Contributed by Kalo & Associates.
1 Real Estate Ownership
1.1 Legal Framework
In the Constitution of the Republic of Albania (Constitution), it is stipulated as one of its essential principles, that the right to private property (which includes the concept of real estate ownership) is guaranteed and protected by the Constitution. Furthermore, private real estate property is equally protected by law as state-owned property. The real estate property can be gained through donation, purchase, or any other means provided in the Civil Code and specific laws. The major means for gaining real estate property pursuant to the Albanian legislation are through contract, inheritance, adverse possession, connection, and a mixture of property, processing, etc.
Moreover, the Constitution provides that real estate property can be expropriated or restricted only for public interests and against fair compensation. The process of expropriation for public interests is regulated by means of Law No. 8561 dated December 22, 1999, On expropriation and taking into temporary use of private property for public interests as amended, along with a set of secondary legislation which thoroughly regulates the expropriation process.
Pursuant to the Civil Code the property is the right to possess, enjoy, and freely dispose of the property within the limits defined by law. Obviously, the Real Estate owners have broader rights in comparison with other categories of beneficiaries from real rights (i.e. lease, usufruct, etc.) which usually have the right to possess and enjoy the real estate property in accordance with the contract but do not have the right to dispose of the property.
Recently, a major development has occurred regarding the possibility of privatization of state-owned real estate for the purpose of investing. In this sense, Albania has adopted or updated a series of legislation aiming to promote foreign investments through the possibility of granting long-term use, with favorable conditions (the so-called “1 Euro Contracts for 99 years”) or transfer in property of private investors of state-owned real estate. Such legislation encompasses Law No. 9967, dated July 24, 2008, as amended, known as Law on Privatization, and the Council of Ministers Decision No. 54, dated February 5, 2014, On determining the criteria, procedures, and means of granting the state properties through lease, emphyteusis or other contracts, as amended, the Law no. 55/2015, dated May 28, 2015, On strategic investments in the Republic of Albania, as amended, which is completed in the specific field of touristic investments by the Law no. 93, dated July 27, 2015, On Tourism, as amended, and by the Law no. 71, dated October 17, 2019, On Albanian Investments Corporate, for other investment projects.
The Albanian legislation has some restrictions in connection with the acquisition of lands from foreigners. More specifically, it is not allowed the purchase agricultural lands, woodlands, meadows, and pastures from foreigners. However, such restrictions can be overcome through the acquisition or establishment of Albanian legal entities, which can be made by foreigners without limitation, and which in turn can acquire or purchase such land without restrictions. Restrictions are applicable also for the purchase of lands within the city areas. The foreigners are able to acquire such lands in the case they lease the land with the purpose of investment and perform an investment which according to the construction permit, exceeds three times the value of the land determined by Council of Ministers Decisions. The same as with agricultural land, even in this scenario, foreigners may acquire land by establishing an Albanian legal entity.
1.2 Registration of Ownership
The ownership of real estate is duly registered in the State Cadaster Agency which organizes and maintains the real estate registers for privately-/state-owned immovable properties and in which are registered the real estate rights over such properties. The activity of the State Cadaster Agency is regulated through Law No. 111/2018 On the Cadaster. The State Cadaster Agency is under the direct supervision of the Prime Minister’s Office.
All private or state-owned properties should be registered in the State Cadaster Agency. With the entry into force of Law No. 111/2018 is supposed to be finalized the whole process of digitalization of the cadastral registers/maps and conclude the process of the initial registration of all the real estate properties. This means that while digitalizing all the existing real estate properties, the State Cadaster Agency scrutinizes the legality of the property registration and invites the owner to remedy any deficiencies that might be noted. This process decreases considerably the risk of having overlaps of properties and overlaps of cadastral maps.
Upon successful completion of the registration process of the relative immovable property, the State Cadaster Agency issues the Certificate of Ownership, the Property Card, and the Cadastral Map per each immovable property, which constitute the evidence of effective ownership of such immovable property.
Pursuant to the Civil Code, the following transactions must be registered in the State Cadaster Agency:
- contracts for the transfer of the ownership of the real estate and the acts for their voluntary separation;
- contracts through which are established, recognized, amended, or cease to produce effects real rights over the properties, such as usufructs, usage, emphyteusis, easements, and other real rights;
- legal acts by means of which are waived the above real rights;
- legal acts through which a commercial entity was established which has under ownership a real estate or enjoys other rights in rem over these properties; and
- court judgments related to real estate matters and the bailiff actions for the seizure or sale of real estate property in auction.
1.3 Publicity of Real Estate Register
The information in the real estate registry is not publicly available. Such information may be accessed by the relevant state authorities, prosecutions, or courts based on a valid legal reason. Also, the public notaries have access to the real estate register however this information can be used and/or processed by them only for reasons of effectuating transactions with real estate properties.
1.4 Protection of Ownership
Any transaction with a real estate property (at least the ones specifically provided in the law) should be registered in the State Cadaster Agency, however, such registration is not always a condition precedent for the validity of the transaction. The Law on Cadaster provides that any transaction or legal action that is necessary to be registered in the real estate registry should be registered within 30 days from the execution of the agreement, otherwise, a fine of approximately USD 30 per day is applied.
The entries of the real estate registry provide a legal presumption of the existence of the real estate rights over the relative immovable property, which is considered valid until a court of law has stated otherwise.
The Constitution provides that property rights are protected by law and real estate rights can be deprived only upon due process of law. While the Civil Code specifically regulates the procedural means for the protection of real estate rights. More specifically such modalities are the claim for restitution of property, the claim for the cease of violation of property (actio negatoria), and the claim for the determination of the boundaries. Basically, these procedural means are the available modalities provided in Albanian law for remedies against unauthorized disposal or use of real estate.
2 Real Estate Acquisition
2.1 Share Deal or Asset Deal?
In the Albanian jurisdiction, the most encountered modality of real estate disposal is the asset deal in which the owner sells to the investor the real estate property through a Sale Purchase Agreement (SPA). In the case the real estate belongs to a commercial entity, the investor may purchase the company which is the owner of the real estate asset (share deal). However, the share deal is rarely used as a modality of transfer of real estate and is used in cases when the main interest of the investor is the company (owner of the real estate) and not the real estate asset itself.
From the perspective of Albanian law, the purchase of real estate through asset deals is more a straightforward process in comparison with the share deal. In these cases the buyer usually conducts real estate due diligence on the ownership documents and if necessary technical measurements of the property and it is conducted the process of signing the SPA in front of the public notary, who performs afterwards the registration of the SPA in the State Cadaster Agency and obtains the ownership certificate in the name of the buyer.
While in the share deal, the investor should perform in addition to the real estate due diligence also a full legal and financial due diligence which is usually a time-consuming and expensive process. The SPA for the share deal must cover in addition to the real estate matters also other important elements necessary for the purchase of the company.
2.2 Share Deal
It has to be noted that in Albania, to the best of our knowledge are almost nonexistent companies that have as their scope of activity the ownership of a real estate asset and the management of such an asset. For this reason, the share deal is very rarely used and practically it is encountered in case the main interest of the investor is the acquisition of the company and not of the real estate.
As a matter of practice, a share deal process starts with full financial and legal due diligence which may be produced by the seller and/or the buyer as the case may be. Afterward, the parties negotiate the terms and conditions of the SPA by means of which is basically transferring the ownership of the shares from the seller to the buyer. The SPA is filed with the Business Registration Center and the shares are transferred to the buyer. In the share deal, if the name of the company is not changed, then no other bureaucratic procedures are performed with the State Cadaster Agency for the RE. In the case the name of the company is changed, then the SPA for the share deal is deposited to the real estate registry and another ownership certificate is issued with the new name of the company.
The main pieces of legislation used for this kind of transactions are the Civil Code, Law No.9901 dated April 14, 2008, On Commercial Entities and Entrepreneurs, and Law No.131/2015 On the National Business Center.
In the transaction document (SPA), the risk is transferred to the purchaser however usually the SPA contains the necessary representations and warranties in order to protect the purchaser’s rights to the maximum extent possible.
2.3 Asset Deal
As explained above, the asset deal is a rather more simple transaction in comparison with the share deal. The transaction is focused almost exclusively on the real estate and the buyer should thoroughly review the property documents. Depending on the value of the asset, real estate due diligence would be highly recommended for the Albanian jurisdiction, which might significantly mitigate any potential risk related to the property documents.
The transaction document for the purchase of real estate (SPA) must be signed in front of a public notary (thus must be in notarial form) and the latter performs all the necessary procedures for the registration of the SPA with the State Cadaster Agency. Prior to the execution of the SPA, the public notary verifies electronically that the real estate is free of any liens, restrictions, pledges, and encumbrances and afterward collects the signatures of the buyer and seller in the SPA. The latter is filed with the State Cadaster Agency for registration only in the case the buyer, deposits in the escrow account held by the notary, the full sale price. After the Cadaster transfers the ownership of the real estate to the buyer and issues the Ownership Certificate (within a maximum of 30 days), the sale price is transferred to the seller’s bank account.
The public notary fees are paid in accordance with a joint instruction of the Ministry of Justice and of Finance and are calculated as a percentage of the sale price.
The applicable legislation for the asset deal is the Civil Code, Law No. 110/2018 On the public notary, Law No. 111/2018 On the cadaster, and other important legislation and secondary legislation depending on the nature of the real estate.
2.4 Disposal Process
According to the Civil Code, the SPA must be in written form and entered into in front of a public notary, who follows the procedure for the registration of the SPA with the State Cadaster Agency as explained in section 2.3. above.
There are no specific consents, approvals, or proceedings for real estate disposal unless the real estate is mortgaged in favor of a financial institution or is seized by the tax authorities or a bailiff. In this scenario, the transaction can be performed only in the case the tax obligation or the debt is duly paid, and the seizure order is lifted.
2.5 Registration of Change of Ownership
Please refer to Section 2.3.
2.6 Risks To Be Considered
As a matter of principle, there are no hidden, pre-emptive, or first-refusal rights to real estate. However, in the case, that the real estate is under the co-ownership of two or more owners, and one of them would like to sell the property, the other co-owners have the pre-emption right for the purchase of a share of the property belonging to another co-owner who is selling the property.
The Civil Code provides that the unsatisfied Purchaser can claim remedy of defects in the case within 10 days from the moment of noticing such defects. In any case, such defects must be claimed within two years from the handing over moment. In the case the building is constructed agreement, such deadline can be extended up to 10 years from the handing over moment.
3 Real Estate Financing
3.1 Key Sources of Financing
The classical and most encountered practice of sources of financing in Albania is the mortgage. This activity is conducted through commercial banks and is an activity regulated by Law No. 9662 dated December 18, 2006, On the Banks in the Republic of Albania, as amended, and closely supervised by the Bank of Albania (regulatory authority) which has adopted a significant number of regulations which are binding for the commercial banks. In addition, the mortgage is also specifically regulated in the Civil Code.
A recent trend arising in real estate financing is also their purchase through a financial lease, with a transfer in ownership option. In this case, the financial institution acquires the real estate on behalf of the buyer and leases to him during the period agreed, and at the end of the lease, the buyer has the right to buy the property at the agreed price. The advantage in this case is that, considering that the financial institution remains the owner of the immovable property during the lease, has more security to provide financing also in cases when the mortgage option would not be viable.
The financial lease is regulated by Law No. 9396, dated May 12, 2005, On Financial Lease, as amended, as well as by the Civil Code.
3.2 Protection of Creditors
The mortgage is the main type of security in real estate financing. The Civil Code defines the mortgage as the real right that is placed over the debtor’s property in favor of the creditor in order to ensure the fulfillment of an obligation. Another modality for the protection of creditors which is frequently used in real estate financing is the guarantee which can be a personal guarantee and/or a corporate guarantee. In addition, there could be pledges or securing charges agreements placed over movable assets which could be used as securities in real estate financing. Usually, the pledges and securing charges are taken as additional guarantees to the mortgage in real estate financings.
4 Real Estate Taxes
4.1 Transfer Taxes
Individuals are subject to a personal income tax at a rate of 15% applicable on the capital gain (i.e., the difference between the registered value of the immovable property and the sale price). However, it should be emphasized, that the sale price cannot be lower, for tax purposes, than the references issued by the state authorities.
Legal entities (in addition to the corporate income tax in the case the seller is a corporate/entrepreneur) are also subject to the local tax on the transfer of immovable properties. In the case of a sale of land, the applicable tax is at the rate of 2% of the sale price. In the case of a sale of a building, the tax is calculated based on the surface of the building and its location (the tax may vary from ALL 100 to ALL 2,000 per square meter).
4.2 Specific Real Estate Taxes
Ownership of immovable property is subject to the annual tax on immovable properties based on the below categories:
- Buildings with residential purposes – 0.05% of the registered value or of the minimum legal value in case the prior is lower;
- Buildings with commercial purposes – 0.2% of the registered value or of the minimum legal value in case the prior is lower;
- Agricultural Land – from ALL 700 to ALL 5,600 per year, depending on the location; and
- Construction Land – from ALL 0.14 to ALL 20 per square meter, depending on the location and purpose of use.
5 Condominiums
5.1 Legal Framework for Condominiums
Condominiums do exist in the Albanian jurisdiction and are regulated by Law No. 10112 On the administration of co-ownership in residential buildings. The law aims to regulate the legal relations in the field of administration of co-ownership in residential buildings with two or more owners, land and ancillary facilities, which are in compulsory co-ownership, determination of subjects, relations between them and with third parties, rights, and obligations of mutual, as well as the relevant sanctions, in the case of non-fulfillment of these obligations.
In units where there are two or more owners, the co-ownership relations between the owners are regulated in accordance with the provisions of the Civil Code, the law mentioned above, and the Council of Ministers Decision (CMD) No. 447, dated June 16, 2010, on Approval of the standard regulation for the administration of co-ownership in residential buildings, which establishes general rules on the administration and maintenance of condominiums in residential buildings.
Law No. 10 112 On the administration of co-ownership in residential buildings specifies that the deed of co-ownership shall be registered with the immovable property registration office, under whose jurisdiction the residential building is located, in accordance with the laws and rules of immovable property registration of the Civil Code. The co-ownership title is registered in the name of the creator.
5.2 Rights and Duties of Co-Owners
The rights and obligations of the co-owners are focused on the maintenance of the condominium, informing the co-owners on the changes or damages that may occur, the monetary investment needed for the building as well as participating in decision-making on the administration of the condominium in co-ownership. According to Law No. 10 112 For the administration of co-ownership in residential buildings, the owner of the condominium has the right to:
a) to request from the other co-owners, in the obligatory co-ownership where he belongs, or from the users of these special units not to infringe the use and enjoyment of indivisible objects, as well as to request compensation or correction of the damage, when the damage is caused by their actions;
b) participate in decision-making;
c) be informed by the assembly or the administrator/management company about the decisions taken in his absence;
d) to be regularly informed by the administrator and by the assembly about the use of the administration fee;
e) to be informed by the administrator/management company about the non-payment of the administration fee by other owners;
f) to submit to the assembly proposals for the administration of the residential building.
Along with these rights, the owner is obliged to:
a) to respect the norms of ethics and coexistence, defined in the regulation of building administration;
b) not to hinder other co-owners in the enjoyment of objects that are in compulsory co-ownership;
c) to pay the administration fee even in the cases when he does not live or has rented the unit;
d) to allow inspections and repairs of the common property within the unit owned by him.
The co-owners of the units, including the “creator of the co-ownership” as long as he owns one or more units, represent the Assembly. In the first meeting, the assembly elects the board, determines the mandate, and decides the amount of the administration fee.
5.3 Liability of Co-Owners
The co-owners will be liable to other co-owners, the associations, and/or third parties related (e.g. the occupants of the condominium) for any action they take on the building or damage caused to it that violates their rights over the condominium.
The CMD no. 447, dated June 16, 2010, on Approval of the standard regulation for the administration of co-ownership in residential buildings, presents a more extensive relationship between the co-owners, mentioning the norms related to the maintenance of the building, the physical stability of the building, the safety of life and public health, ethical norms of coexistence which, of course, are mandatory to the co-owners. The maintenance of quietness, the rules of usage of common areas, restrictions on the usage of individual property, and the keeping of pets are the key points that the article consists of as an integral part of the specific regulation of each co-ownership, regardless of the specifics of co-ownership.
5.4 Rights and Duties of Condominium Associations
The association of the condominium performs the tasks defined in the contract entered into between the co-owners or in the agreement with the board, depending on the chosen form of administration. According to Law No. 10 112 For the administration of co-ownership in residential buildings, there are two forms of condominium administration which consist of the administration through a condominium association or an administrator (physical person) who may be one of the co-owners or an outsourced person/entity. Whichever form is chosen for the condominium administration, shall be registered in the Administrators Book (Register) at the municipality, under which jurisdiction the individual/association exercises this activity.
Condominium associations, in addition to the administration service, can cover with their activity also maintenance services, if they have the necessary qualification for specific maintenance activities, such as maintenance of elevators, restoration or reconstruction of facades or interiors, and any other type of activity, which requires special qualification, in a certain field. As mentioned above in Section 5.2., the assembly of co-owners approves the criteria and costs of administration, the administration fee, as well as the manner and time of its payment for each co-owner, which will finance the administration activity.
6 Commercial Leases
6.1 Form and Contents of a Lease Agreement
The Civil Code provides that the lease agreements concluded for a period of more than one year must be in written form. In this case, the written form is mandatory only for probatory purposes (ad probationen), this means that the lease agreement is valid but it cannot be proved in the court through witnesses or any other means. According to Article 197 of the Civil Code, the lease agreements used for renting real estate for a period of over nine years must be mandatorily executed in front of a public notary and registered with the State Cadaster Agency.
The Albanian jurisdiction does not make major distinctions between the properties leased for commercial reasons and the ones leased for other purposes i.e., living purposes, except for the duration, which can be of a maximum of 5 years in case of a residential lease, and up to 30 years in case of commercial lease. In any case, the legislator leaves it to the discretion of the parties to freely insert provisions in the lease agreement that might be necessary for the lease of commercial real estate.
The usual content of a lease agreement in Albania includes inter alia the description of the leased property, the term of validity, the lease reason, the modalities and purpose of exploitation of the real estate, the rights and obligations of the parties, termination clause, dispute resolution mechanism, etc.
A recent trend in the commercial lease of immovable properties relates to the possibility of having the lease price connected with the performance of the commercial activity. In this case, the parties agree to a base lease price, which is afterward variable based on the performance of the commercial activity. This allows for modulation of the lease price based on the fluctuation of the performance of the commercial activity.
6.2 Regulation of Leases
As a matter of principle, the rules for lease do not substantially differ according to the type of property, however, there is a certain categorization in the Civil Code that makes a distinction between the real estate used for agricultural purposes and other real estate used for different purpose, such as residential purpose and/or commercial purpose.
On the other hand, there are few mandatory provisions in a commercial lease that cannot be contractually excluded. One of these cases relates to the maximum duration of the commercial lease which cannot exceed 30 years. In this case, should the parties agree on a different and longer lease duration, such provision will be considered ineffective, and the maximum duration of the lease shall be in any case the maximum duration provided by the Civil Code.
6.3 Registration of Leases
Pursuant to Article 197 of the Civil Code, all the lease agreements for real estate properties, entered into for a period of more than nine years must be registered in the State Cadaster Agency. The latter registers documents (in this case the Lease Agreement) only in notarial form, which means that it is mandatory to be executed in front of a public notary in Albania. This registration is performed in the relevant section of the real estate register, according to the provisions of Law no. 111/2018 On the Cadaster.
It is important to note that, such registration is a mere condition of publicity of the lease agreement and not a requirement for its validity. The lease agreement will be in any case valid, but its registration is required for its opposition to third parties that may acquire in the meantime the leased property.
6.4 Termination of Leases and Renewals
The lease agreement may contain a specific term of validity, or the parties may not stipulate any term at all. The lease agreement with a determined term, automatically terminates at the end of the expiration period, without the need that any of the parties notify in advance the counterparty of their intent for termination. On the other hand, the lease agreement which does not contain a validity term can be terminated at any moment by one of the parties. In any case, the lease agreement cannot have a longer duration than five years for the residential lease and 30 years for the commercial lease. If the parties have not provided for a lease term, the lease agreement is considered concluded for the duration of the legal term.
One of the main obligations of a lessor in a lease agreement is to ensure the free and quiet enjoyment of the immovable property to the lessee, and the latter can terminate the lease agreement in case such enjoyment has not occurred. On the other hand, the major obligation of a lessee in a lease agreement is to pay the lease price and not intentionally damage the immovable property, and the lessor can terminate the lease agreement in case the lessee does not fulfill such obligations.
In addition to the Civil Code’s chapter which specifically regulates the lease agreement, the general termination provisions which apply to all the contracts are also applicable to the lease agreement. More specifically, in these general provisions is stipulated that when one of the contracting parties fails to fulfill its contractual obligations, the other contracting party, may either request the fulfillment of the obligation, or the termination of the contract, in addition to the claims for compensation. The contracting party may notify in writing the other party that has failed to fulfill the obligation, asking for its fulfillment within an appropriate period, stating that, if after this period the breach is not remedied, the lease agreement will be considered terminated.
Regarding the renewal of the lease agreement, the Civil Code provides for an automatic legal renewal option, in case after the expiration of the lease term, the lessee is allowed to use the leased property without any objections from the lessor. The automatically renewed lease agreement is regulated under the same terms and conditions as the previous one, but its duration is set as for fixed-term leases.
6.5 Rent Regulations and Rent Reviews
The Civil Code, in the framework of rent regulations and reviews, focuses on the object of the lease, its handing over to the lessee and vice versa at the end of the lease agreement, maintenance, and the behavior of the parties regarding their rights and obligations in connection with the leased property.
Pursuant to such principles the lessor must:
1. deliver the item to the lessee on time and in a position to allow the usage for which the parties have agreed in the contract;
2. maintain and keep the leased property in the same condition;
3. guarantee peaceful enjoyment during the rental period;
While the lessee has the following rights and obligations:
1. receive and use the leased property for the purpose provided in the contract and in the case, this is not specifically regulated, use it in accordance with the nature of the leased property;
2. effectuate the lease the payment on time;
3. is liable for the loss and damage of the leased property which might occur during the lease term of the lease;
4. hand over the leased property to the lessor in the same condition that was handed over to him/her and in accordance with the description made by the parties in the lease agreement, except for damages deriving from wear and tear.
6.6 Services To Be Provided Together With the Lease
In our jurisdiction, there is no specific regulation on the services rendered together with the lease. On the other hand, the legislator leaves it to the discretion of the parties to insert any provisions in the lease agreement as they deem fit and/or necessary for the regulation of their commercial relationship.
6.7 Fit-Out Works and Their Regulation
The Civil Code regulates the relationship between the lessee and the lessor in the cases when the leased property needs fit-out works in order to adapt it to the requirements of the lessee or there is a need for maintenance during the lease term.
When the leased property needs repairs which could be classified as usual maintenance, such expenses must be covered by the lessee. In the cases when the repairs are substantial, the lessee is obliged to notify the lessor.
In the cases of urgent repairs, the lessee can perform the investment directly and such costs are borne by the lessor, the latter is immediately notified. On the other hand, the lessee should collaborate with the lessor in the cases of necessary urgent repairs. If the leased property is not repaired within a reasonable time by the lessor, the lessee is entitled to a proportional reduction of the rent.
Further, Article 816 of the Civil Code stipulates that the lessee should not be compensated for the improvement (fit-out works) of the leased property unless this is specifically performed with the consent of the lessor. In this scenario, the lessor is obliged to compensate the lessee with whichever is less, the investment value or the value of the useful result (i.e., in the case such investment can be exploited by the lessor), at the handing over moment.
The lessee who has made additions to the leased property has the right to remove them at the end of the lease, when this is possible without damaging the leased property, except when the lessor agrees to keep the additions himself. In this case, he must pay the lessee compensation equal to the minimum amount between the costs and the value of the surcharges at the handing over time.
Regarding the tax implications of investments made by the lessee, there are no specific provisions that regulate this matter; however, such expenses are usually recognized as deductible expenses by the tax authorities.
6.8 Transfer of Leases and Leased Assets
The transfer of leases and leased assets is allowed in Albanian jurisdiction through a sublease agreement or when the ownership of the leased property is transferred to a third party.
Except otherwise agreed in the lease agreement, the lessee has the right to sublease the property, but cannot assign the contract to a third party without obtaining first the written consent of the lessor.
In the case of assignment of the lease agreement the lessor is entitled to initiate legal action claiming the payment of the rent from the lessee also from the sublessee and to oblige the sublessee to fulfill any pending other obligations arising from the sublease agreement.
The contractual provisions regulating the annulment of the lease agreement or its termination, apply also to the sublessee, and the decision was taken between the lessor and the lessee also applies to him.
When the leased asset is acquired by a third party, the lease agreement continues to be in force and the buyer has the obligation to observe its provisions in the case the lease agreement is entered into before the sale of the property.
7 Zoning and Planning
7.1 How Are Use, Planning, and Zoning Restrictions on Real Estate Regulated?
The Albanian system does not provide proper usage restrictions on real estate. There are no usage restrictions of individual properties legally enforceable. There is only the possibility to assign a certain destination to the common areas of a condominium, which can be enforced also on third-party buyers of an individual immovable property. However, such restrictions are not commonly used in practice.
On the other hand, the Albanian system does regulate zoning and planning. Such regulation is mainly contained in Law No. 107/2014, On Territorial Planning, and the regulation issued in its execution, mainly CMD No. 408/2015, The Regulation on Territorial Planning. Such a set of legislation provides the possibility of different zoning of the territory of the Republic of Albania, providing distinct rules and regulations on the development of real estate, depending on the type of development, i.e., tourism, economic zones, arkeological areas, etc.
With reference to commercial and residential developments, the most relevant type of zoning refers to the General Local Zoning, which provides in general the type of development to which a specific area shall undergo, i.e., residential, commercial, or mixed, and the intensity to which a specific territory shall be developed.
In accordance with the General Local Zoning, the Detailed Local Zoning, provides in detail the development conditions of a specific area of the General Local Zoning, providing for example, distances between constructions, their height, the provision of recreational areas, public roads, etc.
In conformity with the Detailed Local Zoning of a specific area, the specific planning documentation for specific developments provides the specific details of the construction and other environmental and structural details of each building.
7.2 Can a Planning/Zoning Decision Be Appealed?
A planning/zoning decision can be appealed before the competent administrative authority/court in case it is in contradiction with the rules and regulations of territorial planning and violates the rights and legal interests of the real estate owner.
