Investor Guide to Europe 2014
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TYPES of oWnERSHIP
Î
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 Regis-
ter recording is done by property units.
Co-ownership
•
Co-ownership of the same unit of real estate by more than person
is regulated by the law. Co-owners are deemed to own the pro-
perty in “ideal parts”.
•
Co-owners may enter into agreement on separated use of various
parts of the jointly owned property and register the separated use
with 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 enti-
rety 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 is prescribed by municipal
zoning regulations in each municipality and may vary depending
on the characteristics of the area and historic values.
Î
Leasehold
Construction Right of the Tenant
•
The Latvian law in general does not recognize a leasehold
ownership for this purpose. Although for historic reasons there
may exist separate ownership of land and buildings, the legal sys-
tem aims to treat the buildings as improvements on the land and
to limit the future separation of ownership of land and buildings
situated on the land. However, 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 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 free-
dom 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, howe-
ver 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 lease.
Residential Lease
•
There exists a separate statute and regulation 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 obliga-
tions. The residential lease agreements are binding on the buyer
regardless of its registration with the Land Register.
RIGHTS affECTInG oWnERSHIP
Î
Easement
(servitude)
•
Is a burden imposed upon a property, for the use and utility bene-
fitting another property which belongs to another owner.
•
Has to be registered with the Land Register and from the moment
of the registration shall be deemed a right
in rem.
Î
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 an
type of enforcement without the involvement of the court exists
in Latvian law.
Î
Pre-emption right
•
Can exist on statutory basis or may be contractually agreed.
•
An option is provided by law for municipalities to substitute
themselves as 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 apart-
ment ownership) has a right of pre-emption in case of sale of the
ideal shares of that property.
PRoPERTY LaW
