Building rights can last for up to 100 years – Draft civil code introduces important new features in construction

The building rights introduced by the draft civil code pertain to the right of fixed-term ownership of a building raised on land owned by another party, entailing a compensation to the owner of the parcel. This right can last for up to 100 years and can be inherited, sold or given during that time. The owner of building rights must build the agreed facility on the parcel, and the facility then becomes their property. However, after the 100-year period passes, the rights expire and the facility goes to the hands of the owner of the parcel, that is, the owner's successors.

– If you obtain a parcel for a period of 100 years to raise a building there, that building is yours for that time period, and you pay a fee for using the parcel. After 100 years, the building becomes property of the owner of the parcel. That is the essence of this right, which can benefit many – the poorer strata of populace, who can secure themselves a home this way without buying a parcel, as well as wealthy investors in large cities, especially central city zones, where it's hard to find a parcel up for sale. Investors can thereby get to such parcels and build luxurious, profitable facilities. The owners of these parcels, who are not able to built the facilities themselves, collect the fee by letting others use the land for construction – Dr Nina Planojevic, a civil rights professor at the Faculty of Law in Kragujevac, says for Politika.

She emphasizes that the regulation of these rights was one of the most difficult tasks of the government's commission for the preparation of the civil code, which correctly estimated that now is the right time to introduce this institution in the Serbian law.

The building rights are defined as inalienable and inheritable rights on a parcel owned by another party, which authorizes the carrier to use it for a certain period of time for construction, maintenance and exploitation of a permanent building, for which the carrier obtains ownership rights for the period matching the period of the validity of building rights, for which they pay a fee to the owner of the parcel. Upon expiration, the owner of the parcel also pays a fee to the carrier of the rights for the building raised, which becomes their property.

– We don't know yet what the building right will look like in practice, as it is a new thing for lawyers, public notaries and judges, who should become familiar with this institution in detail, in order to be able to solve concrete cases adequately. Dilemmas regarding the registration of these rights should also be solved – Dr Planojevic says.

The validity period can be shorter, with the law not proscribing the lower limit, so contracts can be signed for 20 or 30 years. In some states, this right is permanent.

The right doesn't pertain to agricultural land, only building parcels, which can be developed, but need to provide a possibility of raising another facility or extending or reconstructing an existing one. The law should also specify provisions on the extension of existing facilities and the construction of overground and underground facilities.

Pravni fakultet Kragujevac

Nina Planojević

building rights

building on parcels owned by other parties

civil code