- MOST RECENT COURT FINDINGS IN CONSTRUCTION DISPUTES
- VISION OF A NEW CONSTRUCTION PROCEDURE
- OBTAINING A RESIDENCE PERMIT BY ACQUIRING REAL ESTATE
- EXTENDED TERM OF LIMITATIONS FOR FOREIGNERS TO ACQUIRE AGRICULTURAL AND FOREST LAND IN LATVIA
1. MOST RECENT COURT FINDINGS IN CONSTRUCTION DISPUTES
Two basic conclusions can be drawn from the leading Supreme Court civil and administrative case judgments of recent years in the field of construction. First, litigation with appeal at all instances continues for more than three years, five years on average; thus litigation cannot be considered an efficient protection of rights. Second, most cases would not have come to a dispute and to court if the parties’ contract had clearly defined parties’ rights, obligations and mutual responsibilities.
For an insight, please see a summary of most topical ideas:
- Real division of historical land units is allowed. The Senate has acknowledged that upon dividing a land plot in the historic centre of Riga and its protection zone, the culture-historic value – historic planning structure – should not be changed. Thus wider options also arise to organise the complicated title relations in the historic centre of Riga so that it becomes easier to develop properties.
- General defect statements are insufficient evidence. If a defect statement is prepared generally without indicating specific defects and which does not prove the scope of defects and particular costs, then it is not grounded and cannot serve as evidence in court. Conclusions and statements must contain information about the actual state of the object, must indicate what works and in what scope lack quality or are contrary to regulations, as well as what works should be repeated. Price inquiry and constructors’ estimates on elimination of defects serve as evidence of the scope of losses to be compensated by collecting from the constructor that caused the defects.
- Neighbour’s consent must be clear and intentional. Consent to an exception from general procedure is not valid if a person merely generally expresses consent to construction – there should be a finding that the person was aware of the general regulation and that this person by signing agrees to exactly this exception, that is, to provisions less favourable to him.
- Mandatory legal norms cannot be amended by neighbour’s consent. A Riga construction regulation determining the maximum height of a building is a mandatory norm that cannot be revoked or amended by a neighbour’s agreement.
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2. VISION OF A NEW CONSTRUCTION PROCEDURE
At the end of May, the new Construction Law was sent to the Parliament for review. The draft law will be widely discussed because specialists from various industries have different opinions about the future model. The Construction Law will serve as the backbone with established basic principles, but more developed and detailed regulation is expected to be included in several Cabinet Regulations to be developed on the basis of the wording of the Construction Law once adopted.
Too many administrative decisions, as well as lengthy periods for their adoption, extensive third party rights to dispute a construction permit and wide interpretation of construction norms: present regulation has caused investors to view Latvia as an insecure and unattractive legal environment for construction.
The draft law aims to implement new legal regulation to simplify construction procedure and make it more transparent, improving the business environment and attracting investors:
- a three times shorter term for making decisions is set – ten days;
- multiple interim decisions have been abolished;
- construction permit is the first, not the last decision in the construction procedure;
- construction permit is issued on conditions that largely depend on participants to construction;
- construction can be stopped by a municipal institution only if it finds a departure from the construction plan or laws and regulations.
On the whole, the present edition of the draft law is too general and it is impossible to draw valuable conclusions before developing the entire document portfolio (new general construction norms, special regulations, as well as new laws and regulations for territorial planning).
In any case, significant changes are expected to come into effect within the coming year. To cover against adverse changes, market players are advised to pay special attention to contracts even now because their provisions will resolve issues that are not regulated.
Lelde Laviņa
Return to top 3. OBTAINING A RESIDENCE PERMIT BY ACQUIRING REAL ESTATE
Since summer 2010, acquisition of real estate in Latvia is one of the available routes for citizens of non-EU Member States (Foreigners) to obtain a temporary residence permit (Permit). In order to apply for the Permit a Foreigner needs to submit a Land Book certificate evidencing the Foreigner’s title to real estate as well as additional documents with their nearest Latvian Embassy or Consulate. If a Permit is granted, a visa for travelling to Latvia is issued to the Foreigner. When in Latvia, the Foreigner needs to present the required documents to the Office of Citizenship and Migration Affairs in Latvia in person.
Statistics show that all the decisions on issuing a Permit based on ownership of real estate in Latvia have been positive. Moreover, it has been the ground for issuing around two thirds of the Permits granted to Foreigners and their vfamily members. The amount of such foreign investment in real estate already exceeds EUR 40 million (approx LVL 28 million).
On 26 May 2011, the Latvian Parliament amended the Immigration Law to impose additional requirements on obtaining Permits by acquiring real estate. The Amendments stipulate the minimum required cadastral value of real estate and require that, for the purposes of obtaining a Permit, real estate may only be acquired from a Foreigner if the Foreigner has a valid Permit.
Jekaterina Badejeva
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4. EXTENDED TERM OF LIMITATIONS FOR FOREIGNERS TO ACQUIRE AGRICULTURAL AND FOREST LAND IN LATVIA
Contrary to the prognosis, the term of limitations for citizens of the European Union (EU) to acquire agricultural and forest land in Latvia has been extended to 30 April 2014. The extension was introduced by amendments in the law On Land Privatisation in Rural Areas.
This means that EU citizens and companies registered in EU Member States are subject to limitations on purchase of agricultural and forest land in Latvia; however, it should be taken into account that these limitations do not refer to commercial companies registered in Latvia where more than half of the share capital belongs to natural persons and legal entities from countries with whom the Republic of Latvia has entered into international treaties on facilitation and protection of investments. Thus, at present eight of the ten largest owners of agricultural land in Latvia have foreign capital.
Roberts Prūsis |
