Is an underground rock garage considered a building according to the Swedish Land Code?

Background

A property owner ("the Property Owner") owned a shopping mall in Stockholm. A company ("the Company") used space for car washing within the mall's parking garage. The parking garage is located in an underground rock chamber.

The agreement between the parties, which regulated the lease, was titled "Right of Use Agreement for Temporary Sales Location." In the agreement, the leased space was referred to as "the leased site," "the leased sales location," "the area," and "the space."

The parties disagreed on whether their agreement constituted a lease agreement and whether the company was therefore entitled to compensation under the indirect possession protection. The key issue was whether the agreement could be considered as involving the "lease of a building or part of a building for compensation."

The Company argued that the lease should be regarded as a building or part of a building and that the agreement thus constituted a lease agreement. The Property Owner argued that this was not the case, as the lease involved a space in an underground rock chamber/facility and not a building or part of a building.
A consequence of the Property Owner's position was that the rules on compensation according to the indirect possession protection would not apply in such a case. The Company's claim in the case concerned such compensation.

The District Court, through an interim judgment, concluded that the lease did not constitute a lease agreement. The case was appealed to the Svea Court of Appeal.

Court of Appeal's Assessment

The Court of Appeal first noted that in common language, a building is usually understood to be a structure with walls and a roof above ground. A space excavated in rock, whose walls and roof consist of solid rock, should not be considered a building (cf. Svea Court of Appeal's decision on January 22, 2013, in case no. ÖH 8168-12). However, there are structures located entirely or partially underground that are more building-like; for example, a basement is clearly part of a building, and this should also apply to structures located in rock.
In the current case, the garage is located in the rock. The garage is constructed on multiple levels where the floors between the levels are made of concrete or similar material. The walls mainly consist of rock but with parts of concrete or similar. The rock chamber is ventilated and has electrical installations and drainage. There are entrances and exits for cars and passage to the nearby mall. Although the garage is not obviously considered a building, it has several building-like characteristics. Apart from being located in the rock, it is essentially constructed as a parking garage.

The garage meets what is highlighted in legal literature as decisive for what constitutes a building in the sense of the Land Code. Leasing a space in the garage is also closer to renting than other rights of use, such as tenancy. The fact that the garage is underground and excavated in rock is irrelevant for the application of the rental law provisions.

Therefore, the underground rock garage can, in principle, be considered a building in linguistic terms. Since there are no relevant reasons against applying Chapter 12 of the Land Code regarding the garage, it should also be considered a building in the sense of the Land Code.

Unlike the District Court, the Court of Appeal therefore concluded that the underground rock garage could be regarded as a building and that the lease should therefore fall under the rental legislation.

Leave to Appeal
Decision Date: 2024-11-13
Supreme Court, Case: T 1347-24
Appealed Decision: Svea Court of Appeal's judgment on January 24, 2024, in case T 3782-23