Trust Arrangements under Tyrolean Land Transfer Law – Insights from the Austrian Supreme Court Decision 1 Ob 62/25m

In its ruling 1 Ob 62/25m of 27 May 2025, the Austrian Supreme Court addressed the validity of a Tyrolean land purchase contract that was accompanied by a concealed trust in favour of a Ukrainian third‑country national. The decision clarifies when a contract stands and when it constitutes an unlawful circumvention of § 12 para 1 lit a TirGVG.

Purpose of the Tyrolean Land Transfer Act

Section 12 para 1 lit a TirGVG requires third‑country nationals to obtain governmental approval before acquiring real estate in Tyrol. The rule aims to shield the local property market from speculative capital, safeguard affordable housing and preserve agricultural and forestry structures. Transactions that disguise the real acquirer threaten this statutory purpose.

Evasive Transactions and Legal Effect

A transaction qualifies as evasive when the parties deliberately structure an otherwise valid contract to avoid the scope of a mandatory rule while seeking the prohibited economic result. If that result is actually achieved, § 879 ABGB renders the deal void.

Facts and the Parties’ Positions

In 2022, a seller transferred Tyrolean property to an Austrian limited partnership whose partners were predominantly EU nationals, rendering the deal approval‑free. Internally, the partnership agreed to act as trustee for a Ukrainian company. When the partnership refused to pay the price, it argued that the contract was void because it served to bypass the approval requirement.

Court’s Reasoning

The Supreme Court first examined the contract’s objective content and found that ownership passed solely to the partnership. Consequently, the statutory purpose of § 12 para 1 lit a TirGVG remained intact. The seller lacked any knowledge of the trust, so no intent to evade could be attributed to her. Crucially, the trust agreement was a separate legal transaction; only its execution would trigger an approval requirement. As long as the purchase contract itself does not frustrate the purpose of the statute, its validity must be upheld.

Practical Takeaways

The ruling confirms that a purchase contract with an approval‑exempt buyer remains effective if it does not defeat the TirGVG’s protective purpose. At the same time, trust arrangements are by no means a carte blanche. Once the foreign principal obtains beneficial ownership, approval is mandatory. Buyers should therefore assess at an early stage whether their internal arrangements require notification or approval, while sellers should seek warranties that no concealed evasive purpose is pursued.

Conclusion

The Austrian Supreme Court decision 1 Ob 62/25m draws a clear boundary: the validity of a contract depends on its objective content and the statute’s protective purpose. Trust agreements remain feasible but fall under regulatory scrutiny as soon as they encroach on the prohibition set out in Tyrolean land transfer law.