| Dear clients and cooperation partners,
On 4 December, the Sorainen Real Estate & Construction Sector Group held a business breakfast, when Sorainen specialists spoke about their vision of sector highlights from diverse viewpoints. This newsflash will provide the most significant legal issues raised during the business breakfast.
| Partner Lelde Laviņa, presented highlights of development property purchase. Lelde specified that separating project management (PrCo) and property holding (HoldCo) companies does not always achieve the intended legal purpose and that liability is separated from assets because the PrCo often operates as an attorney of the HoldCo. Likewise, Lelde reminded us that a servitude recorded in the Land Register as a note does not create a right in rem, in other words, in this case the servitude is not considered to be registered. Finally, upon purchasing property “as is”, it is significant to note what this principle refers to, in that it refers to the technical condition of the property, and because it is in the seller’s interests to decrease its liability for property defects it is important to indicate as much information as possible about the property to be sold. |
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Senior associate Dace Everte indicated that the term “construction land” in each EU Member State can signify something different because the precise definition has been left to the discretion of Member States. For example, in Latvia, construction land is land for which a construction permit has been obtained, whereas in Lithuania construction land is land with only an intention to construct there. Dace likewise noted new amendments to Value Added Tax (VAT) rules drafted with the aim of revoking the reverse VAT payment procedure for construction products, household appliances and household electronics starting from 1 January 2020, though for certain types of metalware and related services – already starting from 1 January 2019. Our tax team will keep you informed about the development of this draft law |
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| Senior associate, certified data protection officer Andis Burkevics reminded us about personal data sector news affecting practically everyone, including those working in immovable property and construction. Andis indicated that the Data State Inspectorate (DSI) seeks to follow the principle “consult first” to help businesses understand GDPR requirements. Thus, contrary to concerns that had been raised, the DSI cannot carry out dawn raids on companies; these visits must be arranged in advance. However, the DSI can impose a penalty, if the rights of data subjects (for example, cooperation partners, employees, customers) to obtain information about processing their personal data are violated. So companies should pay special attention to assuring data subjects’ rights to obtain information about processing of their personal data (for example, by appointing a person in charge of processing data subjects’ access requests). |
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Senior associate Marika Grunte spoke about outstanding issues in cases where the size of the transaction requires approval from the Competition Council (CC) to increase the acquirer’s assets and acquire a bigger market share. The most significant “outstanding” question: how to assess the effect on market share of an increase of assets that have not been used for more than a year. Likewise, Marika noted an ever-topical issue in lease agreements: to what extent can the lessor’s rights in a lease agreement be restricted as to leasing premises in a shopping centre to a lessee’s competitors (so-called “exclusivity clause”). Marika indicated that these issues need to be assessed on a case by case basis ‒ because each contracting party has a different position in the market and particular contracts have different provisions ‒ and also the length of the lease. Importantly, these provisions should not be automatically found invalid. |
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| Senior associate Jorens Jaunozols explained topical problematics in construction contracts. Jorens specified that the market widely uses “design & build” contracts to ensure one responsible person for the entire process, although a different specialist has developed part of the project in practice. Legally this structure does not pose any problems; namely, each person can under private law undertake liability for another person's work, and laws allow changing developers of construction projects after approval of a project, once notice has been received that all design conditions have been complied with. Additionally, Jorens indicated that “design & build” contracts should not forget about author supervision in cases when it is mandatory under regulatory enactments, which do not provide for an exemption from author supervision in “design & build” cases. Likewise, if the author supervisor changes, construction boards should not assess parties’ civil-law disputes and should accept the change of author supervisor in all cases when the new author supervisor is sufficiently qualified to perform the work. |
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» Inspect event materials here. |
