A. Mortgages

1. Can security be granted to a foreign lender?


2. Can lenders take a mortgage over land and buildings on the land?


2.1 The distinction between mortgages on land and buildings on the land?


2.2 Are mortgage certificates for a certain value issued? What is the cost? Are they transferable?


2.3 Can second ranking security be taken? If so, how is it registered? Is a priority deed also registered?

Yes. A second ranking mortgage is established before a Belgian Notary and must be registered at the Mortgage Registrar (“Bureau de la Conservation des Hypothèques / Kantoor van Bewaring der Hypotheken”).

A second ranking mortgage ranks below the first ranking mortgage as a matter of law. If the second ranking mortgagee wishes to take enforcement action it can do so but the first ranking mortgagee has a primary right to sell the secured real estate. The first ranking mortgagee is entitled as a matter of law to receive the net proceeds of enforcement to apply to the sums owed to it, whether enforcement is carried out by that mortgagee or not. Priority deeds are not required and the concept of a deed regulating priorities is an unknown concept to Belgian law.

2.4 Can the real estate be transferred to a third party (being still subject to the mortgage) without the lender’s consent?

Yes. A mortgagee can enforce the mortgage even though the property is no longer owned by the original mortgagor. In practice, a mortgage deed includes an agreement not to sell (or grant rights in or to) the property except with the prior written approval of the lender.

2.5 Are there any preferred creditors (other than prior ranking mortgage holders)?

Numerous legal liens and privileges can attach to all (or part) of a debtor’s assets. Prior ranking security arising by operation of law ranks in priority. Specific advice should be taken. Examples of prior ranking claims are claims for unpaid rent, unpaid insurance premia and claims by sub-contractors. In addition, Belgian tax authorities and governmental social authorities have a general lien over all non-real estate assets of a debtor for monies owed to them by the debtor.

2.6 Can “all monies” mortgages be taken?


2.7 Can a landlord’s right to receive rent be charged, assigned or transferred to a lender by way of security? If so, how?

Yes. A receivables pledge of rents can be taken which would be enforceable against the relevant tenant once that tenant receives notification of the pledge.

2.8 It is customary/possible for a lender to take a charge/security over bank accounts of the borrower? Is it usual for lenders to contractually restrict rights to withdraw funds in accounts until the scheduled interest and capital repayments are made?

Yes. Security is taken over bank accounts by a receivables pledge.

It is usual for lenders to contractually restrict the borrower’s rights to withdraw funds from the borrower’s bank accounts. Typically, the receivables pledge agreement allows the borrower to freely operate their accounts until default occurs. After default, amounts standing at credit on those accounts are to be paid to the lender and cannot be withdrawn without lender consent.

3. What are the mechanisms for registering land and for registering and perfecting security?

3.1 Consequences of failure to register?

Security is not enforceable against third parties.

3.2 Formalities for execution of security and costs?

Mortgages must be (i) established before a Belgian Notary (by way of a notarial deed) and (ii) registered at the relevant local Mortgage Registrar (becoming effective on registration). A mortgage is valid for 30 years from the date of registration but it can be renewed.

Registration duties 
1% of the secured obligations.

Mortgage duties 
0.3% of the secured obligations.

Mortgage Registrar’s fees 
Calculated on a sliding scale with no set maximum based on the amount of the secured obligations (the fee for each tranche of EUR 25,000 of the secured amount, being EUR 63.08 for the first tranche and EUR 22.08 for each further tranche) plus a nominal fee depending on number of pages in mortgage deed.

Notary fees 
From 0.0456 % to 1.71% of the secured obligations.

Administrative costs 
EUR 650

All security constituted by attending a Notary requires the lender to be represented. Usually the lender grants local Belgian lawyers a power of attorney (limited in scope and duly legalised in the lender’s own jurisdiction) to enable the lender to be represented before the Notary. It is recommended the power of attorney is put in place ahead of completion.

4. Can the lender use a Security Trustee to hold security on trust for creditors?

No. “Parallel debt” arrangements are used instead: the agent “borrows” loans from each of the syndicate lenders (which the agent on-lends to the borrower). The borrower grants security to the syndicate for the agent’s liability to the syndicate lenders. The borrower’s loan liability to the agent is unsecured.

4.1 What happens if the lenders change later on e.g. on a transfer? Does new security have to be signed?

In case of a merger between banks (involving a transfer of the mortgage to a new entity), no new security needs to be signed.

In case of the refinancing of a bi-lateral loan (i.e. the transfer of the mortgage to a new lender), a notarial deed for novation is possible but almost invariably a new mortgage is taken by the new lender and the old mortgage is released.

In a parallel debt situation no new security needs to be taken.

5. Does the landlord/borrower have control over changes in tenants if the tenant wants to transfer the lease to a new tenant and is the original tenant still bound by the lease?

A lease of retail premises together with the business assets (“cession du fonds de commerce/overdracht van het handelsfonds”) can be transferred without needing landlord’s consent.

For other leases, the outgoing tenant will not be bound by the terms of the lease if it received landlord’s consent to transfer the lease to a new tenant. If the outgoing tenant transfers its lease interest to a new tenant without the lender’s consent, the outgoing tenant will remain liable under the lease.

Unless a default has occurred, it is unusual for the lender to have control over changes in tenants.

6. How can the lender enforce its security?

6.1 Can a foreign jurisdiction (either a court or arbitral tribunal) be chosen to settle disputes and under what circumstances may such a choice not be recognised?

A foreign jurisdiction can be chosen to settle disputes between lenders and borrowers. In the current context, issues relating to the enforcement of the Belgian security and rights/interests in Belgian property would be determined by the Belgian courts and Belgian law.

6.2 Does the local law allow for the enforcement of arbitral awards or foreign judgements without review?

No. Belgium is, however, party to the Brussels and Lugano Conventions and subject to the Brussels Regulation (EC44/2001) on recognition and enforcement of judgments in civil and commercial matters, which generally provide for recognition of judgments of most EC partners, except in limited circumstances.

6.3 How can that security be enforced? Can it be sold to a third party? Is it possible for a secured party to appoint receivers/liquidators and if so how and what are their powers? Can security be enforced directly without recourse to the courts and are private sales of security possible? Does it have to be sold by auction?

The enforcement of a mortgage results in the sale of the property to a third party. Except for private sales by a receiver/liquidator, the real estate is always sold by a notary public under the supervision of the court. The sale is normally by way of a public auction. However private sales may also be permitted by the court.

A secured lender cannot appoint a receiver or a liquidator to a company. If a company is bankrupt, the receiver (who is appointed by the commercial court) may suspend any lender enforcement and sell the property by private or public sale. The sale needs to occur within a one-year period (before the expiry of the receiver’s authority to sell) and the receiver is obliged to pay the net proceeds to the first ranking mortgagee after paying the holders of liens/privileges (see A2.5) and his own costs.

6.4 Is the lender responsible for maintenance and insurance of the real estate after default until sale?

No. However, a lender may choose to maintain/insure.

6.5 Is there any method of foreclosure (lender obtaining good title to the real estate in satisfaction of all or part of its debt)? If so, does this require a court order and is it only automatically used when the real estate is not sold at public auction?

Foreclosure is prohibited. Mortgagees may not gain title to the property without any obligation to sell it.

7. Is there anything else that you would specifically point out to a foreign lender as being unusual or particularly difficult?


B. Security Over Shares

1. Can security be granted to a foreign lender?


2. Can second ranking security be taken? If so, how is it registered?

Yes, if first ranking pledgee approves, a third party pledge-holder can hold the pledged shares for the account of multiple pledgees. B3.2 for perfection requirements.

3. What are the mechanisms for registering and perfecting security?

3.1 Consequences of failure to register?

If the pledge is not registered, the security is not enforceable against third parties.

3.2 Formalities for execution of security and costs?

A pledge over registered shares requires appropriate book entries (registration) in the company share register.

The pledge over dematerialised shares is perfected by the booking (registration) of the shares on a special pledge account.

A pledge on bearer shares requires the delivery of the shares to the pledgee.

No noteworthy taxes/costs (except legal fees and banking fees in connection with granting a pledge over dematerialised shares).

4. Do the shares need to be transferred into the name of the lender or its nominee?

Generally, no. A special pledge account can be opened in the name of the lender or its nominee for dematerialised shares. Bearer shares need to be delivered to the lender.

5. Are loans from shareholders subordinated? If so, how is this done? Is it customary for such loans to be waived or written off contractually as part of an enforcement of a share pledge should a default occur?

Loans from shareholders can be contractually subordinated.

Shareholders can agree that repayment of their loans are waived/written off should default occur, but this is not yet customary in Belgium.

C. Leases

Note: our answers do not apply to leases entered into with retailers. Specific legislation protects the position of the retailer as tenant.

1. Lease Structure

1.1 Typical lease length?

The lease length is determined by the parties in accordance with their economic needs, subject to the comments below. Usually, a term of 9 years.

1.2 Maximum/minimum lease length if any?

Not applicable.

1.3 Statutory controls and obligations re renewal/termination of leases (does tenant have automatic right to renewal or can they apply to the courts for a new lease); also does some form of notice have to be served to terminate a lease to avoid renewal?

Subject as follows, a lease is entered into for a fixed term:

Lease agreements may provide the tenant with a break option, allowing the tenant to terminate the lease before the end of the agreed lease term if it gives the requisite notice;
If, after fixed term expiry, the tenant stays in the premises without objection of the landlord, the lease is renewed on the same terms and conditions (i.e. for the same duration and rent as the original lease);
A lease with no express duration is deemed to be granted on a rolling month-to-month basis and can be terminated by either party giving 1 month’s notice;
It can be agreed that a lease will automatically renew at expiry of the fixed term on the same terms and conditions (i.e. for the same duration and rent as the original lease), unless notice is duly served to terminate.

1.4 Any overriding statutes concerning the ability of the tenant to break a fixed term lease (whether or not included as a term of the lease)?

If leased premises are destroyed (and can no longer serve the purpose for the premises were leased), the lease is automatically terminated.

If the landlord is in breach of his obligations under the lease the tenant can seek the termination of the lease before the courts.

1.5 Any other security of tenure provisions available to a tenant that would frustrate possession or prevent receipt of market rents?


2. Rent/Rent Reviews

2.1 Rental income receivable quarterly/monthly in-advance/in-arrears?

No statutory provisions. Generally rent is payable in advance, typically either on a monthly or on a quarterly basis.

2.2 Periodicity of reviews?

No rent reviews are allowed during the lease term, except indexation reviews (see C2.4 and C2.5).

2.3 Basis of review (upwards-only or variable, indexation or market rent)?

Rent is usually reviewed annually by reference to a specified index (see C2.5).

2.4 Are rents/reviews subject to statutory control in regard to quantum or increase (i.e. rent control)?

Yes. The rent can be indexed only once a year in accordance with the health price index (which can increase or maintain the amount of rent payable). Generally, leases provide that the rent will not decrease below the originally agreed rent (even if the index is negative). The earliest such a review can take place is on the first anniversary of the lease.

3. Lease Obligations: Who has responsibility for:

3.1 Internal maintenance, decoration and repair?

Small repair and maintenance works connected with the ordinary use of the let premises are borne by the tenant.

3.2 External maintenance, decoration and repair?

The landlord must maintain the let premises in a good state of maintenance during the lease term and carry out all repairs required in that respect (“landlord’s works”). However, leases often provide that the landlord is only responsible for structural repairs and that all other maintenance and repair works are borne by the tenant.

External and internal maintenance, decoration, repair beyond the landlord’s works and maintenance/repair obligations accepted in the lease are the tenant’s responsibility (“tenant works”).

3.3 Structural repairs?

All repair costs which are not tenant works (such as structural repairs) are borne by the landlord.

3.4 Insurance?

There is no statutory obligation to have insurance cover in place. Buildings insurance is frequently taken out by the landlord and the premium is then charged to the tenant under the terms of the lease. Most leases require the tenant to insure its own assets placed in the premises.

Generally, it is a lease condition that each party to the lease obtains a waiver by its insurer of any rights it might have to insurance proceeds paid out by the other party’s insurer.

3.5 VAT?

Standard leases are not subject to VAT.

3.6 Rates?

See C3.8.

3.7 Other typical outgoings?

See C3.8.

3.8 The ability to recoup any landlord outgoings (including management costs) by way of service charges?

Common practice is for the tenant to enter into a “triple net” lease: the tenant is obliged to pay (i) rent, (ii) maintenance/insurance/repair costs and (iii) real estate taxes. (ii) and (iii) are charged as service charge. Landlords tend to include as many items as possible in the service charge.

4. Enforceability

4.1 Are terms of leases/contracts recognised and supported by case law in the jurisdiction?

The lease agreements are recognised by Belgian law and case law assists in the interpretation of lease agreements.

5. Valuation and Environmental

5.1 To be recognised in the courts, does an appraisal have to be prepared by some domestically regulated/qualified party or is an RICS (Royal Institution of Chartered Surveyors)-qualified appraisal report accepted and recognised in each jurisdiction?

To be recognised by a court, it is advisable that a property valuation report be prepared by a domestically regulated and qualified expert.

5.2 Is it possible/customary to obtain environmental reports from a local government agency or a qualified, insured environmental professional?

Yes. Lenders often request such report prior to lending. It is seldom requested by parties entering into a lease.

5.3 Is it possible for liability in respect of past or present breaches of environmental laws to attach to a lender by it holding or enforcing a mortgage over real estate?