Clients often approach us asking to check whether the property they have decided to purchase has ownership issues. Our experience, however, shows that this question is not the only one that must be examined when assisting with property acquisition. Below we share several additional aspects that we advise every buyer to check:
Encumbrances on the property
It is very rare for property sellers to lack an ownership document, but quite often such property is subject to mortgages, attachments, pledges, or is involved in legal disputes. Each of these, as well as many other encumbrances, can create obstacles to exercising the acquired rights. The property may be sold at a public auction for third-party debts despite the buyer’s rights. It may turn out that the concluded deal is not enforceable against someone and that the transfer of rights did not produce a legal effect with respect to them. There may be tenants in the property whom the buyer is not informed about, or technical infrastructure facilities—such as power lines, water, or sewage systems—may run through it.
Each of these problems can be anticipated and addressed in the concluded contracts to limit the risks of acquiring a property that cannot actually be used. This is exactly why legal assistance during property acquisition must include an analysis of the encumbrances and the related risks.
Construction documentation
Many of our clients choose to invest in acquiring properties at different stages of construction—“off-plan,” “shell stage,” or fully completed and commissioned. Acquiring a property at any of these stages carries risks beyond those related to ownership or third-party rights.
A high percentage of buyers prefer to acquire a property at an earlier stage of construction, driven by the lower price. In these cases, it is very important for the legal support during the transaction to pay attention to the available construction documentation and address risks related to the property’s commissioning. It is even advisable that the documentation be reviewed by a qualified professional—an architect or surveyor.
This analysis is important, as it can prevent entering into a contract for a property that constitutes illegal construction and is subject to demolition. It also forms the basis for the agreements and guarantees that the builder or investor should provide regarding the commissioning and condition of the property upon and after its delivery.
Illegal construction and improperly executed building works are often the reasons for problematic or completely absent connections to the power, water, or sewage networks. There are frequent cases where non-commissioned buildings are inhabited but use so-called “industrial electricity.”
Every buyer invests in real estate in order to use it personally or gain benefit from it by renting it out or reselling it. The problems described above pose a serious obstacle to achieving these goals and decrease the value of the acquired property. That is why we advise all buyers to pay attention to the construction documentation of the properties they acquire and, if there is even the slightest doubt about inconsistencies, to consult an architect or surveyor.
Zoning of the property
The question of zoning most often arises when acquiring undeveloped land with the intention of carrying out an investment project within its boundaries. The most important question for legal support in this case is what the investor intends to build on the property. The answer determines the direction of the legal analysis, and the result is useful both for assessing the feasibility of the investment idea and the cost of the necessary preparatory steps.
The real estate market is flooded with properties offered at “attractive prices,” located near major roads. These features often attract the attention of buyers with available capital. The low price prompts them to rush the deal without checking whether their goals can realistically be achieved.
In recent years, our clients often sought our assistance with procedures for constructing homes, offices, or warehouses on agricultural land acquired without any preliminary research.
In one case, it turned out that the property was located in a zone designated for greening according to the municipality’s current general development plan and was included in a Natura 2000 protected area. These property issues existed at the time of acquisition, and the buyer would not have purchased it had they known. The investor failed to realize the intended construction of a multi-story residential building.
In another similar case, our client acquired multiple agricultural lands that were located close to each other. When attempting to consolidate them into one property and zone them for a specific type of construction, it turned out that some of the plots were not adjacent to the others and lacked transport access. Upon analyzing data about the available infrastructure, we found that there were no nearby facilities for electricity transmission and distribution networks to connect future buildings. Moreover, although their designation had not been changed, the agricultural lands were zoned for public development. All these issues required considerable investment to arrange transport access, amend the applicable zoning regulations, and build the necessary technical infrastructure to provide power supply to future buildings.
The list of obstacles that arise when acquiring a property for development without analyzing the zoning plans for it is endless. Often, in addition to legal support, technical assistance is required to interpret and correlate the different regulations. However, preliminary analysis is useful both for assessing whether the acquisition makes sense and for planning the expenses for realizing the investment intention.
Acquiring real estate is a complex process that requires careful analysis of various aspects—from the ownership of the rights being acquired, to the presence of third-party rights, construction issues, and development possibilities. Often, purely legal support is not enough, and technical issues must also be examined to determine whether the buyer is acquiring a property that will serve their needs and goals.
The acquisition of real estate is a complex process that requires careful analysis of a wide range of issues – from the ownership of the rights being purchased and the existence of third-party claims, to the construction of the property and its development potential. Often, purely legal assistance is not sufficient, and it becomes necessary to examine technical aspects as well, in order to determine whether the buyer is acquiring a property that truly meets their needs and objectives. That is precisely the type of comprehensive service our team offers – combining experienced lawyers with technical experts such as surveyors and architects.
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