Legal Highlights for Real Estate – January 2023

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Amendment to the Law on Spatial Planning and Development regarding compensation for decrease in property value in case of planning gap  

On 7 January  2023, an amendment to the Law on Spatial Planning and Development of 27 March 2003 (the “Amendment”) entered into force. The Amendment regulates the issue of determining the amount of compensation paid to property owners by municipalities for a reduction in the value of a sold property in the situation of a so-called planning gap (i.e., a period in which the previous zoning plan has expired and the new one is not yet in effect).

It follows from Article 36(3) of the Law on Spatial Planning and Development (the “Law”) that the owner or perpetual usufructuary of a property who sells it may claim compensation from the municipality in which it is located if, due to the enactment of the local plan or an amendment to it, the value of the property has decreased. Meanwhile, according to Article 37(1) of the Law, a reduction in the value of a property should be understood as the difference between the value of the property according to the land use in the new local plan and its value according to the use in the repealed plan or according to the actual use of the property prior to the enactment of the new plan. This method of calculation seems straightforward, but its application was complicated by another provision of the Law, which stipulated that existing local zoning plans effective on the date of the Law’s entry into force that were enacted before 1 January 1995 remain in force until new plans are enacted, but no longer than 31 December 2003. As many municipalities, contrary to assumptions, did not adopt new plans before 2004, the amount of compensation in planning gap situations began to depend on the value of the property “according to actual use”. Thus, situations arose in which, if properties were temporarily not used or were used below their potential under the previous plan, compensations to their owners were adjudged at grossly underestimated amounts vis-à-vis property owners who were not affected by the planning gap.

The amendment determined to exclude the application of Article 37(1) of the Law to cases in which there was a planning gap and at the same time the designation in the previous zoning plan was more relative to the owner than the actual use of the property during the gap period. Thus, the wording of the Law was brought into line with the Constitutional Court’s (“CC”) ruling of 22 May 2019 (ref. SK 22/16). In that judgment, the CC ruled that the provision of Article 37(1) of the 2003 Law on Spatial Planning and Development, understood as allowing the determination of a less favorable use of property than in a local zoning plan adopted before 1 January 1995, is unconstitutional (as violating the principle of property protection).

The approach of the above-mentioned judgment of the CC normalizes the interpretation already dominant in the jurisprudence, according to which a planning gap cannot cause negative consequences for property owners who have decided to pursue planning claims against municipalities. However, it should be noted that the Amendment applies only to specific plans, while it does not apply to general plans.

Amendments to the Construction Law from 2023. – summary

The new year brings with it the entrance into force of the new provisions of the Act of 7 July 1994. – Construction Law with regard to the digitization of the construction process. They lead to a simplification of the way in which construction documentation is kept, which may have a positive impact on the improvement of the construction process.

From 1 January:

• a digital construction object book (“DCOB“) was introduced. The DCOB is a governmental application in which the owner or property manager can make entries regarding information about the building, owners and managers of the building, conducted inspections, construction work carried out after the building has been put into use, or any decisions, rulings and other administrative acts issued in relation to the building.

From 27 January:

• New regulations on the electronic construction site book (“EDB“) will come into force. Under the amendment, a construction site book kept in paper form may be continued as the EDB. The paper version of the construction site book will, in principle, be issued until 31 December 2029, with the exception of the construction site book relating to building work in closed areas established by decision of the Minister of Defence.

Moreover, it should be mentioned that in the field of digitalisation, in the last year, new provisions have come into force regarding:

• the “e-CRUB” system, i.e. the Central Register of Persons Holding Construction Authorisations, which also contains, inter alia, information on persons penalised for professional liability;
• the e-Building portal, which provides the possibility of generating, inter alia
  • o an application for a building permit;
  • o notification of construction or execution of other construction works;
  • o application for a demolition permit;
  • o notification of demolition;
  • o notification of completion of construction;
  • o application for an occupancy permit;
  • o notification of change of use of a construction object or its part.