Acquisition of Commercial Real Estate- Part III – LITHUANIA
Aliant Guide on Acquisiton of Commercial Real Estate was created by Aliant’s Real Estate Practice Group, where our experienced and well established lawyers from France, Italy, Finland, Cyprus, and Lithuania have answered some fundamental and up-to-date questions on how to acquire commercial real estate in their jurisdictions. If you are interested in Commercial Real Estate in any of the beforementioned countries please follow this five part series.
1). Are there any restrictions under your country’s legal system with regards to ownership when acquiring a commercial real estate?
The legal acts of the Republic of Lithuania provide a certain restrictions for foreign legal entities and natural persons related to the acquisition of land (including commercial real estate). In Lithuania, land, inland waters and forests may be acquired by those foreign legal entities and natural persons who meet Lithuania’s European and transatlantic integration criteria, i. y. a foreign state whose legal entities or natural persons wishes to acquire land, inland waters and forests in Lithuania does not belong to political, military, economic or other state unions or alliances established on the basis of the former Soviet Socialist Republics and is at least one of these unions, agreements or organizations – member of the North Atlantic Treaty Organization (NATO), member of the Agreement on the European Economic Area, member of the Organization for Economic Co-operation and Development.
2). Please describe in a few steps the prosses of transfer of commercial real estate in your country with particular focus to the transfer of the ownership or the title to the buyer?
The Commercial real estate purchase and sale agreement must be in notarial form. Disregarding the mandatory requirement for a notarial from invalidates the agreement. Therefore, in order for the commercial real estate purchase and sale agreement to be considered concluded, it must be signed in a notarial form.
In order to conclude a notarial contract, the seller must submit documents proving the right of the ownership (an excerpt from the Registry Center or the sale-purchase agreement that proves the acquisition of the ownership). In addition, the seller has to provide real estate cadaster file and an energy performance certificate, if the building area exceeds 500 sq. m. If the parties of the transaction are legal entities, the founding documents of the legal entities and, if necessary, the decisions / consents of the management bodies of the legal entity for the conclusion of the sale and purchase agreement must be submitted.
The moment of transfer of the ownership and the moment of signing the contract may differ. It is considered that the ownership right to the real estate property passes to the buyer from the moment of the transfer of the property. Normally, in practice, the transfer of real estate property is formalized by the Deed of transfer-acceptance. Therefore, it is the moment of signing the Deed of transfer-acceptance of the real estate property that is considered as the moment of acquisition of the right of the ownership.
3). Is expropriation of commercial real estate possible under your country’s legal system?
In exceptional cases provided by Lithuanian law, real estate may be expropriated for the needs of the society. In such cases, the owner of the property must be fairly remunerated for the expropriation of the property: in accordance with the procedure established by law and at market prices.
4). Under your country’s legal system is there a duty of disclosure for a seller to the buyer in commercial real estate acquisition, if so, please illustrate what matters must be disclosed by a seller?
The seller must disclose the information known to him, which is essential for concluding the contract and ensure the quality of the property. It is important that the seller acts in good faith in carrying out this duty, i. y. discloses to the buyer information available about the property that may be relevant to the conclusion of the contract. The seller must inform the buyer, whether the right to use, dispose of the property is restricted, whether there are arrears for the property and other services, whether there are any legal disputes regarding the property and the condition of it. The case law also states that in concluding each transaction, the acquirer of the property has an interest in not having issues with the acquired property, seeks to protect himself, therefore, the disclosure of essential information is a necessary duty of the seller. Failure to disclose such information shall be considered a breach of the seller’s obligation to disclose material information for the conclusion of the transaction.
5). Please describe what liabilities exist for a buyer (in addition to paying the purchase price) in commercial real estate acquisition under your country’s legal system.
Other liabilities for a buyer apart from paying the purchase price are covering the costs of concluding a real estate purchase-sale contract, except if the parties agree otherwise, and costs of accepting a property and signing the Deed of transfer-acceptance.
Please follow these series for Part IV where we will discuss key aspects on acquisition of commercial real estate in Cyprus.