REALWorld Law

Sale and purchase

Real estate and public law

What are the most important areas of public law for an investor to consider when purchasing real estate?

Angola

Angola

Relevant areas of public law are:

  • Urban and planning law
  • Authorizations relating to the building, and
  • Environmental law
Australia

Australia

Town planning (zoning), construction and environmental laws may all apply. The buyer should also consider the level of compliance with workplace health and safety legislation requirements. Proper due diligence by a buyer should cover these particular areas of concern.

The buyer should undertake a full investigation of the site's town planning and land use history, and in particular whether developments on a site have been authorized and have been constructed in accordance with all required permits and approvals.

Belgium

Belgium

Planning and zoning regulations must be checked. These vary depending on the property's location. Generally, the Flemish, Walloon and Brussels Capital regions have each adopted their own regional zoning regulations. These provide the framework for local/municipal regulations.

Environmental rules

Similar regional variations apply to environmental rules.

Flemish region

In the Flemish region, where environmental rules are most developed, all real estate sales generally have to be accompanied by an ‘orientating’ soil survey when certain hazardous activities have been, or are being, carried out. If contamination is found in this orientating survey, a more detailed ‘descriptive’ soil survey must be conducted and this may identify a clean-up obligation.

Walloon region 

On 1 March 2018, the Walloon Parliament adopted a Soil Decree which came into force on 1 January 2019. No specific obligation applies in case of asset purchases except the obligation for the seller to provide the purchaser with a soil attestation. The asset purchases themselves do not trigger any other specific obligation than providing the purchaser with said soil attestation.

Brussels Capital region

On 13 May 2004, the Brussels Capital region also adopted a Soil Clean-Up Act. This Act was updated on 5 March 2009, and the update came into force on 1 January 2010; it was further updated pursuant to a decree dated 23 June 2017 which came into force on 23 July 2017. A preliminary soil investigation must be carried out before the transfer of rights to real estate where hazardous activities are being, or will be, carried out. This is also required before commencing or terminating hazardous activities. The person transferring the real estate must bear the cost.

Energy performance regulations

As a result of EC Directive 2002/91 regarding the energy performance of buildings, each of the regions have adopted legislation to increase the energy efficiency of several different types of building. This Directive has been replaced by the 'Recast Directive' (Directive 2010/31/EU of the European Parliament and of the Council of 19 May 2010 on the energy performance of buildings). Among other things the new directive contains stricter building standards. The Recast Directive was amended to some extent by the Energy Efficiency Directive (Directive 2012/27/EU of the European Parliament and of the Council of 25 October 2012 on energy efficiency). The legislation in the regions is being amended in order to comply with this new legislation.

Flemish region

On 22 December 2006 the Flemish region adopted an Energy Performance Decree for buildings. This decree gives the Flemish Government the power to make lists of mandatory energy performance criteria, both for existing and for new buildings, and different lists can be created for different types of building. Furthermore, the decree gives the government the power to introduce mandatory 'energy performance certificates'. These certificates contain 'reference values' for comparing the energy performance of similar buildings and advice on how to increase the energy efficiency of the building in a cost-efficient way. The Flemish Government has made these energy performance certificates mandatory when 'non-residential', 'residential' and 'public' buildings are sold or rented.

The decree mentioned above, was replaced on 1 January 2011, by the ‘Energy Decree’ of 8 May 2009, which is a very general decree, also containing a chapter entitled ‘Energy performance of buildings’. The principles, explained above, still apply. The Energy Decree was further updated pursuant to a decree dated 24 February 2017 which came into force on 1 April 2017.

The Executory Decree of 19 November 2010 also contains regulations concerning energy performance. Its main purpose is to indicate how energy performance is to be calculated and to indicate the energy performance requirements and the requirements for the interior climate of buildings.

This Executory Decree was amended by the Alteration Decree of 28 September 2012 following European Directive 2010/31/EU. As from 1 January 2014, this Decree requires that newly built buildings for housing, school or office purposes, must generate a certain amount of energy out of renewable energy resources.

Walloon region

On 1 May 2015, the Decree of 28 November 2013 concerning the energy performance of buildings and its Executory Decree of 15 May 2014, came into force.

This Decree and Executory Decree:

  • Contain the elements that have to be taken into account to calculate the energy performance of specific buildings (eg thermal characteristics, ventilation, heating system and natural light)
  • Contain the minimum energy performance criteria for buildings
  • Provide the classification of buildings (eg individual habitation, apartments, sports installations and health facilities)
  • Give the Walloon Government the power to introduce mandatory 'energy performance certificates'.

Brussels Capital region

On 7 June 2007 the Brussels Capital region adopted its Energy Performance Decree for buildings. The partial amendment of the decree made on 14 May 2009 came into force on 6 June 2009. This decree gives the Brussels Government the power to specify energy performance criteria for new buildings and buildings being renovated, and the power to introduce energy performance certificates. On 19 June 2008 the Brussels government adopted an Executory Decree specifying that new and renovated buildings used for housing, offices, services and education require an energy performance certificate, with similar content to the Flemish certificates. On 27 May 2010 the Brussels government adopted an Executory Decree specifying the requirement for an energy performance certificate for public buildings. On 17 February 2011 the Brussels Government adopted an Executory Decree specifying the requirement for an energy performance certificate for ‘non-residential’ buildings and an Executory Decree specifying the requirement for an energy performance certificate for ‘residential’ buildings.

All these Decrees were abrogated by the Decree of 2 May 2013 enacting the Brussels Code of Air, Climate and Energy Control. Books I, III and IV of this Decree, providing for the general principles and specific provisions on air and climate came into force on 31 May 2013. Book II came into force in full on 1 January 2015 (although some articles of this Book came into force on 5 February 2014).

Bosnia-Herzegovina

Bosnia-Herzegovina

When purchasing real estate, a potential investor should consider the following:

  • Zoning and planning issues: the zoning plan should be checked to ensure construction is permitted and establish whether any specific rules or regulations apply. 
  • Construction issues: the investor should ensure that all necessary building, construction and use permits have been obtained and that all stages of construction were approved and carried out in accordance with the permissions and authorisations issued. 
  • Safety issues: the status of the building should be verified to ensure that it can be properly used. This includes compliance with rules on fire prevention, health and safety, etc. 
  • State (formerly social) ownership: if land is state owned then additional approvals are required.
Canada

Canada

Town planning (zoning), construction and environmental laws may all apply. The buyer should also consider the level of compliance with workplace health and safety legislation requirements. Proper due diligence by a buyer should cover these particular areas of concern.

As part of its due diligence, the buyer will wish to request a municipal comfort letter confirming that the property is being used in compliance with any issued permits and that the property is not subject to any notices of violation or unpaid orders issued by any such authority.

China

China

Buyers considering purchasing properties in suburban areas should ensure that the land on which the property is located is not collective land. Collective land refers to land owned by rural collective economic organizations, which are generally committees of local villagers. The management and development of collective land is tightly regulated under PRC law. Generally, collective land may only be used for the establishment of rural or township enterprises or, subject to the approval of government authorities, for the construction of residential housing or public facilities. In order to develop collective land for profit seeking enterprises, such as real estate development, the land must first be converted into state-owned land. Moreover, the sale of properties on collective land is illegal without further state approval.

Planning, construction and environmental laws may all apply. Buyers should also consider fire safety regulations and health and safety rules.

Croatia

Croatia

An investor should consider the zoning permits, construction permits and operation permits.

Czech Republic

Czech Republic

In particular, the following issues should be verified by the buyer:

  • If the building has not yet been constructed, then zoning and town planning provisions should be confirmed. This should be done with reference to the general Zoning Plan (Územní plán) and the related technical rules (in major cities: Obecné technické požadavky na výstavbu or OTP). Checks should include whether the plot of land can be used for its intended purpose and whether any proposed buildings can be constructed on the plot
  • If the building has already been completed, then a 'use permit for a building' (kolaudační rozhodnutí or kolaudace) or, where applicable, an 'occupancy approval' (kolaudační souhlas) should be obtained and reviewed. This certifies that the building was constructed in accordance with the building permit, complies with the relevant technical regulations and can be used for the purpose stated in the use permit
  • In all cases, the buyer should review the building permit and technical drawings to ensure they comply with the Zoning Plan, technical regulations etc
Denmark

Denmark

An investor should always investigate the planning regulations. Planning regulations for land in Denmark comprise a Planning Act and municipal- and local plans.

The Planning Act, dated 16 April 2018, deals with the hierarchy of the planning system, in line with which local authorities address regional and municipal issues, and prepare municipal plans and more specific local plans for each area. Local plans must comply with municipal plans. All plans must ultimately comply with the Planning Act.

As a general rule, a local plan will cover a small area of an area within the municipality. Among other things, the local plan will include:

  • The use of the area
  • Measurements and boundaries of the property
  • The location, use, measurements and design of buildings

An investor should also check whether any contamination has been registered against the property under the Contaminated Soil Act, dated 27 March 2017.

France

France

Private ownership of real estate is subject to land use rules and other limitations, such as the protection of archaeological sites, or mandatory expropriation for reasons of public interest (expropriation pour cause d’utilité publique). Ownership rights can also be restricted by easements for public use (servitude d’utilité publique), which are incorporated into planning documents such as the local land use plan.

Public authorities also have pre-emption rights, allowing municipalities to purchase property to facilitate projects that are in the public interest (for example, the creation of communal facilities).

A buyer should also verify that the property is not part of the public domain (domaine public). Public authorities hold both public domain (including property and fixtures that are either identified as belonging to the public domain or used for the performance of a public service) and private domain assets. Authorizations to occupy a public domain property normally take the form of a temporary occupancy agreement between the public authority and a private contractor. These authorizations are subject to the French General Code of Public Property (Code général de la propriété des personnes publiques).

An authorization for temporary occupation of the public domain usually grants the private developer some of the privileges typically associated with legal ownership, such as the right to dispose of (subject to prior approval by the public authority), or create a security interest over, a building or structure on the public domain, even though the legal ownership of the land remains with the public authority.

The public body granting a temporary occupancy authorization is not obliged to renew it upon expiry. If an authorization is not renewed, the French General Code of Public Property does not provide for any right to compensation.

More generally, an investor should also have a clear understanding of the commercial lease regime as set out in the French Commercial Code which has been deeply modified following the law n°2014-626 (Pinel law) dated 18 June 2014.

These past years American and English compliance rules are increasingly being incorporated into French real estate acquisition practice. The latter integrates more and more in the performance of the obligations of the parties some of the provisions of the United States Foreign Corrupt Practices Act 1977 and the UK Bribery Act of 2010 concerning anti-corruption, sanctions and anti-money laundering compliance – which French equivalent legal provisions would be the law “Loi no 2016-1691 du 9 décembre 2016 relative à la transparence, à la lutte contre la corruption et à la modernisation de la vie économique” (often referred to as loi Sapin II).

Germany

Germany

An investor should always verify that the building complies with the relevant building permits and the zoning and building laws. Usually the building permit will be sufficient to confirm that the building complies with zoning law but sometimes it is also helpful to check the zoning plan. This allows the investor to verify whether the proposed use of the premises is permitted.

Any change in use will require a revised permit.

New public law restrictions on rent increases for residential properties cap rental increase on entering into a new lease contract at 10 % above the local reference rent in areas subject to housing market pressures, subject to certain exceptions for new or extensively modernized buildings. New restrictions also limit the sale of residential condominium properties to tenants within a certain time after the conversion of rental space.

In the federal state of Berlin, a so-called rent cap has been in force since 23 February 2020. Residential rents will be capped for five years at the level of 18 June 2019 and an increase is prohibited by law. Exceptions only apply in special cases, such as social housing. Fines of up to €500,000 may be imposed for violations.

Hong Kong, SAR

Hong Kong, SAR

Town planning (zoning), construction and environmental laws may apply and should be investigated with the assistance of lawyers. As part of its due diligence, a purchaser should confirm that the property is being used in compliance with the use authorized by the occupation permit issued by the Buildings Department and that the property is not subject to any notices of violation issued by any authority.

Hungary

Hungary

The buyer should investigate the following:

  • Zoning and town planning provisions: the general and detailed development plans, and related implementation rules, will demonstrate whether the proposed use of the property is permitted.
  • Restrictions and special obligations relating to properties subject to some form of cultural heritage, historical or national interest related protection.
  • Building permits: the structure must comply with the original building permits.
  • Occupancy permits: all real estate assets must be granted an occupancy permit confirming that the environmental, fire, and health and safety requirements prescribed by the building permit have been met.
Ireland

Ireland

An investor must consider the planning (zoning) and environmental aspects of any property transaction.

The following public law aspects are relevant to the acquisition of real estate:

  • Local Government (Planning and Development) Acts
  • Multi‑Unit Developments Act
  • Air Pollution Act
  • Building Control Act
  • Electricity Supply Acts
  • Environmental Agency Act
  • Fire Services Acts
  • Local Government (Sanitary Services) Acts
  • Public Health Acts
  • Safety in Industry Acts
  • Water Pollution Act
Italy

Italy

The following matters should be verified by the buyer:

The zoning and town planning provisions

Tthe general master plan (Piano Regolatore Generale) and the related implementation rules (Norme Tecniche di Attuazione, NTA) show the permitted use of the area in which the property is located.

Building permits and licences

The buyer should ensure that the structure of the property complies with the original building permits (in particular the designs and plans attached to the permits) and that any building work has been carried out with the necessary prior authorisations (building permits and declarations of commencement of works). The seller shall declare the compliance of the de facto state of the property with the cadastral data and maps filed with the Cadastral Register.

Fitness for use

All properties require a certificate (certificato di agibilità) confirming that certain health and safety requirements have been met. In this respect, within 15 days from the notice of completion of construction/renovation works, the certified declaration of fit-for use (segnalazione certificata di agibilità) attesting the existence of such health and safety requirements shall be summitted to the competent Municipality along with by all designs and structural and cadastral documentation pertaining to the property. The Municipality has 30 days to check the documentation and request any clarification/supplement of documentation.

Fire prevention provisions

Certain structures (for example offices with more than a specified number of employees, parking spaces covering more than a specified area, storage and archive buildings, heating plants and buildings in which particular activities are carried out) are subject to fire prevention regulations.

Any project plan regarding works to be carried out on the structures mentioned above must be approved by the Fire Service.

Before the site inspection takes place, a declaration can be completed by the owner of the building, attesting that all work has been carried out according to the project plan. Once this declaration is submitted, the structure can be used legally, even if the fire prevention certificate has not yet been issued.

A developer must request a site inspection by the Fire Service, after which a certificate is issued.

A potential buyer should therefore ascertain whether a property is subject to fire prevention rules and whether a declaration has been submitted.

Japan

Japan

There are, among others, two public laws an investor should consider when purchasing real estate: the City Planning Act and the Building Standards Act.

The City Planning Act defines ‘Urbanization Promotion Areas’ as areas where development is actively promoted and ‘Urbanization Restricted Areas’ as areas where development is restricted.  Generally, construction of residential, office and retail property is not permitted in Urbanization Restricted Areas.  This act also defines the types of ‘Zoning Districts’ which are classifications of Urbanization Promotion Areas.

The Building Standards Act stipulates the types of properties and structures permitted in each Zoning District, as specified by the City Planning Act.  

Netherlands

Netherlands

  • Zoning - Municipal zoning plans and decisions designate particular use to specific plots and areas. Lower level zoning plans (eg municipal zoning plans) must comply with upper level zoning plans (eg provincial, regional and/or national zoning regulation).
  • Public-private relations - Municipalities charge fees for public law cooperation eg permits and exemptions. The amounts are adopted in ordinances. In addition, municipalities may adopt exploitation ordinances which govern the municipal authorities' policy in contracting with private law parties in relation to land exploitation, in which the municipal authorities may set fees payable in relation to such exploitation as well as rules on compensation of planning-related damages suffered by third parties.
  • Environment - Environmental law under Dutch law governs both strict (physical) environmental law as well as zoning-related environmental law. Environmental permits are required for carrying out specific activities (eg demolition and construction) or making specific use of real estate, eg uses which deviate from the applicable municipal zoning plan.
  • Building permits - Statutory law sets conditions for building operations and permit exemptions; additional requirements may be set by zoning law and building permits.
  • Monuments - Specific regulations exist with regard to buildings of historical or architectural interest which may restrict work on/ alterations to such buildings.
Nigeria

Nigeria

    • Land Use Act 1978;
    • Companies and Allied Matters Act 2020;
    • Nigerian Investment Promotion Act 1995;
    • Finance Act (2019 & 2020 Amendments), Capital Gains Tax Act 2004 (as amended), Personal Income Tax (Amendment) Act 2011 (as amended), Stamp Duties Act 2004 (as amended), Companies Income Tax Act 2004 (as amended) (Tax legislations);
    • Land Instrument Registration Act (States);
    • Land Registration Law of Lagos State 2015;
    • Lagos State Real Estate Regulatory Authority Law, 2022;
    • Urban and Regional Planning and Development Law 2010;
    • Land Use Charge Law of Lagos State 2020; and
    • Tenement Rate Laws (States).

    The Land Use Act, Companies and Allied Matters Act, Nigerian Investment Promotion Act 1995 and Tax legislations are Federal statutes applicable uniformly. The other legislations are enactments of the respective States, but with similarities in most of the states.

Norway

Norway

Buyers should consider the following issues:

  • The development plan that each municipality draws up for the local area. This provides a description of the permitted use for property in different areas of the municipality. 
  • Building permits and licences, since the right to develop a property depends on being granted a building licence by the local authority. Buyers should verify that any construction has been carried out with the local authority's prior approval and that the property has been built in accordance with the building permits granted (according to the description provided in the plans attached to the permits). 
  • Certificate of completion or a temporary permit, since all property must be provided with a certificate attesting that certain technical, health and safety requirements have been met. 
  • Fire prevention provisions, since it is the buyer's responsibility to ensure that the building complies with safety regulations after the purchase.
Poland

Poland

The most relevant public legislation is:

  • Planning and zoning
  • Environmental law, nature conservation law and revitalization law
  • Protection of ancient monuments
  • Construction issues
  • Restrictions in the trade in agricultural properties
  • Tax
Portugal

Portugal

Relevant areas of public law are:

  • Urban and planning law
  • Licenses to the building
  • Environmental law
Romania

Romania

Investors should consider the following aspects:

  • City planning and construction – zoning and local plans, town planning certificate, building permits etc.
  • Observance of the relevant public tender procedures for properties owned by the Romanian State or its administrative bodies
  • Registration of the real estate in the Land Books
  • Environmental approvals for the transaction and for any proposed development, if applicable
  • Protection of historical monuments and archaeological sites
  • Potential restitution claims
  • Tax compliance
Slovak Republic

Slovak Republic

Potential investors in Slovakian real estate should ensure they investigate the following:

  • Zoning and planning issues: the zoning plan will show whether construction is permitted on the plot of land and provide information about the rules and restrictions which apply.
  • Construction issues: investors should ensure that buildings have all the necessary building, construction and use permits, and that all stages of the construction project were approved and carried out with official permission.
  • Safety issues: the condition of the building should be ascertained to ensure that it can be properly used for its intended purposes and that it meets all relevant safety requirements, for example, fire prevention, safety at work or health regulations.
  • Special laws: these may include obligations in relation to certain real estate. For example, there may be associated easements. Special obligations may also apply if the land is in certain areas, such as close to a river or dam, or where nature conservation rules apply.
Spain

Spain

Buyers should check the following:

  • The planning certificate (certificado urbanístico/cédula urbanística) and the relevant zoning and town planning provisions. Buyers should ensure that the intended use of land is permitted. They should also check that all planning obligations have been complied with (infrastructure works, mandatory agreements, etc)
  • Building permits and licences. Buyers should ensure the structure of buildings complies with the original building permits (in particular the designs and plans attached to the permits) and that any building works have been carried out with the necessary prior authorizations (building permit – licencia de obra, or declaration of commencement of works – licencia de inicio de actividad)
  • Fitness for use. All real estate assets must receive a fitness for use certificate (certificado de habitabilidad) confirming that certain health and safety requirements have been met
  • Fire prevention provisions, since certain structures are subject to fire prevention regulations
  • Information relating to any administrative proceedings which may affect the validity of the relevant planning regulations, or the permits and licences, and whether there are any pending legal actions against the property
  • The Energy Performance Certificate: buyers and/or tenants of housing, retail and office buildings must be provided with an Energy Performance Certificate, allowing them to compare and evaluate the energy efficiency and CO2 emissions of the building, or their individual unit
Sweden

Sweden

The following areas should be investigated by a buyer:

  • Zoning plans, which are prepared on the basis of the Planning and Building Act (Plan och Bygglagen)
  • Building permits and licences, although the purchase agreement normally includes the seller's guarantee that buildings have been erected in accordance with building permits
  • Environmental issues, including potential pollution or contamination hazards under the Environmental Act (Miljöbalken)
Thailand

Thailand

The important areas of public laws for an investor to consider when purchasing the land or real estate are the relevant Town Planning, Building Control Act and relevant environmental legislation. Additionally, an investor should verify that the land or real estate is not state property.

An investor should also satisfy itself:

  • That the intended use of land or real estate is permissible under the relevant Town Plan
  • That the construction of the building complies with the general requirements prescribed by the Building Control Act in connection with stability, safety, fire protection, public health and maintenance of the quality of the environment
  • That the design and installation of electricity, water, gas, fire protection and water treatment systems, as well as parking areas and entrances, comply with the Building Control Act
  • Whether an Environmental Impact Assessment Report was required to be submitted for the construction of the building
  • In the case of the purchase of a building, that the construction permit and the certificate of use for the building are obtained for inspection. The inspection of the plans and the building should be conducted by an expert
United Arab Emirates - Abu Dhabi

United Arab Emirates - Abu Dhabi

Planning, construction and environmental laws may all apply. Buyers should obtain assurances that the statutory approvals relating to the initial construction were obtained.

Depending on the use of the property, further statutory regulations may apply, for example, fire safety and other health and safety regulations.

The potential retrospective nature of UAE law is a feature that investors should bear in mind when considering an investment in Abu Dhabi real estate.

United Arab Emirates - Dubai

United Arab Emirates - Dubai

Planning, zoning and construction laws may all be relevant and a buyer of a building under construction or already completed should carry out due diligence to ensure that all the relevant statutory approvals have been obtained.

Depending on the use of the property, certain health and safety rules and regulations will apply. 

UK - England and Wales UK - England and Wales

UK - England and Wales

Planning, construction and environmental laws may all apply. Depending on the use of the property, buyers may also need to consider fire safety and energy efficiency regulations, employment law and health and safety rules.

Part of the buyer's investigation will cover the site's planning history and, in particular, whether the buildings have been duly authorised and the current use of the property is permitted by law. There are also statutory regulations relating to building works, and buyers should verify that the property complies with these.

UK - Scotland

UK - Scotland

As part of the buyer's pre-contractual due diligence they will normally require the seller's lawyers to produce local authority searches and a planning/zoning history for the property. This will include confirmation that:

  • the buildings erected on the property have been authorised under planning and building control regulations;
  • the current use of the property is permitted under law; and
  • there are no statutory notices affecting the property, for example in relation to repair or compulsory purchase.

In addition, depending on the use of the property, it may also be necessary to confirm compliance with further statutory regulations, for example compliance with fire safety requirements and other health and safety issues. It is the responsibility of the buyer to seek verification of these issues before the conclusion of the contract.

Ukraine

Ukraine

The following matters should be verified by the investor:

  • Zoning and town planning provisions: town planning documentation should be checked to establish whether the designated use of the land plot allows construction
  • Building permits and licences – the building must be compliant with the construction documentation and the construction works must have been carried out with the necessary prior authorizations (for example, a construction permit)
  • Permits and approvals from other authorities – all necessary approvals for the acquisition of a plot of land and the construction of buildings must be obtained
  • Encumbrances – any encumbrances registered in public registers for the property must be identified since, in certain cases, these (for example, a tax lien or mortgage) can make the legal acquisition of the asset impossible, and
  • Environmental restrictions and obligations

Acquisition of real estate forming a single integral property complex may require anti-monopoly clearance (in a form of consent of the Anti-Monopoly Committee of Ukraine)

United States

United States

Zoning, construction and environmental laws may all apply and should be investigated with the assistance of counsel. As part of its due diligence, the buyer will wish to confirm that the property is being used in compliance with any certificate of occupancy issued by the applicable local governmental authority and that the property is not subject to any notices of violation issued by any such authority.

Zimbabwe

Zimbabwe

  • Land Acquisition Act [Chapter 20.10]
  • Deeds Registries Act [Chapter 20.05]
  • Exchange Control Act [Chapter 22:05]
  • The Value Added Tax Act [Chapter 23:12]
  • Zimbabwe Investment and Development Agency Act [Chapter 14:37]