Imagine receiving a letter that your real estate located in Bulgaria will, in fact, “change” its location within the neighborhood. This can come up as a shock to any international investor in Bulgaria. Such companies might wish to finance certain entrepreneurial construction activity in Bulgaria, and therefore, acquire one or more plots of land. This sort of legal conundrum is indeed possible in Bulgaria and this article will look into its intricacies.
Thus, the main purpose of this article is to acquaint you with the legal nature of development plans under Art. 16 of the Bulgarian Spatial Development Act, hereinafter referred to as SPA. In order to be able to rationalize this process, it is necessary to familiarize ourselves generally with the historical background of this legal phenomenon.
Collectivization in Bulgaria was a campaign in the years 1944 to 1959, led by the totalitarian communist regime in Bulgaria to seize agricultural property from individuals and hand it over to state-controlled Labor Cooperative Farms. After the fall of the communist regime in Bulgaria, numerous restitution laws were adopted, which regulated the restoration of the property of the successors of these individuals, whose properties were expropriated. In the process of restitution, it became clear that not all properties could be restored within their actual boundaries. Therefore, a need for a legislative solution arose to prevent “overlapping” on properties or other violations of property rights of the owners to whom land properties have been restored. Art. 16 of SPA seeks to provide the solution in question.
The detailed development plan under Art. 16 of SPA is relevant to territories with unregulated land properties, as well as to territories with unapplied first regulation according to a previous development plan. The plans under Art. 16 SPA are considered implemented in relation to the regulation with the entry into force of the administrative act upon its approval. The legal effect of the plan occurs as of the date of its entry into force - from this date, the ownership is transformed, with the municipality/state acquiring the right of ownership over the parts of properties intended for public ownership and private entities acquiring the right of ownership over the regulated land properties. The plan under Art. 16 excludes the conduct of a special expropriation procedure under SPA, respectively. For the acquisition of ownership of each regulated land plot, the mayor of the municipality issues an order with a precise individualization of the property. The order for the individualization of the newly formed regulated land plot has the legal effect of a title of ownership that is subject to entry into the property register. In the presence of an effective detailed development plan under Art. 16 of SPA, which has an immediate rem-legal alienation effect and transforms the right of ownership, persons cannot legitimize themselves as owners without an individualization order. The area of the newly formed regulated properties, their specific designation, the character, and the method of their development are determined by the detailed development plan itself.
Practically, the municipality determines an “equivalent” regulated property, taking into consideration the location of the properties in the locality but not their exact boundaries. When the property falls into different development zones, the newly formed regulated plot is provided in the zone in which it had its predominant location. The regulated properties have a market value not less than the market value of the properties before their regulation, which is secured by a decision of a specially assigned commission. The decision of the commission is served to the interested persons together with the draft for a detailed development plan and can be appealed in the proceedings for the appeal of the act for approval of the detailed development plan.
Upon explicit request by the owners, landed properties owned by the same persons may be united into one newly formed regulated property, as well as one plot may be divided into two or more newly formed regulated plots. A co-owned regulated property may be formed for two or more landed properties owned by different persons, based on a common application of the owners with notarized signatures, which determines the ideal shares of the co-owners, which are specified in the order. The municipality administration drafts an official detailed development plan for the neighborhood (locality). Property owners are obliged to transfer no more than 25% of the area of their plots to the municipality for the construction of social infrastructure objects - landscaping, streets, and technical infrastructure networks for the benefit of the community. New regulated properties are created. For their acquisition, the mayor of the municipality issues an order with exact individualization of the property. When there is no first regulation applied to the territories, a street regulation plan can be created to appoint the location of streets.
A copy of the effective plan is provided to the Agency for Geodesy, Cartography, and Cadastre - for ex officio entry the cadastre. Practically, the municipalities seldom register the new plots in the Property Register ex officio, mainly due to workload, and thus, it is in the owners’ best interest to do so themselves. Any encumbrances, imposed on the properties before this procedure are completely transferred to the newly created regulated plots ex lege. The approved cadastral map has only a certifying (declarative) and not a constitutive effect. It does not create, amend or terminate rights and obligations.
The advantage of the plans Art. 16 SPA is that the municipality officially brings the plots into regulation and thus increases their market value. There are some disadvantages, however, for example:
- Practical inability to provide the necessary infrastructure using the reduction with 25% of the areas;
- occurrence of a conflict of interest with the neighbors;
- for some territories, more than one applied regulation occurs;
- if the owners object to the plan, as is their administrative right, of course, it may not take effect for years.
In conclusion, we can summarize that the main purpose of Art. 16 of SPA is to legalize the “exchange” of properties between the owners and the municipality, but not in the form of expropriation. Thus, the municipality acquires the necessary area for public benefit by the lawful reduction of the area of private properties, while the owners obtain stability and security regarding undisturbed use of their property.
By Ivelina Atanasova, Head of Real Estate & Construction, and Olga Shopova, Associate, PONTES