E-Journal: real estate related practice of the Supreme Court (March-April 2015)E-Journal: real estate related practice of the Supreme Court (March-April 2015)

This GLIKMAN ALVIN real estate and court practice related E-Journal introduces the following real estate related decisions of the Supreme Court from the period of March-April 2015:

1. About the zoning plan of Pirita TOP;
2. Changes in heating systems of an apartment building and making doorways to apartment building;
3. Payment of fee for tolerating an engineering structure;
4. Deciding on a transition from one heating system to another;
5. Reclaiming the repair money.

About the zoning plan of Pirita TOP

In court case no 3-3-1-71-14 the Supreme Court solved the complaint of MTÜ Pirita Selts for withdrawal of the zoning plan of Pirita TOP. The main claim of the complaint was the significant change in the living environment of the residents (privacy is not ensured any more, the level of congestion and noise shall increase, etc.) and the local authority has neither considered this fact at establishing the zoning plan nor reasoned the planning solution sufficiently.

Once again the principle was stressed that considering different interests is the task of the local authority and the court cannot do it for the local authority. In addition, it was explained that the significant part of the plan should be looked at as the main solution of the zoning plan, in carrying out which the complete functioning of the zone shall be secured. The Supreme Court did not consider determining the proportions of service land and residential land as changing the main solution of the zoning plan (the zoning plan prescribed building of 100% commercial function buildings or 90% residential land and 10% of commercial function buildings), as the general plan prescribed a mixed functions area around TOP, where non-residential buildings as well as trade and service companies, residential buildings, parks and parking lots would be located.

In present case, it is a so-called popular complaint (the complaint was filed by citizens’ association) and there the court emphasized once more that in such case hypothetical allegations cannot be presented on interference or violation of rights of specific persons and the local authority does not consider such allegations in its decision.

The court stressed that the Planning Act prescribes the minimum requirements of the planning proceeding and the local authority may always conduct more public discussions than the law prescribes.

The decision also explained that the zoning plan must be the basis for land usage and construction activity of the coming years and for that reason, the planning solutions should be very specific. Determination of alternative intended purpose of land-use in the zoning plan is not in coordination with good planning practice and it may be used only as an exception in case of justified need.

Changes in heating systems of an apartment building and making doorways to apartment

In court case no 3-2-1-155-14 the Supreme Court had to resolve the following matters:

can the apartment association and apartment owners claim the reconstruction of the heating system in the plan of the building,
do the apartment owners have right to make a doorway into their apartment without the consent of the co-owners.

The Supreme Court explained that at first it should be made sure if the resolving of this matter is in the competence of the apartment association or the agreement of co-owners is necessary for that. The Supreme Court stressed that the general meeting of members of the apartment association cannot decide matters where the agreement of all owners is necessary, by majority of votes.

In both cases it should be assessed whether the changes accompanied with the heating system and the doorway are significant changes. The consent of the co-owners is necessary when it is established that these changes are significant.

The Supreme Court found that the heating system of the building belongs to shared ownership of the co-owners. Therefore, the other co-owners are entitled to demand the restoration of the situation before changes in the heating system made without their consent.

The court also found that all walls being part of the building, external and internal walls, are in the shared ownership of co-owners, independent of the fact whether they are located in the real share of the apartment ownership or not. Therefore, in order to make a doorway into the wall in the real share of the apartment ownership, the consent of all co-owners is necessary, if it is a significant change.

The Supreme Court also stressed that the building permit grants a permit to make a doorway and building a door according to public law, but that does not replace the legitimate consent of co-owners.

In conclusion, the Supreme Court explained that if the apartment owner wishes to make a significant change in his/her apartment and needs the consent of other owners, the owner may claim the consent through court on a condition that the planned change does not violate the rights and interests of other co-owners.

Payment of fee for tolerating an engineering structure;

In court case no 3-2-1-87-14 the Supreme Court had to evaluate whether the land owner is entitled to claim a fee for tolerating an engineering structure on his/her property (from Elering AS in present case), incl. claim for annual fee and land tax, also compensation for maintenance costs.

The person in the named case had been paid a fee for year 2012, but it was much less than the sum the person claimed for. Elering AS did not agree to pay a bigger fee and reasoned it with the fact that the law does not regulate the amount of fee for tolerating an engineering structure.

Even though the Supreme Court did not solve the case conclusively, but sent it back to county court, it gave the following instructions to the court for the future. 

The lack of regulation of fee in the law does not mean that the owner of the engineering structure cannot be claimed for fee. The court can determine the toleration fee in the fair amount. The order of payment of the fee shall take place in civil court in a proceeding without action. The fact that the land tax and maintenance costs have not been paid yet, does not hinder their order of payment in the future.

The owner is entitled to receive a periodical fee for toleration from the owner of the engineering structure in part that does not enable himself/herself to use the immovable property and concerning which the owner is obliged to bear costs. On the evaluation of the Supreme Court it concerns land tax first and foremost, but also the expenses of maintaining the immovable property.

In addition to compensating the expenses, the owner of the immovable property must be paid additional compensation on court’s discretion either once or periodically.
In case the circumstances change, the change of the amount of fee can be claimed in the future, as well. In determining the fee for toleration, the intensity of toleration obligation must be considered which depends on the nature of the engineering structure, the scope of protected zone and restrictions arising from the protected zone, intended purpose of the land, its size and location (and other factors influencing the value of the property). Also other circumstances that would enable the owner to use the land more efficiently or in other way (e.g., rent, develop construction activities there, etc.).

In Supreme Court’s opinion, the fee for toleration for engineering structure on a land returned or privatized during the ownership reform can be less than fee on setting the servitude and compulsory possession, as the acquirer must have understood that the engineering structure on the immovable property may hinder the further usage of the land.
On the Supreme Court’s evaluation, the appropriate beginning point for determining additional compensation could be a compensation the state would pay to a person in case the land is not returned during the land reform. Depending on the intensity of the toleration obligation the compensation can be less than that.

Deciding on a transition from one heating system to another;

In court matter no 3-2-1-31-15 the Supreme Court had to come to a position in the matter whether the transition from one heating system to another can be decided by the apartment owners by the majority of votes or does it acquire the consent of all apartment owners.

The Supreme Court found that in case of transition from electrical heating to district heating, the consent of all apartment owners is not necessary, but this decision can be made by the apartment owners at the general meeting by majority of votes. The same goes to making a decision on taking a loan and increasing the repair fund related to transition from one heating system to another.

Still the Supreme Court found that the execution of the decision of the general meeting of the apartment association may on exceptional circumstances partially or completely contrary to the principle of good faith to the apartment owner who voted against the decision, for which reason the latter may refuse from executing the decision. If the apartment owner has voted against the decision and if it can be presumed that on economic or other reasons, the full recovery of costs cannot be expected from him/her, this apartment owner can be claimed for compensation of necessary costs.

Reclaiming the repair money

In court case no 3-2-1-12-15, the Supreme Court had to resolve the matter whether one apartment owner can reclaim the repair money paid to the head by the apartment owners when the authorization agreement concluded with the head has been cancelled.

The apartment owners had not formed an apartment association, but paid the repair money to the head elected at the general meeting of the apartment owners. At one point the head cancelled the contract. At the same time he didn’t have anyone to hand over the management and repaid fund money collected from the apartment owners.

One of the apartment owners claimed the returning of the money through court and the question under dispute was whether he can do it alone or must it be claimed jointly by all apartment owners.

The Supreme Court found that the claim can be submitted by one of the apartment owners if he/she has the consent of other apartment owners, but in a way that the money is returned to all apartment owners jointly.