A handy property glossary to help you understand everything

We have prepared a property glossary for you. This glossary will help you understand the specialist vocabulary used in the property sector, which can sometimes be difficult. We have therefore created a short glossary of the most commonly used terms to make things clearer.

Notarial deed of sale

A notarial deed is a document drawn up by a notary, as required by law when completing the sale of a property. The notary has a maximum of four months to carry out various administrative searches in order to prepare the deed.

The notary is also present when the deed is signed. The notary is responsible for reading and explaining the deed to all parties. The notary also ensures the legal validity of the deed.

Basic deed

The basic deed is a notarised document. It describes the entire property, namely the common and private areas.

It also specifies the share of the common areas allocated to each private unit.

Deed-in-hand clause

A deed-in-hand clause may be included in the offer made by the buyer to the seller. As it is uncommon, it is important to pay close attention to it, as it may be detrimental to an inattentive seller. This clause means that the buyer’s offer includes the sale costs, such as registration duties. The amount of the purchase offer may therefore be misleading, as a seller who has not noticed this clause may believe it to be the sale price excluding costs (registration duties, etc.), as stated in a ‘standard’ offer.

Interim property administrator

An interim property administrator is a natural or legal person responsible for managing the assets of a person who has been declared incapable of making decisions and taking measures concerning their estate. They are appointed by a court decision or by agreement.

General meeting

The general meeting (in a co-owned property) may be convened in different ways:
– By the property manager in accordance with the co-ownership regulations, as well as when an urgent decision must be made
– At the request of one or more co-owners, provided that they hold at least 20% of the shares in the common areas. The request must first be sent to the property manager by registered letter. Upon receipt, the property manager must convene the co-owners within thirty days.

Association of co-owners

An association of co-owners exists subject to two conditions:
– In buildings comprising at least two units owned by different owners.
The basic deed and the co-ownership regulations must also have been registered with the mortgage registry.

Property insurance

When purchasing a property, two types of insurance are essential: outstanding balance insurance and fire insurance.
Outstanding balance insurance: this covers the risk of death. It is required by the bank before the mortgage loan matures and takes the form of an annual premium determined according to age and various personal factors.

Addendum

An addendum is simply an amendment to a contract intended to modify an earlier contract or a standard contract. For example: a change of tenant or guarantor.

Nine-year lease (standard)

The standard term of a lease is generally nine years. By law, several categories of lease are automatically set at nine years: verbal leases, written leases that do not specify their duration, and leases with a term of between three and nine years.

There are several ways to terminate this lease early.
– If both parties agree, they simply need to draw up a written document recording their mutual agreement
– If either party fails to meet their obligations, an application may be made to the justice of the peace for judicial termination of the lease
– If one party wishes to terminate the lease unilaterally, it is easier for the tenant to do so. The tenant may terminate the lease at any time and without giving a reason, provided that the applicable conditions are met. The landlord, on the other hand, must provide a reason and comply with the statutory notice periods in order to terminate the lease. (See termination of a lease by the landlord and termination of a lease by the tenant)

Once the property has been let, the landlord may visit the premises occasionally with the tenant’s prior consent.

For more information, visit notaire.be:
https://www.notaire.be/acheter-louer-emprunter/1-bail-de-residence-principale/duree-du-bail/duree-normale-de-neuf-ans

Civil lease (offices, etc.)

A civil lease has the particular feature of not binding the tenant for a fixed term. This type of lease mainly concerns office or warehouse premises, as well as non-agricultural land. It also covers commercial premises made available to associations that do not receive customers and are governed by the 1901 Law.

Commercial lease

A commercial lease is a lease of a building (or part of a building) generally used by the tenant (or subtenant). It applies where a retail business is operated or a craftsperson carries out an activity involving direct contact with the public.

Short-term lease (three years or less)

As a general rule, leases have a term of nine years. However, there are exceptions: short-term leases (with a term of three years or less) are one such exception.

By mutual agreement, the landlord and tenant may decide to enter into a lease for a maximum of 3 years. If the tenant remains in the property beyond this period, the lease will be deemed a standard 9-year lease.

If the term of the lease is less than 3 years and the parties wish to renew it, they may do so provided that the total term of the lease does not exceed 3 years.

A short-term lease must be made in writing.

For early termination of the agreement:
– As with a standard 9-year lease, if both parties agree, they may easily terminate the agreement
– In the event that one party wishes to terminate the agreement unilaterally, and if the agreement does not contain an early termination clause, neither the landlord nor the tenant may terminate the lease.

For more information, visit notaire.be:
https://www.notaire.be/acheter-louer-emprunter/1-bail-de-residence-principale/duree-du-bail/baux-de-courte-duree

Landlord

The landlord owns a property and makes it available to a tenant in return for a periodic payment.

Registration office

As its name suggests, the registration office is responsible for keeping administrative documents.

On 1^st January 2015, responsibility for registration duties and inheritance tax was transferred to the regional offices.
There are ten regional legal certainty centres, with a total of 48 local offices.
The Flemish Region, the Walloon Region and the Brussels-Capital Region operate in slightly different ways.
The Flemish Region has one registration office for each local office, while the Walloon Region and the Brussels-Capital Region have three types:
– for authentic instruments
– for miscellaneous documents
– for inheritances

Land Registry

The Land Registry is a public register maintained by the FPS Finance. It contains information about real estate, including the location, value and surface area of landed properties, as well as the identity of their owners. This list of owners is known as the “cadastral matrix”. The Land Registry also provides a geographical record of all plots, known as the “cadastral matrix”.

Bank guarantee

A bank guarantee allows a prospective tenant to reassure the landlord. It is mainly used for applicants who do not have a regular or sufficient income; they simply need to place a sum of money in a blocked bank account. The bank will act as guarantor if the rent is not paid. A bank guarantee is not always granted by the banking institution.

If the applicant requires a loan to purchase a property, they must provide a guarantee to prevent non-payment of the rent. There are two types: a bank guarantee (described above) or a mortgage (which is more expensive for the buyer).

If the bank guarantee is joint and several, the landlord may claim the rent owed from the debtor and also, if they wish, from the guarantor.

Once the sums have been repaid, the guarantor may ask to be released from their guarantee obligations by providing the bank with evidence that the obligations have been fulfilled.

Planning certificate

A planning certificate is sometimes required when applying for planning permission or subdivision permission. The certificate assesses the feasibility of the project and the conditions that apply to it. This mainly concerns large-scale projects. It remains valid for a maximum of two years.

For more information, visit the Brussels urban planning website:http://urbanisme.irisnet.be/lepermisdurbanisme/autres-premis-et-certificats/certificat-durbanisme

EPC certificate

As its name suggests, the Energy Performance of Buildings certificate assesses a building’s energy performance. This assessment has been required in all Member States under European Directive 2010/31/EU since 19 May 2010. All sale and rental advertisements must state the property’s energy performance.

On 1^st January 2017, the regulations were strengthened to achieve the Nearly Zero-Energy standard by 2021.
3 new changes should be noted:
– the various EPC indicators are stricter
– for individual homes, the calculation method has been amended with regard to the consideration of thermal bridges and transmission losses
– the Ew primary energy consumption indicator must be complied with by all new or equivalent non-residential PEB units (except industrial PEB units)

For more information about these new regulations, visit the Walloon energy website: http://energie.wallonie.be/fr/exigences-peb-du-1er-janvier-2017-au-31-decembre-2020.html?IDD=114085&IDC=7224

Rental charges

Rental charges are amounts payable by the tenant (in addition to the rent). They relate to charges associated with the use of the property, including, for example, electricity, heating, gas and water consumption costs, refuse collection tax, insurance costs, and the tenant’s share of the heating, lighting and maintenance of communal areas.

For more information about your rights regarding rental charges, visit the Belgian law website: http://www.droitbelge.be/fiches_detail.asp?idcat=9&id=50

Housing Code

The Brussels Housing Code contains, among other things, all measures intended to regulate the quality of properties offered for rent. Its purpose is to guarantee the right to decent housing and improve tenants’ living conditions in order to comply with Article 23 of the Belgian Constitution and encourage the renovation of lower-quality housing.

Read the Brussels Housing Code in full on the website of the Brussels-Capital Region Housing Company: http://www.slrb.irisnet.be/professionnels/reglementation/code-bruxellois-du-logement-exigences-elementaires-securite-salubrite-equipement/code-bruxellois-du-logement/view

Statutory auditor

Pursuant to the Law of 2 June 2010 and the Royal Decree of 12 July 2012: ‘The general meeting shall appoint an auditor annually, whether or not a co-owner, whose duties and powers are determined by the co-ownership regulations.’

The auditor will ensure that co-ownerships fulfil their obligation to follow a minimum chart of accounts. The election of an auditor is mandatory for all co-ownerships.

Condition precedent

A condition precedent must be distinguished from a condition subsequent. It is included in the preliminary sale agreement. However, the preliminary sale agreement only exists if the condition precedent is met, unlike a condition subsequent, under which the sale agreement exists even if the sale has already been concluded.

Co-ownership council

Under the law, co-ownerships comprising fewer than 20 units may decide at the general meeting to establish and appoint a co-ownership council (or management council).

If the co-ownership comprises more than twenty units, it must establish a co-ownership council at the first general meeting.
Its role is to ensure that the property manager’s duties are properly performed (with the exception of accounting).

Precarious occupancy agreement

Precarious occupancy means that a tenant may occupy a property for a very short period. If the owner decides to take back possession of the property, the tenant is required to vacate it. This arrangement often applies when, upon expiry of a lease, the tenant wishes to remain in the building solely while looking for a new property. It should be noted that the tenant often pays no rent or very little rent.

Co-ownership

Co-ownership exists when a building or group of buildings belongs to several tenants. The property is divided into units, each comprising a private area and a share of the communal areas.

Since 1^st September 2010, a reform has been in force to ensure greater transparency and better management. In addition to associations of co-owners, it is now also possible to form ‘sub-associations’.

A co-ownership has various governing bodies:
– the general meeting
– the co-ownership council
– the property manager

Declaration of nominee

A declaration of nominee allows a prospective purchaser of a property who does not wish to disclose their identity to be represented when the sale takes place. It is frequently used in public sales or private treaty sales.

Security deposit

The security deposit, which should not be confused with a ‘guarantee’, is a sum paid by the tenant (at the end of the lease and after the check-out inventory) to secure any potential claims by the landlord

Co-ownership debt

Following significant investments, some co-ownerships may accumulate debts.

Since September 2010, owners remain liable for these debts, even after selling their property. The buyer’s notary automatically deducts the amount of the debts owed by the owner from the sale price

Post-intervention file (DIU)

Since the Royal Decree of 25 January 2001, the law has required owners to compile a post-intervention file. It contains a description, the identity of the person who carried out the works and details of most works carried out since 2001. The DIU must be referred to in the deed of sale.

The file must contain all safety-related information, as it serves to protect the new owner against potential accidents.

Right of accession

The right of accession is based on the doctrine that ‘he who builds on another’s land builds for another’. Where work is carried out by a third party on a property that does not belong to them, anything joined to and incorporated into that property belongs to the property owner. The owner may decide either to retain the work or to require the third party to remove it. If the latter option is chosen, any costs will be borne by the person who undertook the work. If the owner wishes to retain it, they must reimburse the value of the materials as well as the labour costs.

For more information, visit the notaire.be website: https://www.notaire.be/acheter-louer-emprunter/4-acheter-un-terrain-et-construire/droit-d-accession

Registration duties

Registration duty is a tax payable when acquiring a property. The standard rate in the Brussels-Capital Region and the Walloon Region is 12.5%. It is calculated on the basis of the agreed value of the property. If the purchaser decides to make the property their main residence, they may qualify for a reduction in this rate.

If the property is resold within two years of purchase, 36% of the registration duties will be refunded.

Pre-emption rights

The right of pre-emption gives private individuals or public bodies priority when acquiring certain properties. The right of pre-emption operates differently depending on the region.

Registration of the deed

Once the deed of sale has been signed, the notary files it with the registration authorities upon payment of the duties owed to the Treasury. For deeds subject to a fixed duty, the minimum registration fee is €25. For the sale or purchase of a property, proportional duty applies and is calculated according to the amounts involved.

The rates vary depending on the type of transaction. For leases, the rate is 0.20%, but registration is free where the property is the tenant’s family residence. When creating a mortgage or executing a deed of partition, the rate is 1%.

Schedule of condition agreed between the parties (check-in and check-out)

The schedule of condition is an inventory providing a detailed description of the accommodation at the beginning and end of the tenancy. The check-in schedule of condition is mandatory and must be registered with the FPS Finance at the same time as the tenancy agreement. The costs are shared between the landlord and the tenant. If no schedule of condition is prepared at check-in, the law favours the tenant. The schedule of condition allows the landlord to provide evidence of the condition of the property before the tenant moved in, for example in the event of damage or alterations to the premises. The check-out schedule of condition allows the landlord to identify any damage or shortcomings attributable to the tenant at the end of the tenancy. It is generally prepared one month before the tenancy ends. This document enables the premises to be vacated, the keys to be returned and the rental deposit to be released.

Schedule of condition prepared by an expert (check-in and check-out)

Given the importance of these documents, it is strongly recommended that they be drawn up by an expert. This will ensure that nothing is overlooked when describing the condition of the property at check-in.
The expert will also be essential when preparing the check-out schedule of condition, as this is often a delicate stage in the event of a disagreement

Purchase deed costs

For the Brussels-Capital Region, purchase deed costs can be estimated using various parameters: the purchase price, the allowance (the tax-exempt portion), the amount of registration duties, the notary’s fees, administrative costs, mortgage registration and, finally, VAT.

Some of these costs may be borne by the seller if this is stated in the sale agreement.
It should be noted that, since 1^st January 2017, the first €175,000 is exempt from registration duties, subject to certain conditions.

Deed preparation costs

The cost of preparing a notarial deed comprises three main items: registration duties, the notary’s fees, and administrative searches and formalities.
In addition to these various costs, notary’s fees have included 21% VAT payable to the State since 2012. VAT does not apply to registration duties.

Rental deposit

The rental deposit is a sum of money requested from the tenant by the landlord to protect the latter in the event that the tenant fails to fulfil their obligations. It is not a legal requirement and is only mandatory if stipulated in the written agreement.
The deposit may be provided in different ways: by depositing securities, shares or bonds, in cash, or through a third party’s undertaking to meet the tenant’s obligations.

Management fees

Management fees remunerate the property manager or managers. They are calculated as a percentage of the rent. These fees are subject to VAT.

Annual indexation

Indexation allows the rent to be adjusted annually, on the anniversary of the contract’s signature, in line with the cost of living.
The contract may stipulate that no indexation will apply. For indexation to be possible, it is also essential that the contract be drawn up in writing.

Joint ownership

When several people wish to acquire a property, they may decide to purchase it jointly or in divided ownership.

In the first case, all purchasers will own a share of the building in predetermined proportions.
In the event of difficulties or disagreements between the co-owners regarding decisions concerning the building, the acquisition structure will need to be changed by means of a standard division of the building. In this case, each owner personally owns part of the building, giving them greater freedom in terms of investment or resale.

Acquiring the building in separate units makes it possible to obtain a reduction in registration duties if the cadastral income of each flat is less than €745.

Investment

The purpose of an investment is to increase capital by committing a sum of money in the hope of generating a profit.

Breyne Law

The Breyne Law dates from 9 July 1971. It protects purchasers of residential properties bought off-plan or while still under construction.

It allows the purchaser to deal with a single contractor and therefore to sign only one contract. This company undertakes to complete the construction.
Furthermore, payment is made in instalments according to the progress of the construction work. However, the deposit requested from the purchaser by the contractor may not exceed 5% of the total price.

Mandate

A mandate is a contract that allows the agent to act in the name and on behalf of the principal in relation to certain specific legal acts. If the mandate is exclusive, the property owner may not engage another agency to sell or let the property. The commission will automatically be payable to the appointed agency.

Planning permission

Planning permission is issued by the municipality in which the property is located and allows its holders to carry out certain construction, renovation, extension or even demolition work. If it concerns a new or substantial construction project, the involvement of an architect is mandatory.

Subdivision permit

A subdivision permit allows a property or plot of land to be divided into several lots for the purpose of selling or letting one of these lots for a minimum period of 9 years.

Specific Land Use Plans (PPAS)

PPAS are a tool developed by the municipality or the Region to determine the organisation and development of the area concerned (neighbourhoods). They cover only part of the territory.

Property tax

Property tax must be paid annually on real estate. It is a regional tax calculated on the basis of cadastral income.

Promise of sale

A promise of sale is a binding agreement signed solely by the seller and accepted by the purchaser. The parties are definitively committed and must proceed with the sale and purchase of the property.
It should be noted that this promise is valid for a limited period and that, once this period has expired, the seller's obligation comes to an end.

Receipt

A receipt is a written document issued by a creditor confirming and acknowledging that payment has been received from the debtor. The debtor is therefore discharged from the debt.

Co-ownership share

A co-ownership share is the allocation of the common areas among the co-owners. It is determined according to the weighting of each unit in the building. The allocation is generally established by means of a report drawn up by a notary, chartered surveyor, architect or estate agent. The co-ownership share applies only to co-ownerships created from 1^st September 2010.

Acceptance

The acceptance of properties arises from the Breyne Law and consists of two stages: provisional acceptance and final acceptance. It consists of the purchaser's approval, subject to certain reservations, of the property as constructed at the time of acceptance.

Final acceptance

Final acceptance takes place at least 1 year after provisional acceptance. The purchaser occupies the property and may identify and report any remaining defects in the building.

Provisional acceptance

Provisional acceptance allows the purchaser of the property to approve the progress and execution of the works. Both parties sign an acceptance report listing any visible defects.

Return

The return on a property is the difference between the amount spent on purchasing and maintaining that property and the rental income it has generated. The property's potential capital gain must also be taken into account.

Termination of the tenancy by the landlord

A standard tenancy agreement runs for a period of 9 years. If the tenant and landlord give notice of termination 6 months before the expiry date, they will not have to pay compensation.

Both parties may also terminate the agreement every 3 years under the same conditions.
If the landlord wishes to terminate the agreement outside the prescribed periods, they may do so in three cases. These rules are not mandatory.

1) The landlord may terminate the tenancy at any time in order to occupy the property personally, subject to giving six months’ notice. To be valid, the notice must state the reason and the identity of the person (the landlord or a family member related to the 3^rd degree) who will personally and effectively occupy the rented property.

2) At the end of each three-year period, the landlord may terminate the tenancy in order to carry out certain works, subject to giving six months’ notice.

3) At the end of the first or second three-year period, the landlord may terminate the tenancy without stating a reason, subject to giving six months’ notice and paying the tenant compensation equivalent to nine or six months’ rent (depending on whether notice was given at the end of the first or second three-year period).

Termination of the tenancy by the tenant

The tenant may leave at any time, provided that they give the landlord three months’ notice. They are never required to state a reason for giving notice. During the first three years of the tenancy, however, they must pay the landlord compensation equivalent to three, two or one month’s rent, depending on whether they leave during the first, second or third year.

Cadastral income

Cadastral income is the amount that a property yields annually to its owner. This average normal net income is calculated by the Land Registry, Registration and State Property Administration (ACED).
Cadastral income is used as the basis for calculating property tax and also determines the property income reported in the tax return.

Auction session

An auction session is, by definition, a public auction at which the successful bidder (the person offering the highest amount) acquires a property.

It takes place in several stages: announcement of the sale, reading of the terms and conditions, receipt of bids and adjudication.

A sale by auction may result either from legal proceedings or from the owner’s decision.

Easement

An easement is a right established between two property owners over the property of one of them. It is an agreement that must be observed by both parties and applies to the property rather than the owner.

There are different types of easement: natural easements (a right of way or a feature naturally linking two properties), continuous or discontinuous easements (whether or not requiring human intervention), as well as statutory easements imposed by public authorities.

Easements may also be created by property owners through an agreement

Tacit renewal

Tacit renewal is a legal term that applies to tenancy agreements. It means that the tenancy will be renewed automatically under the same terms as the original agreement unless one of the parties stipulates otherwise.

Property tax

Property tax is a tax paid annually by the owner of a property. The term “précompte immobilier” is more commonly used. It is a regional tax calculated on the basis of cadastral income.

Time-sharing

Time-sharing is used for holiday homes and allows holidaymakers to rent a property for several weeks each year over a fixed period of several years. This arrangement helps make holiday complexes profitable.

Rental value

The rental value of a property is the amount that the property would yield if it were let for a given period, such as a year or a month. This value depends on several criteria, including demand, geographical location, floor area, facilities and condition.

Market value

Market value is the amount that can be obtained from the sale of a property, taking current market conditions into account.

Life annuity sale

A life annuity sale is the sale of a property belonging to an elderly person. Instead of paying the entire sum at once, the buyer pays an initial lump sum known as the bouquet. They then pay a life annuity, determined in advance by the seller, until the seller’s death.

Public sale

The public sale of property is a form of auction. Interested buyers submit successive bids. The person making the highest bid will acquire the property, provided that their bid is accepted by the seller. This type of sale is conducted exclusively by a notary.

We hope that this property glossary has helped to clarify matters for you. If you would like to learn more about current developments in the property sector, we invite you to browse our blog, which is full of interesting articles. And if you would like to daydream about properties, browse our available properties.