[BUYING AND SELLING REAL ESTATE IN LATVIA]
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The owner of the building (structure) is entitled to use the part of the land plot functionally related to the building on the grounds of legal right of use, which was introduced on 1 January 2023 to replace the compulsory lease. The legal right of use is viewed as an easement in-rem on land. In the case of divided estate, the parties should agree on the size of the used area of the land and on the amount of payment for use, and, if the parties cannot agree on the mentioned, the dispute shall be resolved by the court. The building owner is obliged to pay the landowner a fee of 4% of the cadastral value of the land per year, but not less than 50 EUR per year. Since 1 January 2023, a special legal mechanism can be applied to end the forced shared ownership between the apartment owners and the land owner of an apartment building, through a statutory right of redemption granted to the community of apartment owners over the land under the apartment building. This process is initiated by the community of apartment owners’ decision and is conducted without the land owner’s consent. Second form . Voluntarily established divided estate. Buildings built after September 1, 1992, when the Civil Law of the Republic of Latvia entered into force, based on a specific long term (at least 10 years) lease agreement providing the rights to the lessee to build buildings on the leased land plot as separate real estate objects. After 1 January 2017 it is no longer possible to establish a new voluntary divided ownership relationship. The separate ownership of the building (structure) is established only during the validity of the lease agreement. Amendments to the Civil Law entered into
force on 1 January 2017, by introducing a new institute of build-up rights, which henceforward replaces the institute of specific long-term lease for the voluntary established divided estate. The build-up rights are rights in-rem, established based on the agreement entitling, during the validity of such rights, to build and use non-residential buildings or engineering structures on the land plot owned by another person. The building (structure) built based on the build-up rights is an integral part of the build-up rights. It is not permitted to build residential buildings based on the build-up rights. The validity of the build-up rights cannot be less than 10 years, and the build-up rights shall be registered with the Land Registry. The build-up rights can be alienated and encumbered with rights in-rem, unless explicitly prohibited in the agreement on granting of the build-up rights. After expiry of the build-up rights, the building (structure) built based on the buildup rights becomes an integral part of the land plot, i.e., becomes the property of the land plot owner. The owner of the land plot acquires the building (structure) without remuneration, unless such remuneration has been provided in the agreement on granting of the build-up rights. In the agreement on granting of the build-up rights the parties may provide that, prior to the expiry of the build-up rights, the holder of the build-up rights shall vacate the land plot from the constructed buildings (structures). D. Restrictions for acquisition of land in Latvia There are certain provisions and legal restrictions for acquisition of real estate in Latvia; however, these restrictions are imposed only regarding ownership of the land,
ILN Real Estate Group – Buying and Selling Real Estate Series
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