Amendments to the Planning and Construction Act – The legislator finally got it right… or not

May 27, 2019

Amendments to the Planning and Construction Act – The legislator finally got it right… or not

May 27, 2019

Radovan Grbović

Radovan Grbović

Partner

Miloš Gledović

Miloš Gledović

Attorney-at-Law

On 30 April 2019 amendments to the Planning and Construction Act came into force. The amendments are mostly technical in its nature, aimed at overcoming practical difficulties investors encounter in course of permitting procedures. In addition, Serbian Chamber of Engineers has been reorganized. Provisions dealing with the land for regular use of buildings have been amended again, and they are as incomprehensive as ever. Yet, one amendment deserves to be highlighted as excellent indicator of what is so fundamentally wrong with the Serbian real estate laws. And this cannot be rectified by amendments to the Planning and Construction Act. Especially not by amendments to the Planning and Construction Act.

Permitting procedure in respect to certain type of buildings (industrial complex and certain energy and infrastructure facilities) has been amended, to enable that, as proof of having adequate rights to the land in a procedure of obtaining of a construction permit, an investor may provide statement that he will acquire adequate rights on the land before commencing construction works. If a construction permit is obtained based on such statement, before commencing the approved construction works, the investor must submit evidence to the construction authority that he has acquired adequate rights to the land. Why is Serbian legislator so obsessed with adequate rights on the land when it comes to issuing of construction permits? Why do construction authorities in Serbia refuse to issue construction permits if the land registry extract contains a marginal note on title dispute, unresolved application, or anything which clerk issuing building permits sees as suspicious, or does not understand? Why is that, that since recent amendments of the law related to cadastral procedures, existence of construction permit is registered in the real estate cadaster as a marginal note?

The reason is not that obvious. It seems that Serbian legislator started believing in misconception developed in practice that a construction permit vests some property rights into an entity to which it is issued i.e. that it somehow affects property rights the land. This misconception may partly come from the fact that in former Yugoslavia, when all construction land was in regime of socially owned (and later state-owned) property, a construction permit had huge practical importance in proving one’s title to a building. This influence is the reason why Croatian legislator felt the need to insert into Croatian Construction Act the odd provision stating that ‘construction permit does not affect property rights and does not entitle its holder to access the property’. In countries not burdened by communist past such provision is entirely unnecessary as no one with common sense could possibly think that it does. Nevertheless, even in communist Yugoslavia construction permits never had legal significance apparently attached to them in post-communist Serbia (as a document that vests some property rights into the person to whom it has been issued). But more likely is that this misconception is a consequence of the fact that Serbia is the only country in CEE that has not adopted comprehensive property rights legislation following the fall of the communism. All other ex-communist countries, including all the former Yugoslav republics (and both entities in Bosnia and Herzegovina), have done it a long time ago, which somehow makes sense, considering that one of the key differences between the communism and the capitalism lays in the way property rights are organized and protected. Serbia did abolish property rights system of the communist era, but instead of replacing it with a new comprehensive property rights legislation it left a giant legal loophole to be filled by legal practice. And legal practice likes to stick to concrete documents and cannot possibly develop abstract set of rules required for comprehensive property rights system. Even English legal practice could not do it and England had to adopt property laws contrary to their common law traditions. Therefore, the only way to really improve Serbian real estate laws and regulations is to pass comprehensive property law legislation, which is in the middle of any real estate regime, and thereafter adapt secondary laws, such as the Planning and Construction Act, the Real Estate Cadaster Act, the Housing and Maintenance of the Building Act etc. to it. These secondary pieces of legislation simply cannot shape comprehensive real estate legal regime.

This text is for informational purposes only and should not be considered legal advice. Should you require any additional information, feel free to contact us.

Contact:

Radovan Grbović , Partner
radovan.grbovic@sog.rs

Miloš Gledović, Attorney-at-Law
milos.gledovic@sog.rs

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