Legal Notice Introduces Possibility of Amending or Revoking Conditions in Contracts of Sale and Emphyteusis

On the 23^rd August, 2024 a new set of regulations (the “Regulations”) were promulgated under Legal Notice 196 of 2024 enabling requests for the amendment or revocation of conditions imposed in the original deed of sale or emphyteusis concerning property transferred by the Government of Malta (the “Government”), the Lands Authority (the “Authority”), or any ecclesiastical entity which subsequently transferred the title to the Government. Such Regulations shall apply to both new applications as well as to those already pending before the Authority at the time of their entry into force.

Application to the Lands Authority

These Regulations allow any natural or legal person having a title of acquisition by virtue of a public deed or emphyteusis on property that would have been passed thereto by the Government, the Authority or by an ecclesiastical entity which subsequently transferred the title to the Government, to make a request to the Authority in order to have a condition in the original contract amended or revoked (the “Applicant”). However, these Regulations shall not apply where such property has been transferred to the Housing Authority.

To ensure that an application submitted to the Authority is considered valid, the Applicant must satisfy all the requirements outlined within the application form. Such requirements include submitting a request for the removal of the particular condition, which is signed and attested by a commissioner of oaths, along with a site plan authenticated by an Architect and which indicates the exact property location, an authenticated copy of the original contract including any attached plans and documents, as well as recent photos of the site taken from multiple angles. Additionally, in the case of development sites, the application must also include the development permit and the relative plans. Where the original contract is one of emphyteusis, the Applicant must also provide proof that there are no arrears of ground rent due to the Authority for the particular property. Furthermore, the Regulations also require the Applicant to submit a sworn declaration affirming that the contents of the application are truthful and that any information which would have compelled the Authority to reject or refuse the application, even if such information might already have been known by the Authority, was not withheld. Moreover, the Authority reserves the right to request any additional information or documentation it deems necessary to process the application. Finally, a payment of €500 must accompany every such application submitted to the Authority.

Processing of the application

Upon receiving the application, the Authority will examine the condition which the applicant seeks to amend or revoke. Typically, a condition is a requirement or a term with which either one or both of the parties to the original contract must abide. The Regulations grant the Authority sole discretion to accept, refuse, or reject applications for the amendment or revocation of conditions. However, albeit this discretion, some exceptions thereto exist. Namely, conditions pertaining to the title by virtue of which the land was granted or, in the case of emphyteusis, the date of revision, the canone or its term, are considered to be “core conditions” and cannot be amended or revoked. Additionally, the Authority is precluded from accepting applications to amend or revoke conditions in a contract arising out of a Parliamentary resolution, a tender or an auction. Furthermore, the Authority cannot accept applications requesting the amendment or revocation of a condition if the contract itself specifies the remedies available.

Once the Authority accepts an application, the amendment or revocation of the condition is subjected to a fee in accordance with the footprint of the property granted by sale or emphyteusis, irrespective of its current development state. For the purpose of determining the footprint of the property, the condition shall be considered an encumbrance on the entire site, even if it appears to only affect a part thereof. The aforementioned fee is established by the Authority, and it is based on whether its Board of Governors or an authorised member or officer of the Authority categorises the particular condition as being of minor, medium, or major importance. The categorisation of a condition is assessed on a case-by-case basis by taking into consideration the context of the contract in which it is found.

The Schedule to the Regulations specify the relevant fees for conditions of minor, medium, and major importance where the site of the property subject of the original contract has a footprint not exceeding 1,500m². Conversely, when the property enjoys a footprint which exceeds 1,500m², the fee for revoking a condition shall be established by a Perit appointed by the Authority after carrying out a valuation based on the freehold value of the land as at the application date, considering its potential development according to the planning plans and policies in force. However, any building, development, or other improvement already made thereon by the owner or emphyteuta will not be taken into account. The fee is then calculated as a percentage of 2.5%, 5%, or 10% of the valuation made by the Perit according to the level of importance of the condition. However, the fee must necessarily exceed the minimum fees established by the Regulations for each level of importance.

Additionally, if it is determined that the Applicant is in breach of the condition which is the subject of his application, the Applicant will also be liable to an administrative fee amounting to 25% of the fee for its amendment or revocation.

Where the Applicant requests the amendment or revocation of more than one condition contained in the original contract, the applicable fees and any administrative penalties shall be calculated separately for each condition for which amendment or revocation is requested.

Outcome of the Application

Where the Authority wishes to allow the amendment or revocation of a condition, it shall provide the Applicant with written acceptance of such change. The amendment or revocation would then need to be made by a public contract. However, the Authority must ensure that no such contract is published, nor any transfer is made before it has collected from the Applicant all the expenses incurred in relation to or incidental to his request.

If the Authority decides to reject or refuse an application, it shall do so in writing, and shall provide detailed reasons for its decision. In such event, the Applicant shall only be entitled to a reimbursement of any expenses incurred, and shall have no right to claim damages and/or an award for compensation from the Authority.

If the Authority determines that there has been a breach of the Regulations, it may file a case before the Civil Court, First Hall seeking the reinstatement of the amendment or revocation of the condition, regardless of whether the public contract has already been published or if the property has been transferred to a third party.

Right of Appeal

An Applicant who feels aggrieved by the Authority’s decision may, within 20 days of receipt of the said decision, file an appeal before the Administrative Review Tribunal in terms of Article 57 of the Lands Authority Act (Chapter 563 of the Laws of Malta). Following this, any party who feels aggrieved by the decision of the said Tribunal shall have a right to appeal before the Court of Appeal (Inferior Jurisdiction).

Precursor to these Regulations

The Regulations have repealed Subsidiary Legislation 573.09 entitled “Modification to, or Removal of, a Condition or Conditions Imposed in a Contract of a Property Transferred by The Government, The Lands Authority or Ecclesiastical Entities through A Sale Or Emphyteusis Regulations” without prejudice to anything done or omitted to be done thereunder.