AUSTRIA Law and Practice Contributed by: Christoph Urbanek, Irena Gogl-Hassanin and Mario Schiavon, Urbanek Law
of the existing debt declares that, in the event of the debtor’s liquidation or insolvency, the creditor’s claim will be satisfied only after the more recent, senior creditors. This requires the consent of all parties involved and is often used in debt restructuring, recapitalisations or refi - nancings. Subordination can be accomplished through amendments to contracts or as part of a financing arrangement. There are no general legal restrictions as long as the terms are con - sistent with legal requirements, such as insol - vency laws. 3.8 Lenders’ Liability Under Environmental Laws A creditor who holds a security over a property or enforces it in the event of an execution may, under certain circumstances, be held liable, even if not causing the pollution of the property. This may be the case if the property is contaminated with legacy pollution and the creditor manages or controls the property. In particular, a credi - tor can be held responsible for the removal of environmental hazards if they intervene in the exploitation process or are involved in the use of the property. In addition, a creditor could be con - sidered “responsible operator” if actively inter - vening in the management of the property and thus assuming liability for existing environmental pollution. In order to minimise liability risks, it is recommended that the property’s environmental conditions be checked as part of the due dili - gence. 3.9 Effects of a Borrower Becoming Insolvent If a borrower becomes insolvent, security inter - ests created for the benefit of a creditor can be contested under certain conditions. In particu - lar, if the security was granted within six months prior to the opening of insolvency proceedings and the creditor was or should have been aware
of the impending insolvency, there is a possi - bility that the security may be declared void in the context of the insolvency proceedings. This serves to protect the equal treatment of creditors and to prevent individual creditors from receiving preferential treatment. If a security is challenged and declared invalid, the creditor loses the right to the security in question. However, as long as a security is not challenged, the creditor can con - tinue to rely on it and will receive preferential treatment in the insolvency proceedings. 3.10 Taxes on Loans When ordering mortgage loans or mezzanine loans on real estate, no specific recording or transaction taxes are incurred in Austria, unless it is a transfer of ownership. However, a registra - tion fee of approximately 1.1% of the secured amount is due for the registration of mortgages or other security rights in the land register, and is usually borne by the borrower. In addition, notary fees may be incurred for the notarisation of contracts and the preparation of documents. There are currently no specific new or proposed rules that provide for additional taxes or fees in connection with mortgage or mezzanine loans, apart from the usual land transfer tax and regis - tration fees when a security is registered in the land registry. 4. Planning and Zoning 4.1 Legislative and Governmental Controls Applicable to Strategic Planning and Zoning Spatial planning and land use in Austria are governed by federal, state and municipal laws. The federal Spatial Planning Act sets general principles, while each state has its own detailed planning and building regulations. Municipalities implement these through zoning and develop -
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