Brief analysis of the obligation to remit land or make investments based on urban planning documentation

22.07.2022

Brief analysis of the obligation to remit land or make investments based on urban planning documentation

I. Background

The development of any real estate project involves going through the stages required by Law no.50/1991 on the authorization of construction works under Law no. 50/1991 and at the same time of Law no. 350/2001 on the regional planning and urbanism.

However, many times, in order to authorize a real estate assembly, the public authority imposes conditions through General Urban Plan (PUG), Zonal Urban Plan (PUZ), or Detailed Urban Plan (PUD) documents.

These conditions may consist of various withdrawals from property boundaries, and green zone arrangements, or may concern the height regime and any other aspects necessary for the integrated development of the area from an urban point of view.

From our point of view, the conditions concerning the obligations of the beneficiaries of PUZ or PUD to develop roads, parks, or to develop pre-school and school education units, etc. their disposal free of charge in favor of the public authority are problematic.

In the following, we will make a brief analysis of the obligations imposed on the beneficiaries of investments to carry out the above-mentioned development works by means of planning documents.

 

II. Transfer of ownership to the public authority

Firstly, we emphasize that imposing the transfer of ownership of a property (land or construction) through urban planning documentation is certainly a way of acquiring the public property right.

Secondly, both the Romanian Constitution and the Civil Code expressly regulate the modalities of acquisition in the public domain.

The relevant legal texts are summarised below:

  • Art. 44 Romanian Constitution

(1) The right of ownership, as well as claims against the State, shall be guaranteed. The content and limits of these rights shall be determined by law.
(3) No one may be expropriated except for a cause of public utility, established by law, with just and prior compensation.

  • Art 858 Civil Code

Public ownership is the right of ownership belonging to the State or to an administrative-territorial unit over property that, by its nature or by the declaration of law, is of public use or interest, provided it is acquired in one of the ways provided for by law.

  • Art. 859 Civil Code

(1) The exclusive object of public ownership shall be the public interest riches of the subsoil, the airspace, the waters of national interest, the beaches, the territorial sea, the natural resources of the economic zone and the continental shelf, and other goods established by an organic law.

(2) Other property belonging to the State or to administrative-territorial units shall form part of their public or private domain, as the case may be, but only if it has been acquired in one of the ways provided for by law.

  • Art. 863 Civil Code

Public ownership is acquired:

a) by public procurement, carried out under the conditions of the law;

b) by expropriation for public utility, under the conditions of the law;

(c) by gift or bequest, accepted in accordance with the law, if the property, by its nature or by the will of the disposer, becomes of public use or interest;

(d) by agreement for valuable consideration, if the property, by its nature or by the will of the acquirer, becomes of public use or interest;

(e) by transferring an asset from the State's private domain to its public domain or from the private domain of an administrative-territorial unit to its public domain, in accordance with the law;

f) by other means established by law.

Furthermore, Law No 255/2010 on expropriation for public utility, necessary for the realization of objectives of national, county and local interest expressly regulates the legal framework for taking measures for the execution of works by the public authority.

In the same sense are also the provisions of Law no. 33/1994 on expropriation for public utility, republished. According to the aforementioned law, the expropriation of immovable property, in whole or in part, may only be carried out for reasons of public utility, after prior and just compensation, by court decision (Article 1 of Law No 33/1994).

We point out that the national legal provisions on the way public property is acquired are in line with the provisions of Article 1 of the First Additional Protocol to the Convention for the Protection of Human Rights and Fundamental Freedoms.

 

III. Legality of the measure to transfer the land to the public authority or to carry out development works.

Although the way in which public ownership is acquired and works on objectives of national or local interest are carried out are expressly and restrictively regulated by national legislation, as indicated in section 2 of this analysis, in practice, public authorities require the transfer of land or parts of land, including through urban planning documents.

For example, the PUZ has made the acceptance of certain authorized works conditional on the free surrender of ownership of a portion of land for the construction of a road network.

Other times, also through the PUZ, the authorization of the construction works has been made conditional on the construction and improvement of a road by the beneficiary of the investment and its free transfer to the public authority. Similar conditions were imposed on the construction of crèches and nurseries by the beneficiaries of the investment and their transfer free of charge to the public authority.

From our point of view, administrative acts in the field of urban planning such as PUG, PUZ and PUD, regardless of the way of adoption and the urban planning projections contained therein, cannot constitute legal instruments that operate the transfer of property from the private to the public sphere. This aspect derives from the legal function of these administrative acts, which, according to Law 350/2001, constitute proposals of a directorial nature and operational regulations (Article 39) on spatial planning.

However, the imposition, by means of planning documents, of the transfer of a building free of charge in order to authorize construction work or the construction of objectives at the expense of the beneficiary of the investment, which are subsequently transferred to the public authority free of charge, constitutes, in practice, expropriation, but without following the procedure for the declaration of public utility and the payment of compensation.

In short, the above-mentioned conditions constitute in practice a de facto expropriation, or, at least, create the premises for a de facto expropriation, which may subsequently take the form of free-of-charge agreements between the public authority and the beneficiary of the investment.

More precisely, in the hypotheses presented above, there is a conflict between private property rights and the public interest, with the consequence that the private property is transferred to the public domain and the beneficiary of the investment is "forced" to transfer his property by means not provided for by law.

Although the conditions for the transfer of land or investments to be transferred free of charge to the public authority are imposed by the urban planning documents, we point out that the competent authorities do not have any powers regarding the transfer of ownership under Law 350/2001.

Moreover, such powers are not conferred either by the General Town Planning Regulations or the Methodological Norms on the financing of the elaboration and/or updating of the general town planning plans of localities and local town planning regulations approved by H.G. no. 525/1996 or by the Guide on the methodology for the elaboration and content - framework of the General Town Planning Plan approved by MLPAT Order no. 13N/1999.

It follows that the public authority does not have any power to impose the transfer of ownership of the real estate in land development and urbanization activity. Also, the only legal ways of acquiring public ownership are those regulated by Article 863 of the Civil Code.

 

IV. Case law of national and European courts

With regard to the free transfer of private property rights to the public domain on the basis of urban planning documents, the practice of national courts[1] has held that according to Article 3 of Law No 213/1998, the public domain includes the assets referred to in Article 35 of the Constitution, those referred to in the annex to Law No 213/1998 and any other assets which by law or by their nature are of public use or interest and have been acquired by the State or territorial administrative units in the manner provided for by law. In this regard, it was held that the provisions of Articles 1 and 2 of Law No 33/1994 provide that property may be expropriated from natural and legal persons only for reasons of public utility, after fair and prior compensation, and that this public utility is declared for works of local interest by a decision of the County Council which must be based on a prior investigation.

Further, the court concluded that the right of ownership can only be acquired by the TAU through one of the legal means of acquiring public property rights and that it cannot be acquired only on the basis of an urban planning document such as the PUG.

We consider that the national court's view set out above is in line with the interpretation conferred by the ECHR on the protection of the right to private property in relation to the de facto expropriation of privately-owned property.

More specifically, in Vergu v. Romania, the European Court found that there had been an interference with the applicant's right concerning his property and established that in order to be compatible with Article 1 Protocol No. 1 of the E.D.O. Convention, such interference must be carried out in the public interest and under the conditions laid down by law and general principles of law.

Similarly, the European Court of Human Rights emphasized in Sporrong and Lonnroth v. Sweden and Antares Transport S.A. and Transroby SRL v. Romania that both the interference with respect for property and abstention from action must strike a fair balance between the requirements of the general interest of the community and the imperatives of protecting the fundamental rights of the individual. In particular, there must be a reasonable relationship of proportionality between the means used and the aim pursued by any measure depriving a person of his property, and the court must ascertain whether, by reason of the State's action or inaction, the person in question has had to bear a disproportionate and excessive burden.

As a consequence, even if the public authority considers it appropriate to carry out objectives of local interest (road networks, parks, kindergartens, etc.), it must follow the expropriation procedure or proceed to acquire private property in the variants required by Article 863 of the Civil Code. However, simply imposing a condition to this effect on the beneficiaries of the investment by means of planning documents does not constitute the acquisition of ownership in a lawful manner, regardless of the public interest pursued.

 

V. Conclusions

From the brief analysis carried out in this presentation, it appears that the conditions imposed by the PUG, PUZ or PUD on the beneficiaries of investments, in the sense of transferring real estate free of charge in order to authorize construction works, have no legal basis.

We emphasize that, to the extent that the public authorities consider it necessary to build roads, parks, kindergartens, etc. to serve the real estate projects requested to be authorized, there is the possibility of imposing the realization of these objectives while preserving the right of private ownership in favor of the beneficiaries of the investment.  Subsequently, in the event that the public utility of these assets is assessed, private property may be expropriated under the terms of Law No 33/1994.

However, the imposition by the public authority of conditions that would foreshadow a mechanism requiring the holder to relinquish his right in order to exercise the attributes of the right of ownership constitutes an interference with private property.

In this situation, we consider that such regulations, such as those analyzed herein, imposed by the urban planning documents, can be censured by the courts under Law no. 554/2004 on administrative litigation.

 

MAXIM/ Associates

Av. Talida Ardelean

27.07.2022

 

 


[1] Ruling no. 590/2019 delivered by the Sibiu Court, Second Civil, Administrative and Tax Division

 
SHARE VIA
Subscribe to Newsletter

Subscribe