24 | Investor Guide to Europe 2014
aCQuISITIon PRoCESS:
KEY STaGES
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negotiations
•
The negotiation phase of larger transactions may include
signing of a letter of intent by the parties. The letter of intent
may include a non-disclosure clause in order to allow access to
the property, information and documentation.
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Due diligence
•
The public electronic registers provide adequate information on
the immovables and applicable limitations established by real
right or by law. There is however some information that is not
publicly available (such as contractual obligations not entered in
the Land Register, certain limitations established by general or
detailed plan, limitations established for the protection of nests
of species of highest protection category etc.) that should be
verified separately.
•
The entries of the Land Register are public. The purchaser
may verify the real rights encumbering the immovable and
the real rights established for the purpose of enabling use of
the immovable (such as road servitudes). The public registers
provide adequate information on applicable limitations: nature
protection areas, limitation zones established by law (such as
building restriction areas on the shoreline of a water body,
limited management zones around roads, major utility lines) and
heritage conservation limitations. The larger municipalities hold
public registers with data on valid territorial plans and proce-
dures initiated planning procedures. The public Building Register
provides information on issued building permits and detailed
data on erected buildings.
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Preliminary contracts
•
The preliminary contracts must be concluded in the same
legal form as the principal contract. The preliminary contracts
concluded for transfer of an immovable or establishing real right
must be notarised. Therefore the preliminary contracts are not
common.
•
The transaction may be concluded in two phases. The parties
may conclude a notarised sales agreement of the immovable
and postpone concluding of the real right contract. In such case
the sales contract includes the conditions and time of signing
the real right contract. By concluding the real right contract the
ownership of immovable is transferred and entered in the Land
Register.
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Deed of sale
•
A
ccording to the deed of sale to the ownership of a property is
transferred from the seller to the buyer. The contract transfer-
ring ownership of an immovable or establishing a real right must
be notarised. The transfer of ownership of an immovable shall
be registered at the Land Registry and the relevant documents
are ordinarily passed to the registrar by the notary
LIMITaTIonS To aCQuISITIon of an
IMMovaBLE
•
The right of a foreign entity to acquire agricultural or forest land
are limited. A legal entity registered in the European Economic
Area or an OECD member state may acquire an immovable
consisting of more than 10 ha of forest or agricultural land,
if the legal entity has been engaged in forest management
or agriculture or has acquired a permission from the county
governor. A legal entity registered in a third country may acquire
an immovable consisting of more than 10 ha of forest or agri-
cultural land, if the entity has obtained a permission from the
county governor, the branch of the entity has been registered
in Estonia and the entity has been engaged in forest manage-
ment or agriculture for a year. A legal entity registered outside
the European Economic Area may not acquire an immovable
located in certain border areas specified by law, unless permitted
by the Government of the Republic. The above limitations do
not apply to acquiring shares of a legal entity who owns relevant
immovables.
CoMMERCIaL LEaSES
Leases of buildings used for commercial purposes are covered by
the Law of Obligations Act. The legal framework established by law
may in majority be negotiated by the parties and agreed otherwise.
The provisions of the commercial leases may be freely agreed
by the parties, such as the amount of rent (which can be fixed or
variable), the term of the contract (with or without a set term) and
the accessory charges. The commercial leases commonly regulate
the division of maintenance and repair obligations, improvements
and the removal or compensation of improvements after termina-
tion of the contract.
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Term and termination of the lease contract
•
The lease contract may be concluded for a set term or without a
set term. Unless agreed otherwise, a contract concluded without
a set termmay be terminated by both parties by a three-month
notice.
•
The contract may be terminated by both parties on the grounds
of good reason established by law (such as termination by the
lessee if the premises do not correspond to agreed conditions
and the lessor does not fulfil relevant obligations). The parties
may agree on more precise or different grounds for termination.
•
A notice of unilateral termination of lease contract of business
or residential premises must be submitted in writing. The notice
submitted by the lessor must include provisions set forth by law.
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Transfer of business
•
If the lessor is substituted as a result of transfer of ownership or
encumbering of the immovable, the new lessor of business pre-
mises may terminate the agreement if the new lessor urgently
needs the premises for own use. The lease contract may not
however be terminated on this ground if a notation of the lease
agreement has been entered in the Land Register.
