LUXEMBOURG Law and Practice Contributed by: Claire-Marie Darnand, Victorien Hémery, Johan Léonard, Benjamin Marthoz and Tom Storck, Stibbe
assets, the type of activity or the quality of the parties. 2.3 Effecting Lawful and Proper Transfer of Title The transfer of a real estate asset must be recorded in a notarial deed. It is then registered and recorded in the mortgage registry held by the Land Registration and VAT Authorities ( Admin- istration de l’Enregistrement, des Domaines et de la TVA ), to ensure enforceability against third parties. The deed is also applicable to: • all other remaining in rem rights pertaining to real estate assets; • any mortgage inscriptions or easements (with the exception of legal easements); and • commercial lease agreements with a duration of more than nine years. 2.4 Real Estate Due Diligence Due diligence is usually carried out by making the relevant documentation linked to the real estate available in a virtual data room, which is accessible to the buyers. The findings resulting from the analysis of such documents are sum - marised in a due diligence report, which may take the form of a full detailed report or a “red flag” summary reporting only the points that might raise an issue for the buyer. A due diligence report will usually address legal, financial, technical and sustainability/environ - mental topics. All due diligence is now conducted (when pos - sible) on a virtual basis. 2.5 Typical Representations and Warranties Typical representations and warranties under Luxembourg law address the following points:
• disclosure; • the capacity of the seller and the conse - quences of the sale; • property ownership (encumbrances, expro - priation, conditions of the property, etc); • leases; • insurance; • permitting; and • easements. In cases of misrepresentation, the buyer may take legal action in order to have the sale declared void by a judge or, if that proves unat - tainable, to seek compensation for damages. 2.6 Important Areas of Law for Investors Ownership rights are notably subject to Civil Code provisions, land use rules (town and country planning), the protection of archaeo - logical and/or specially classified sites, manda - tory expropriation for reasons of public interest ( expropriation pour cause d’utilité publique ) or pre-emption rights (droit de préemption) in favour of the state or municipalities. Ownership rights can also be restricted by easements for public use ( servitude d’utilité publique ). Certain plots of land owned by the state may only be available under temporary occupation rights, rather than full ownership title (see 3. Real Estate Finance ). 2.7 Soil Pollution or Environmental Contamination The requirements regarding who is responsible for soil pollution or environmental contamination of a property are integrated into the authorisation to be obtained from the Ministry of Environment (operating permit). The authorities may impose soil survey or clean-up requirements on the owner, user and/ or operator of any land by virtue of other legal frameworks, such as the legislation on classified
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