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PROPERTY LAW
Types of ownership
Freehold
Ownership
• Ownership right as an absolute right is enforceable against all
third parties and includes the right to use, possess, receive the
benefits of, and dispose of a property, subject only to lawful
rights of third parties.
• Any right in rem (including title, mortgage, lease and similar)
is binding as against third parties only if registered with the
Land Register (called “Land Book”). The person registered
with the Land Register as the owner of the real estate is
deemed to own the title to the real estate.
• Land Register is public and is accessible electronically. Land
Register recording is done by property units.
Co-ownership
• Co-ownership of the same unit of real estate by more than
one person is regulated by the law. Co-owners are deemed to
own the respective property in “ideal parts”. Each co-owner is
entitled to request actual division of property, if possible.
• Co-owners may enter into agreement on separated use of
parts of the varying jointly owned property and register the
separated use with the Land Register. The registered use
rights are binding upon any new owner of any part of the real
estate.
• Each co-owner has a right to separately mortgage its ideal
parts, but disposal (including construction) of the real estate
in its entirety requires consent of all the co-owners.
• The Law on Apartment Ownership distinguishes a separate
form of ownership – “apartment ownership” where each
owner of the condominium is deemed to own an apartment
and an ideal share of the multi-apartment building (and land,
where applicable). Concept of co-ownership is modified in
relation to the apartment ownerships and is less restrictive.
Volume
• The minimum area of the land plot which may be a separate
real property unit is prescribed by municipal zoning
regulations in each municipality and may vary depending on
the characteristics of the area and historic values.
Leasehold
Construction right of the tenant
• The Latvian law in general does not recognize a leasehold
ownership for this purpose. The legal system aims to treat
the buildings as improvements on the land and to limit the
historically formed separate ownership of land and buildings
situated on the land. Although a more restrictive regulation is
planned as of 2017, by way of exception, the tenant is entitled
to build and register the construction works (building) as a
separate property owned by the tenant for the duration of the
lease term if such right is agreed in the lease agreement, the
lease agreement is registered with the Land Register and the
term of the lease agreement is not less than 10 years.
Long-term lease registered with the Land Register
• The parties to the lease agreement possess high degree of
freedom to agree on the contractual terms of the lease.
• There is no requirement of minimum or maximum term of
the lease. The landlord and the tenant may agree to register
the lease agreement with the Land Register. If so registered,
the tenant is granted a right in rem. Lease rights may not
be mortgaged, however the claim rights under the lease
agreement may be pledged by way of registered movable
property pledge (in the Commercial Pledge Register).
• Registration of the lease with the Land Register requires a
written form lease agreement (in Latvian or accompanied by a
Latvian translation) and a notarized application in a statutory
form to register the respective lease.
Residential Lease
• A separate regulation exists on residential lease agreements.
This law to a large degree continues to serve a social function
and protects tenants with open-ended lease contracts against
termination, amendment or increase of the rent so far as the
tenant complies with the payments and material obligations.
The residential lease agreements are binding on the buyer
regardless of its registration with the Land Register.
Rights affecting ownership
Easement (servitude)
• Is a burden imposed upon a property, for the use and utility
benefitting another property which belongs to another owner
and has to be registered with the Land Register providing that
from the moment of the registration shall be deemed a right
in rem.
Mortgage
• Is a security encumbering the real estate, which entitles the
beneficiary to a preferential security right over other creditors
in the event of a forced sale of the relevant asset or insolvency
of the owner.
• Mortgage right is valid and enforceable against third parties
only if registered with the Land Register. Registration requires
filing of a notarized registration request in statutory form
accompanied by a written mortgage agreement;
• In addition to the mortgage itself it is customary to register
with the Land Register an accompanying prohibition on
the owner to sell, transfer, repeatedly mortgage, lease or
otherwise dispose with the property without prior written
consent of the mortgagee (without such prohibition the
property may be freely transferred as encumbered with the
mortgage).
• Mortgagee is entitled to expedite enforcement process
against the mortgaged property with a decision by a judge
unilaterally in a written process. However no concept
of lender’s pledge or a type of enforcement without the
involvement of the court exists in Latvian law.
Pre-emption right
• Can exist on statutory basis or may be contractually agreed.
Upon failure to comply with pre-emption right, the respective
infringed person (except municipality) has a right of redemption
(to buy out the property from acquirer within one year).
• An option is provided by law for the municipalities to
substitute themselves as an acquirer in a real estate transfer
for purposes of the general interest. This municipal option
does not apply to the transfer of ideal shares.
• Each co-owner of a jointly owned property (save for the
apartment ownership) has a right of pre-emption in case of
sale of the ideal shares of that property.
• An owner of land has pre-emptive right in case of sale of
buildings located on the land which are owned by another
person (and vice versa). Other specific pre-emptive rights
may be imbedded in particular laws.
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Investors Guide to Europe 2015