of contract law in encroachment conflicts in favor of the encroacher.[26] The Cour de cassation finds no circumstances under which an encroacher is worthy of protection.[27]
226The rulings of the Cour de cassation have been subjected to extensive criticism in the French literature.[28] In 2008, an elaborate reform proposal was presented but was ultimately unsuccessful.[29] According to this proposal, an encroacher would be protected when the encroachment extends less than 0.3 meters on the neighbor’s plot of land and the encroacher acted in good faith. The neighbor may prevent the encroacher from receiving protection by objecting to the encroachment within two years of gaining knowledge, with a maximum deadline of ten years. The judge may order, at the request of either party, the transfer of title over the encroached plot of land against compensation. This reform proposal is notable for two reasons. Firstly, the legislation is very restrictive in that it grants the neighbor a right to object to the encroacher’s protection without allowing for a balancing of the parties’ interests.[30] Secondly, the legislation takes a formalistic approach by setting clear-cut requirements in the form of exact maximum dimensions of the encroachment. Even from a conceptualist perspective, one would expect that these maximum dimensions relate to the size of the encroached plot of land in some way.
In 2016, the French Notaries Association discussed another reform proposal, which ultimately did not find a majority within the association.[31] This was despite the proposal’s observations on comparative property law[32] and the exceptional position of French property law in this respect. The proposal adapted the one made in 2272008, dropping the formal limitations on the maximum dimensions of the encroachment. The neighbor would still be able to prevent the encroacher’s protection. The proposal set a uniform time limit of five years following the beginning of construction, making it a highly restrictive proposal.
A recent case of the Cour de cassation has given rise to speculation that a shift in the judiciary may be emerging. In this case, the Cour de cassation ruled that a balancing of interests could lead to the protection of the encroacher in the event of a building encroachment that affected a servitude. This ruling was made in a case where the encroacher had built completely on his own land encumbered with a servitude. This decision was also based on Art. 8 of the European Convention on Human Rights (ECHR).[33] It remains unclear whether it will also fundamentally impact conflicts between encroachers and proprietors.[34] While many observers believe that the Cour de cassation will not extend this flexibility to cases where a proprietor demands protection against an encroachment,[35] and the Cour de cassation has so far indeed stuck to its strict course,[36] there has since been a ruling by a Court of appeal that extended this balancing of interests to a property conflict.[37] Nevertheless, previous attempts by lower courts to adopt a similar approach have consistently been rejected by the Cour de cassation.
2.2.2 Belgium – Desacralization through Abuse of Rights
Despite the close historical and substantive law connections between French and Belgian property law, Belgian courts have taken an independent path. After lower courts had adhered to the strict protection of the neighbor as established by the French Cour de cassation,[38] in a decision dated 1972, the Belgian Cour de cassation protected an encroacher by implementing the abuse of rights doctrine.[39] The neighbor’s right to have the building encroachment removed will be replaced by a claim for just compensation, and courts will order a forced sale.[40] Belgian courts devel228oped a balancing of interests in which the damage caused to the encroacher in case of demolition and a possible protest of the neighbor against the encroachment are taken into account.[41]
In 2020, the protection of encroachers has been incorporated into Belgian property law through the enactment of a property law reform. Art. 3.62 § 2(2) Code civil provides that an encroacher who acted in good faith and whose interests would be disproportionately harmed by a demolition of the building encroachment may be granted protection. At the neighbor’s discretion, the encroacher may be granted a right of superficies for as long as the encroachment persists, or the title to the encroached plot of land. The neighbor shall be compensated in accordance with the principles of unjustified enrichment, which will result in an indemnification based on the objective value of the right of superficies or the built-upon land. Even in the event that the encroacher acted in bad faith, a weighing of interests can be in favor of the encroacher according to Art. 3.62 § 2(3) Code civil when there is neither a considerable encroachment nor a potential harm to the neighbor. The legislator reviewed other national property laws and their protection of encroachers[42] and considered the codification to be a specific application of the doctrine of abuse of rights.[43]
2.3 Balancing of Interests (also) on a Proprietary Level
2.3.1 Germany
German property law contains specific regulations for conflicts arising from building encroachments (Überbau). In accordance with § 912 BGB, the neighbor has to tolerate an encroachment on his property unless it can be proven that the encroacher has acted intentionally or with gross negligence. In the absence of gross negligence, the neighbor may seek to avoid the duty to tolerate the encroachment by filing an objection before or immediately after the encroachment occurred. The time limit is not contingent upon whether the neighbor was able to detect the encroachment.[44] If the encroachment does not have to be tolerated, the neighbor may 229pursue the demolition of the encroachment at the expense of the encroacher through an actio negatoria, as set forth in § 1004(I)(1) BGB.
Upon initial examination, the regulation appears to be rigid due to its lack of balancing the parties’ interests and its apparent lack of judicial discretion. Firstly, the legislation does not seem to differentiate according to the extent of the encroachment. However, the more substantial the encroachment, the less probable it is that it was carried out without gross negligence. With regard to minor building encroachments, the scope of the regulation requiring that the encroacher has “built over the boundary” is limited to instances where the encroachment is significant to such a degree that a demolition would actually be detrimental to the encroacher’s interests.[45] The concept of “building” is so thoroughly imbued with the weighing of interests that even a substantial building encroachment will not be considered to be a “building” that can be protected under § 912 BGB if a demolition does not cause significant harm to the encroacher, for instance, if it is not costly and does not affect the remaining building.[46]
Secondly, the neighbor may prevail by merely filing an objection, regardless of his interests in the encroached plot of land and seemingly regardless of the damage this would cause the encroacher. However, the time limit for the objection can only be met by objecting in such a timely manner that the building encroachment is still insignificant enough so that its removal will not substantially harm the encroacher.[47]
Furthermore, the Bundesgerichtshof has expanded the scope of application of the contract law regulation on relative hardship (§ 275(II) BGB) to the proprietary remedy of actio negatoria.[48] Consequently, even outside the protection provided for by § 912 BGB, the encroacher can be protected under § 275(II)(1) BGB. The extent of this protection will be contingent upon a balancing of interests between the encroacher and the neighbor. The decision will depend on the costs or the damage that a demolition of the encroachment would entail in comparison to the interests of the neighbor in such a demolition. In case the encroacher is found negligent, this will be considered in favor of the neighbor under § 275(II)(2) BGB.[49] The flexibility intro230duced by the use of contract law in encroachment conflicts is still evolving and raises further questions. Particularly, contract law regulations on relative hardship do not provide for any compensation for the neighbor’s losses.
Such compensation is provided for by the encroachment regulation in § 912(II) BGB, which stipulates that the neighbor has to be compensated by periodic payments if he has to tolerate the encroachment. The amount is fixed according to the objective use value of the encroached plot of land[50] at the time of the encroachment. A subsequent increase in value will not be taken into account. The compensation does not encompass all potential damages to the neighbor.[51] For instance, there will be no restitution even if the neighbor can achieve a higher value for his plot of land as a whole than merely for the encroached part.[52]
The regulation is similarly clear regarding the transfer of property. In accordance with § 913 BGB, the regulation is effective against each current proprietor of the respective plot of land.[53] In the event that the encroachment is destroyed, the neighbor regains full control over his plot of land,[54] and the encroacher’s obligation to compensate is terminated (§ 914(I)(2) BGB). This is the solution that most respects the conflicting interests. However, it does require the neighbor to maintain a continuing relationship with the encroacher, which can only be terminated unilaterally by the latter by removing the building encroachment. The regulation provides for an alternative mode of compensation if the neighbor is not interested in periodic payments for a limited period of time. The neighbor may compel the encroacher to buy the encroached plot of land in accordance with § 915(I)(1) BGB. The price will be determined according to the objective value of the plot of land at the time of the encroachment.
There have been various proposals regarding the conceptual interpretation of the encroacher’s position under § 912 BGB if there is no forced sale. Some scholars argue that § 912 BGB confers a statutory servitude upon the encroacher.[55] The drafters of the BGB perceived a servitude-like right.[56] The modern view considers the situation as a statutory expansion of the encroacher’s property rights at the expense of a statutory restriction of the neighbor’s property rights.[57] In essence, there is a general consensus that the encroachment regulations result in a shift on the pro231prietary level, rather than in mere modifications to the neighbor’s remedies or in a mere blocking of the neighbor’s property right.
2.3.2 Switzerland
The Swiss civil code has also explicitly regulated the problem of building encroachments (Art. 674(III) ZGB). The encroacher will be protected if he acts in good faith, which is the case as long as there is no gross negligence.[58] The neighbor can avert the encroacher’s protection by objecting to the encroachment in due time. The Bundesgericht ruled that the time limit is not contingent on the neighbor’s ability to detect the encroachment. Rather, it commences as soon as the encroachment becomes perceptible, as the regulation primarily aims to protect the builder from damage.[59] In accordance with German property law, the objection is timely as long as the building encroachment is still insignificant and its removal will, therefore, not substantially harm the encroacher.
At the judge’s discretion, the encroacher may be assigned an appropriate servitude[60] or the property over the neighbor’s encroached plot of land, as far as the encroachment physically extends. The neighbor will be compensated through a “once and for all” payment.[61] In a case where the building encroachment consisted of a balcony, the Bundesgericht opted for a servitude and not for a transfer of property.[62] The regulation is understood to mean that the protection of the encroacher will still depend on a weighing of the parties’ interests, even if the legal requirements of Art. 674(III) ZGB are fulfilled.[63] In the case of a building encroachment that can be easily removed without causing considerable damage to the rest of the encroacher’s building, protection will not be granted. Furthermore, protection will not be granted when the damage caused to the neighbor exceeds the encroacher’s interests.[64]
If a servitude is granted, it will ipso facto extinguish upon the destruction of the encroachment.[65] The protection of the encroacher has absolute effects even before a servitude or property is assigned since the mechanism in Art. 674(III) ZGB is good 232against a transferee of the neighboring plot of land and can also be invoked by the transferee of the encroacher’s plot of land.[66] The regulation itself is considered to trigger a proprietary shift.[67]
Furthermore, the neighbor’s actio negatoria (Art. 641(II) ZGB) aiming at the removal of the building encroachment can be excluded due to the doctrine of abuse of rights. This means that the neighbor has to tolerate the encroachment even if the requirements of the encroachment regulation are not met. For example, an abuse of rights has been assumed in a case where the neighbor had no recognizable interest in the destruction.[68] This doctrine is furthermore applied to cases where the balance of interests favors the encroacher.
2.3.3 Austria
At first glance, Austrian law appears to be more restrictive in its protection of the encroacher. It does not specifically address mere building encroachments (Überbau), but rather generally regulates the erection of complete buildings on foreign land. In accordance with § 418(3) ABGB, the builder (encroacher) will only be protected if he acts without any negligence[69] and the neighbor is fully aware of the encroachment and does not object to it in a negligent manner. When these requirements are met, the title to the neighbor’s encroached plot of land automatically passes to the encroacher.[70] The encroacher is then required to compensate the neighbor for the value of the encroached plot of land.
This rather restrictive regulation is, however, made more flexible by the objection of abuse of rights (§ 1295(II) ABGB). According to newer rulings of the Oberster Gerichtshof, the parties’ interests are weighed up on this basis.[71] The encroacher will 233only be protected if he acts in good faith.[72] If the encroacher acts intentionally or with gross negligence, the neighbor’s rights will (as a rule[73]) prevail, even in cases of very minor building encroachments.[74] It is noteworthy that this recourse on the doctrine of abuse of rights by the Oberster Gerichtshof (to date) does not depend on compensation being paid to the neighbor and is not phrased as a shifting of property rights but merely as a blocking of the neighbor’s proprietary remedy. As no compensation will be granted, the weighing of the parties’ interests cannot take compensation into account, which could be unfavorable to the encroacher.
2.4 Balancing of Interests on a Remedial Level – England
In English law, a building encroachment constitutes a continuing trespass.[75] A mandatory injunction may be granted, requiring the demolition of the encroaching building.[76] Nevertheless, courts have awarded damages in lieu of an injunction in certain instances. Most of these cases dealt with prohibitory injunctions in nuisance disputes. The court’s discretion with regard to mandatory injunctions is said to be even higher than with regard to prohibitory injunctions, especially since hardship[77] to the defendant is generally a bar against a mandatory injunction.[78] Nevertheless, a “good working rule” has been established and was deemed to apply to prohibitory as well as to mandatory injunctions.[79] Consequently, damages may be awarded in lieu of an injunction in cases of exceptional circumstances. These circumstances are determined by the extent of the injury to the legal right, the feasibility of monetary compensation, and the potential oppressiveness of an injunction to the defendant in 234light of his legitimate interests.[80] One potential factor in favor of the encroacher is a delayed reaction by the neighbor.[81] Nevertheless, injunctive relief may be granted in the event that the encroacher acted in bad faith,[82] which is considered to be the case when he took a calculated risk.[83]
However, the concept of damages can be misunderstood from a comparative perspective. Damages in lieu of injunctive relief do not compensate for harm that has already occurred but rather for harm that will have to be endured in the future because an injunction has not been and will not be granted.[84] The court awards “the price to be paid for the compulsory acquisition of a right”.[85] The payments are therefore not periodic, but are awarded “once and for all”.[86]
While the rules on building encroachments discussed in the previous section tend to take a comprehensive approach, treating the issue as a problem of shifting property rights, English law approaches the conflict from the specific case to be decided by the court, and, therefore, primarily from the perspective of remedies. English law focuses on the various remedies available and does not directly address the question of what happens to the neighbor’s property rights to the built-over part. This is probably not due to a different concept of property or ownership in land,[87] but it is an example of English law thinking in terms of (discretionary[88]) remedies rather than substantive rights, a phenomenon not limited to land law.[89]
235From a property rights’ perspective, however, English law is ambivalent in this respect. The effect that the neighbor cannot invoke his property right against the trespasser in the future is not justified on the level of substantive rights but by a recourse to res iudicata.[90] It is also due to res iudicata that the neighbor’s successors are not granted injunctive relief. The fact that the English courts[91] do not see this as a question of the transfer of property rights to the trespasser but “only” as a question of remedies, is also indicated by phrases such as “the withholding of injunctive relief causes the court, in effect, to authorize the continuance of an unlawful state of affairs”[92]. And although it is not possible for the courts “to license future wrongs, this may be the practical result of withholding injunctive relief”.[93]
3. Comparative Analysis
3.1 Form vs Substance
According to the polemic of a detached and contingent abstract concept of (real) property, it seems possible to assume that the concept alone decides the conflict against the encroacher. The comparative analysis has easily refuted this assumption. The vast majority of the legal systems analyzed do provide for protection of encroachers in certain cases, despite their strong concept of property and codification of property law.
Even French property law, which (to date) always decides in favor of the neighbor and never protects the encroacher in property conflicts, cannot be cited as an example of case-blind conceptualism. Although one failed reform proposal noticeably tried to solve this conflict formally with exact maximum dimensions of an acceptable encroachment, which might be an indication of strong conceptual tendencies in French property law.
While one could argue that French property law leads to unjust results from the perspective of most other property laws, it would be a distortion to assume that these results are achieved by mere conceptualist reasoning, ie, by “form” rather than “substance”. French property lawyers have had intense discussions on whether the decisions of the Cour de cassation are appropriate. Proposals for reform have been made in vain. French property law has substantively decided to 236always protect the neighbor against building encroachments. This can lead to inefficient results and even relative hardship. Ultimately, it is based on the conviction that “expropriations” for private purposes should be suppressed.[94] In this view, private land as a resource is not something to be subjected to the conditions of wealth maximization or hardship but a non-negotiable prerequisite for individual freedom.[95]
3.2 Rule vs Standard
At first glance, the rule/standard divide can be observed in national laws with respect to building encroachment disputes. Whereas English law has a very flexible approach, focusing on judicial discretion in the choice of available remedies, the codified property law of, eg, Germany appears very rigid. This rigidity also makes Germany appear as a comparatively safe haven for encroachers, while this formalism seems to favor the neighbors, eg, in Austria. And indeed, protagonists of comparative property law sometimes tend to qualify German property law as a system in which encroachments must be tolerated “as a rule”.[96] Furthermore, German law tends to be seen as a system of rigid rules sacrificing flexibility for the sake of predictability. In German law, according to the analysis of some comparative lawyers, the protection of the encroacher is “incorporated into the civil code and not left to the courts”.[97]
All of this seems to suggest that there are (still) national property laws that decide hard cases with clear rules. However, this perception does not stand up to closer scrutiny. Instead, the regulations on building encroachments challenge the antagonistic distinction between “standards” and “rules” (in property law) and support John William Singer’s observations.[98] He correctly postulates that “rules” can be as flexible as “standards”. Indeed, the scope of the regulation often serves as a safety valve for the “rules”. In Germany, the balancing of interests is, to some extent, built 237into the legal requirement of an “encroaching building”. Furthermore, the concept of “negligence” is open to interpretation. The interests of the parties are also weighed when deciding whether the neighbor has objected “in due time”. Last but not least, (almost) every codified property law system analyzed allows for the use of concepts of relative hardship or abuse of rights as a last resort to achieve more flexibility in deciding encroachment conflicts. This is often overlooked in comparative analyses.
3.3 Property vs Remedy/Liability
The resolution of conflicts over building encroachments is often seen as an example of the prominent[99] distinction between “property rules” and “liability rules”, with the protection of the encroacher being achieved through the application of the latter.[100] And indeed, this seems to be a good description of what English courts do when they award damages in lieu of an injunction.[101] From the English perspective, it is clear that the distinction between property rules and liability rules is seen primarily as a choice of remedies.[102] It is not about clear-cut rules that are good against the world, but about resolving a concrete conflict between two persons, also relying on judicial discretion.
The distinction between property rules and liability rules has both normative and analytical implications. The normative content of this distinction is, in fact, a theory of efficient breaches in property law under certain circumstances. This aspect will not be considered here. Henry Smith has already demonstrated for US law that this is not how property law actually deals with property infringements,[103] and this is even more true for continental European property law systems, where notions of efficiency are less prominent. The rules on building encroachments are just one example of national laws being primarily concerned with preventing hardship rather than promoting efficient infringements (ie, encroachments).
The analytical value of this approach is to find a common language for cases where the holder of a property right is not granted proprietary protection but merely monetary protection. Indeed, it is a plausible concept for what happens at the remedial level when such conflicts are decided. From the perspective of property law, however, the distinction between property rules and liability rules is es238sentially incomplete[104] because it does not address the consequences erga omnes,[105] ie, against the world, and focuses primarily on the conflict at hand.[106] It is clear that the remedial approach is somewhat favored by a theoretical background of legal realism, or vice versa. While anti-conceptualists believe that property conflicts should only be seen as taking place between the persons involved, a more “formalistic” approach to property also considers the consequences at the level of property against the world.
Analytically, it would be highly ambiguous to claim that these conflicts are resolved by simply substituting remedies. The application of a liability rule instead of a property rule almost always leads to a shift in substantive property rights. This becomes clear in cases where the owner can prevent this substitution of remedies ex ante through self-help measures. Such self-help is not only undesirable in certain cases but even unlawful[107] (eg, in the case of necessities), which can only be explained analytically as an ex ante shifting of property rights.
In the case of building encroachments, it is not ex ante preventive self-help measures that highlight these differences between a mere remedial solution and a shift in property rights, but rather constellations in which the neighbor will ex post violate the newly assigned encroacher’s right. For example, if the neighbor builds a wall on his property so close to the encroachment that it effectively renders the building encroachment useless, the encroacher is entitled to property protection. Further questions ex post show that the situation goes beyond the level of remedies. The question of whether injunctive relief should be granted when the encroachment is destroyed, and the encroacher plans to rebuild is a question that goes beyond the concrete case to be decided. A conflict between successors in title to either parcel is a question of the third-party effects of the encroachment regulation and is not ultimately decided at the inter partes remedial level. When the remedial approach relies on the institution of res iudicata to make the solution good against the world,[108] it is, in fact, providing for a relocation of the substantive property right.
The remedial perspective will, of course, defend its approach against the accusation of incompleteness by invoking the pragmatist’s view that only the conflict at 239hand needs to be decided in substance. Theorizing about abstract property consequences would lead nowhere. However, in deciding the concrete case, the damages awarded to the neighbor must be assessed, and they cannot be determined without considering the consequences that the denial of the injunction will have for his property right in the future and against the world.
4. Conclusion
If one were to succumb to the anti-conceptualist bias prevalent in modern property law theory, it would be tempting to tell the story of building encroachments from a comparative perspective as an example of the assumed fundamental deficits of conceptualism in property law. French law would serve as an example of a property law that sacrifices equitable solutions on the altar of conceptualism. Such a system would be described as inherently incapable of resolving the increasingly complex conflicts of modern property law. The strong property concept of French law would be analyzed as perhaps having been appropriate at a time when neighbors lived far apart and encroachment conflicts were rare, but it would be classified as outdated[109] in modern and urbanized societies where land is scarce. English law would be presented as a counterpart and an example of a flexible and pragmatic system that does not resolve individual conflicts by resorting to abstract concepts. The way in which English courts deal with encroachment conflicts would be analyzed according to the property rule/liability rule scheme and used to support this prominent theoretical approach.
Such a narrative has been developed mainly at a more abstract and theoretical level, but it has also been told many times with reference to concrete issues of property law. For example, in the discussion of the point in time at which ownership of movables passes, a “unitary” approach has been discredited as a conceptualist atavism.[110] Moreover, realism has had remarkable international success in the law of secured transactions.[111] This picture of the supposed divide between form and substance in property law is always painted with very broad strokes and will in most 240cases not stand up to closer scrutiny.[112] The case of building encroachments is a good example.
The solutions that national property laws provide for conflicts on building encroachments vary widely. However, they are always rooted in substance and not predetermined by the concept of property. Once again, strong concepts do not prevent courts or legislators from finding pragmatic solutions when necessary. On the other hand, it seems that the pragmatism of remedialism cannot work without conceptualist considerations. It is not possible to resolve property conflicts only between the parties to a dispute. When awarding damages in lieu of an injunction, the amount of compensation cannot be calculated without considering future effects against the world as well.
When comparing the requirements for the protection of an encroacher in detail, all property laws compared, except France, operate with a balancing of the parties’ interests. In some systems, this balancing is somewhat hidden in the definition of the scope of the rule, while other systems deal with it very openly by granting judicial discretion. Those systems that operate without open judicial discretion allow recourse to the doctrine of abuse of rights. The trespasser is protected only on condition that the neighbor is compensated. Most systems work with a one-time payment, while Germany provides for periodic payments but gives the neighbor the option of a forced sale. The continental European systems openly address the transfer of property rights in their respective regulations, either by granting the trespasser a temporary property right over the neighbor’s over-built land or by transferring the title to the encroacher. The choice between servitude and ownership is left to the neighbor in some systems or to the court in others.
© 2024 the author(s), published by Walter de Gruyter GmbH, Berlin/Boston
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