Void administrative acts might jeopardise the operation, and even existence, of completed projects in Bulgaria.
The detailed zoning plan (DZP) is one of the key steps in every real estate development project in Bulgaria. It sets the parameters of the future construction, such as maximum built-up area, height and location. Moreover, it is the basis for the issuance of the construction permit and the operation permit. Thus, it is very important that once approved, the DZP remain stable and resistant to claims that might jeopardise subsequent permits or the existence and operation of the completed construction.
The Bulgarian zoning law envisages several measures intended to ensure that the zoning procedure will be expedient and the approved DZP stable. Two of the most important provisions in that regard relate to the right to appeal the order for approval of the DZP. First, only a limited scope of interested parties is entitled to appeal the order. In general, these are the neighbours or owners of other real estate nearby that might be affected by the intended plan. Second, the term for appeal is limited and relatively short – 14 days as of the announcement of the approval of the DZP either (i) by publication in the State Gazette or (ii) by notice to the interested parties (in case of zoning of small areas).1
However, the order of the respective mayor for the approval of the DZP is, by definition, an administrative act, meaning it also is subject to the general rules for issuance and appeal of the administrative law. One of the key principles in the Bulgarian administrative law is that void administrative acts can be challenged by everyone who has an interest (which might include parties beyond the scope mentioned in the paragraph above) without time limits for filing of such claim. The justification for this is that the imperative public interest requires such void acts to be revoked.
Therefore, if there are serious flaws in the procedure for issuance of the order for approval of a DZP or in its content, any interested person is entitled to file a claim and ask the court to declare the order (eg, the DZP) void. Moreover, there is no time limit to exercise such right, regardless of the mentioned 14-day period.
Even though only very serious flaws can justify a decision of the court to declare the order void, the very possibility that such a lawsuit can be initiated at any time creates significant uncertainty.
Investors feel uneasy knowing that a key stage of their investment project can be the target of a (justified or unjustified) challenge. Considering the time and expenses that a court proceeding usually requires, such risk is not to be underestimated.
On the other hand, if the order is appealed within the "regular" procedure of the 14-day period, the court is required by law to review all potential grounds for voidance of the order. If it holds that the order is valid and enforceable, no further challenges can be allowed.
The problem occurs when the court rules that the order is void after the construction approved with the revoked DZP has already been started or, even worse, is completed. According to the law, all subsequent acts in the development process are based on the approved zoning. If the latter is revoked, the main question is how this will affect the construction permit.
Case by case basis
Since the issue is not explicitly regulated in the legislation, only the case law of the Bulgarian Supreme Administrative Court can provide some guidance. According to it, the effect of a void DZP on the construction permit and the permits thereof is to be decided on a case-by-case basis.
If the court, upon its own discretion, decides that the construction also is in major violation of the material legal requirements, it can be declared unlawful and ordered demolished. Conversely, if the court decides that the construction complies to a sufficient extent with the law, it might rule that despite the void zoning, the construction is lawful and can be used as intended.
The trick is that decisions are taken, as mentioned, on a case-by-case basis and the chances to predict the ruling in the particular case are slim. Further, according to the Spatial Development Act, the appeal of an order for approval of DZP is reviewed at one instance only – the decision of the regional administrative court is final and binding and cannot be appealed.
Expected amendment of the Spatial Development Act
The problem might be solved with the expected amendment of the Spatial Development Act. One of the changes is to make the judicial review of the orders for approval of the DZP a two-instance procedure. This is generally deemed to improve the quality of the control even though it will inevitably lead to longer periods for completion of the trials.
In the meantime, investors are advised to carefully observe the procedure for approval of DZP and be in constant touch with the Municipality to ensure that there will be no grounds to void the issued order.
1 The proper notification of all interested parties is also a very important step of the procedure for approval of the DZP, which is usually not done in accordance with the law, as from the date of the notification the 14-day term for appeal starts running. That is because the Municipality, which is in charge of the procedure for approval of the DZP and the notifications, does not have an up to date list of all interested parties or is not aware who is an "interested party" within the meaning of the law. However, this is changing with the implementation of the cadastre map, which is currently going on for most parts of Bulgaria.
This article was originally published in the schoenherr roadmap`11 - if you would like to receive a complimentary copy of this publication, please visit: http://www.schoenherr.eu/roadmap.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.