When a building permit is not enough: the legal risk of buying a property with a future building

In real estate transactions, failing to settle clearly the ownership of a future building can create a serious legal risk, even years after the land was bought.

A client asked me to draft a contract for the sale of a property. While discussing the case, a question arose that deserves particular attention: can the buyer of a plot of land face a dispute over the ownership of a building constructed after the purchase, when the building permit was issued to the previous owner?

The case

The owner of a plot of land held a building permit for a holiday house. He later sold the property to a third party.

The notarial deed stated that the subject of the transaction was the plot of land with its present and future improvements and accessions under Art. 92 of the Property Act. It did not expressly deal with the right to build the planned building.

Two years after the purchase, the new owner built the holiday house and obtained a certificate of occupancy for it.

At first glance, everything seemed to have ended well.

But when a later sale was being prepared, an important legal question arose: could the previous owner dispute the ownership of the building, arguing that the building permit had been issued in his name?

Why does this question matter?

In real estate transactions, a distinction must be made between the ownership of the land, the right to build, and the administrative acts relating to the construction of the building and its commissioning.

A building permit is not in itself a title document. Likewise, a certificate of occupancy confirms circumstances relating to the lawful use of the building, but does not automatically settle every possible dispute about who owns it.

The rule in Art. 92 of the Property Act, under which the owner of the land also owns the buildings on it unless otherwise established, is also relevant.

That is why, in a case like this, it is not enough to review only the notarial deed and the construction documents. It is necessary to establish on what legal basis the land was acquired, what exactly the parties agreed, and on what basis the building was constructed.

How should such a case be approached?

When preparing a real estate transaction, such questions should be raised and clarified in advance, not only when the owner decides to sell the completed building.

The legal analysis should cover the content of the notarial deed, the effect of Art. 92 of the Property Act, the existence and scope of any building right granted, and the documents on the basis of which the construction was carried out.

It is especially important to establish whether the contract and the other relevant circumstances show that the parties intended the building to belong to the new owner of the land, or whether there are grounds for a different legal conclusion.

Case law accepts that when land is transferred, ownership of the buildings as a rule follows ownership of the land, unless otherwise established. The assessment, however, depends on the specific facts and the content of the transaction.

Why does a preliminary legal analysis matter?

When buying a property, the client should not receive just a contract that formally describes the subject of the transaction. The circumstances that may affect the client's rights in the future must also be established and analysed.

An omission that seems insignificant when the notarial deed is signed can become a serious problem on a later sale, when seeking financing, or if an ownership dispute arises.

My work as a lawyer is not only to assist with concluding the transaction, but also to identify the legal risks that may affect the client after it is completed.

When buying or selling a property, especially where construction is planned or has already begun, a timely legal consultation can help clarify ownership and avoid future disputes.