The legislation that lays down restrictions on dealing with real estate, and the compensation provided for them, is neither complete nor coherent. It is fragmented, has not been harmonised across all the sectors involved and, in many cases, even shows a lack of consistency in determining compensation and a failure to observe proportionality when setting the criteria for restrictions. This is revealed by the study “Mapping of encumbrances on real estate and compensation”, carried out at the request of the Ombudsman. The Ombudsman expects a clear vision from the Cabinet of Ministers on putting the field in order by 6 July this year.
What do property rights mean and how may they be restricted?
Ownership rights over an object or a piece of real estate mean that the owner may deal with it freely, at their own discretion. These rights are not absolute, however, and in practice are always subject to certain restrictions. Human rights standards permit restrictions, and in certain cases recognise them as necessary, provided they are imposed for a legitimate aim, are proportionate and come with fair compensation. An important nuance: they will not be proportionate if they restrict a person, or people, more than society benefits from them. Every situation must also be assessed individually and in detail, which is why the seriousness of a restriction on property rights cannot be judged in the abstract.
Which cases can be regarded as restricting property rights? For example, cases in which the state has begun construction work to build a road on property belonging to a resident, denying the owner access to their own property, or where such work has begun without a formal expropriation procedure. Also cases in which real estate belonging to a resident is designated as a specially protected nature territory, or is made subject to a protection zone that others may use. Restrictions on particular ways of dealing with real estate, on the other hand – for instance restrictions on construction, or the use restrictions set out in spatial planning documents – are to be regarded as measures to control property rather than to restrict it.
The most significant problems
The study was carried out at the Ombudsman's request by SIA “Zvērinātu advokātu birojs Šķiņķis Pētersons”, in order to identify the encumbrances on real estate laid down in legislation and to assess the compensating mechanisms from the point of view of fairness, legal equality and the legal system as a whole.
The study identified a number of problems in the rules that set restrictions on dealing with real estate and the compensating mechanisms provided for them. One of the main reasons is that legislation in this field has generally been drafted in a fragmented way (harmonised with other rules only within the sector concerned), in response to individual problem cases or objections from a particular sector, and under constrained budgetary conditions.
The study drew attention to the absence of any regulation of the “de facto” (actual) expropriation of property, to the proportionality of restrictions and the need for individualised assessment, to the lack of consistency in determining compensation and its amounts, and to the accessibility of information systems and state registers and the need to make them more efficient.
Homework for the government
The Ombudsman calls on the Cabinet of Ministers to set out a clear vision by the beginning of July for putting the legislation in order.
In the Ombudsman's view, amendments to the law [1] should be drafted and put before the Saeima for adoption, laying down a procedure for expropriating real estate where the restrictions imposed on its use amount to expropriation “de facto”. Such rules should give the owner of the real estate the right to demand expropriation in return for fair compensation, and should allow an individual assessment to be made in each particular case – for example, to establish whether the restrictions imposed on a piece of real estate are such that the property is to be regarded as having been expropriated in practice.
Legislation needs to be drafted and introduced setting out a clear procedure for paying compensation to the owner of real estate. A comprehensive comparative analysis must also be carried out of those regulatory acts that already provide for compensation (for restrictions on property rights), identifying cases in which the amount of compensation is not fair, does not comply with the principle of legal equality, or reveals other shortcomings.
As regards properties that may be affected by the state's military needs, rules [2] need to be drawn up and introduced on restrictions within and near military training areas, as well as on compensating mechanisms for those owners whose real estate lies within the protection zone around national defence facilities.
It is no less important to continue work on making information systems and registers accessible, so that every resident can obtain up-to-date information as efficiently as possible about the use restrictions imposed on a particular piece of real estate.
[1] In the Law on the Expropriation of Immovable Property Required for Public Needs (or in another regulatory act)
[2] In the National Armed Forces Law