Right to Build: Legal Framework and Practical Guidelines

Introduction

The right to build, or “superficies,” is a property right that allows an individual to construct a building on someone else’s land and become its owner. This right plays a significant role in Bulgarian property law, particularly in urban development and construction. It is regulated by the Law on Ownership (LO) and other legislative acts, which define the conditions and procedures for its establishment, exercise, and termination.

Legal Framework

Key Legal Acts

1. Law on Ownership (LO):
   Governs the nature of the right to build, its creation, and termination.

2. Spatial Planning Act (SPA):
   Specifies construction and territorial planning requirements, including necessary permits.

3. Civil Procedure Code (CPC):
   Regulates legal actions for protecting rights related to the right to build.

Characteristics of the Right to Build

1. Independent Property Right:
   The holder of the right to build owns the constructed building independently of the land’s ownership.

2. Limited in Scope:
   The right is restricted to specific construction defined in the agreement or administrative act.

3. Transferable:
   The right can be transferred to third parties through a contract.

Establishing the Right to Build

Methods of Establishment

1. Contractual Agreement:

   • Most commonly, the right to build is established through a contract between the landowner and the person intending to build.
   • The contract must be notarized and registered in the Property Register.

2. Administrative Act:

   • State or municipal authorities may grant the right to build on public land.

3. Inheritance:

   • The right to build can be inherited if it has not been terminated by the time of the holder’s death.

Required Documents

1. Land Ownership Documents:

   • A notarial deed or other proof of land ownership.

2. Construction Project:

   • An approved architectural plan compliant with territorial planning regulations.

3. Notarial Deed for the Right to Build:

   • A formalized agreement between the parties, registered in the Property Register.

Rights and Obligations of the Parties

Holder of the Right to Build

Rights:

• To construct a building as per agreed terms and approved construction plans.
• To transfer the right to build to third parties.

Obligations:

• To commence construction within the agreed timeframe.
• To comply with the SPA and other regulations.

Landowner

Rights:

• To demand compliance with contractual terms.
• To acquire ownership of the building if the right is terminated due to non-compliance.

Obligations:

• To provide the land for exercising the right to build.

Termination of the Right to Build

1. Expiration of Term:

   • If the right is granted for a fixed period and that period elapses.

2. Non-Performance:

   • Failure to start or complete construction within the agreed timeframes.

3. Merger:

   • If the land and the building become owned by the same person.

Tax and Legal Aspects

Tax Obligations

1. Tax on the Right to Build:

   • A tax is due upon the establishment of the right to build, based on the property’s tax valuation.

2. Property Taxes:

   • The holder of the right to build pays property tax after the building’s completion.

Legal Risks

1. Ownership Disputes:

   • May arise if the right to build is not properly registered.

2. Non-Compliance with Obligations:

   • The landowner may terminate the right if the holder fails to fulfill contractual terms.

Practical Tips

1. Verify Land Ownership Status:

   • Ensure the land’s ownership and rights are clear and unencumbered.

2. Seek Legal Advice:

   • Professional legal assistance is essential for drafting contracts and registering the right.

3. Adhere to Construction Regulations:

   • Ensure the project complies with the SPA and local territorial plans.

Conclusion

The right to build is a vital legal tool that facilitates construction on third-party land under clearly defined terms. Adhering to legal requirements, proper establishment, and professional legal consultation are key to successfully exercising this right. When managed correctly, the right to build can be a valuable asset for both landowners and investors.

For assistance with implementing your investment plans, you can contact Legal Frame Law Firm, where our legal professionals are ready to guide you through the process.