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Zoning requirements
• The permitted and intended use of a land plot is subject to
municipal zoning regulations, which may reserve certain
parts of the land for future infrastructure development plans.
Such “reserved territories” are not always identified in the
records of the Land Register or the plans of the land plot.
Careful examination of the territorial planning documents is
especially advisable in case of acquisition of development
properties/projects.
ACQUISITION PROCESS:
KEY STAGES
• Private individuals and legal entities of the EU Member States,
European Economic Area States and the Swiss Confederation
may acquire real estate in ownership under the same
conditions as Latvian citizens and Latvian registered legal
entities.
• Foreigners from non-EU countries are prohibited to acquire:
–– urban land: land in state frontier areas, protected coastal
areas of the Baltic Sea and Riga Bay, and other public
bodies of water; agricultural and forest land; . Foreigners
from non-EU countries wishing to acquire urban land
(other than the restricted territories specified above) need
to report the acquisition documents and intended use of
the property to the respective municipality and receive its
permission to acquire such property;
–– rural land: land in state frontier areas, nature reserves,
agricultural and forest land, protected coastal areas of the
Baltic Sea and Riga Bay, and other public bodies of water,
mineral deposits of national importance.
• In relation to agricultural land, new restrictions on acquisition
and use have been imposed recently, regardless of the
nationality of the purchaser. One private individual or
legal entity is able to acquire ownership of up to 2,000
ha of agricultural land (or less if such determined by local
municipality) and such land has to be used for agricultural
purposes. Also other specific rules apply.
• Note:
Foreigners (non-EU) are allowed to acquire shares in
a company which owns real estate in Latvia. However, there
are certain restrictions on the companies themselves in
connection with making new acquisition of land in Latvia.
Negotiations
• This stage is not regulated by law, but rather based on a
customary practice.
• As a preliminary step, in relation to commercial property
a confidentiality and non-disclosure agreement is usually
proposed by the seller/agents in order to allow access to the
property, information and documentation.
• Exclusivity period can be agreed during which the due
diligence exercise is carried-out and at the expiry of which the
would-be purchaser is expected to provide an offer or confirm
its initial indicative offer.
Preliminary contracts
• Preliminary contracts are common in Latvia, but are not
statutorily required. Preliminary contract is a conditional
agreement aimed at conclusion of the purchase agreement in
the future.
• Parties are free to choose the extent of regulation in the
preliminary contracts, however, more detailed provisions
ensure higher certainty and less negotiation in the stage of the
final purchase agreement.
• Preliminary contract commonly provides for contractual
penalties if the other party refuses to conclude the purchase
agreement for unjustified reasons.
• Liability of a party for failure to comply with the preliminary
contract may arise not for the failure to deliver the property or
for failure to pay the purchase price, but rather for the failure
to conclude the final purchase agreement.
• As a specific form of preliminary contract the law provide for
a down payment agreement, although also the preliminary
contract may include provisions on paying in advance a small
portion of the purchase price in order to reserve the deal.
• It is not customary to structure the preliminary contracts as
call option arrangements, however the parties may freely
choose to structure their relations this way.
Agreement of purchase and sale
• Only real estate registered with the Land Register can be sold
and transferred, and only by its registered owner.
• There is no statutory requirement that the purchase
agreement itself should be notarized. Nevertheless, the
parties must execute a notarized registration application to
the Land Register in a statutorily designated form.
• Usually there is no re-negotiation of the terms and conditions
of the sale which have been agreed at the stage of the
preliminary contracts, except if subject to due diligence
findings.
• Transfer of ownership must be registered with the Land
Register. Land Register is required to record transfer of
ownership within 10 days from the receipt of all appropriate
documentation.
• By law, the seller is liable for the defects that the seller has
concealed or not disclosed in bad faith, and for the lack
of qualities of the property that the seller has expressly
warrantied. In case of breach of warranty, the buyer has a
claim for either: (i) annulment of the purchase agreement
which expires in 6 months from the date of purchase; or (ii)
reduction of the purchase price which expires in one year
from the date of purchase.
• Unless agreed otherwise, all risk in relation to the property is
transferred to the buyer as of the moment of the purchase.
Off-plan sales
• No such specific type of agreement or legal relationship is
regulated under Latvian law, however, the land together with
design documentation and/or construction works can be sold
at any stage, including by retaining the obligation to perform
and finalize the construction works. The parties are free
to agree on the terms, conditions and transfer of risks that
regulate their legal relationship.
COMMERCIAL LEASES
• There is no special regulation or codification of provisions
applicable to commercial leases. Lease agreements can
be entered into in a freely chosen form at the discretion of
the contracting parties. Sub-leases require consent of the
landlord.
64 Investors Guide to Europe 2015