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Land use agreements in real estate development


Real estate development and contractual arrangements

Attorney at Law Leea Salminen spoke about land use agreements in real estate development in a morning seminar arranged on 2 March 2016 by the Helsinki Region Chamber of Commerce and the Finnish Bar Association's expert group on environmental law.

It is essential for a land owner that his property is well integrated into the surrounding environment and that functioning planning solutions can be established for the area. However, individual landowners have no right to decide on local detailed planning, as the municipality has a monopoly on it. Real estate investments’ competitiveness is still important also for municipalities since they compete with other investments, and this requires financial and operational solutions in the planning of areas.

Land use agreements are private agreements, which has also been recently confirmed by a decision of the Supreme Court. The municipality's right to decide on  local detailed planning cannot, however, be limited by agreement. Therefore, and as the parties’ negotiating positions may often be very different, knowledge of the planning process can be of great help while negotiating land use agreements.

A landowner who receives significant benefit through a local detailed plan is, in accordance with the Land Use and Building Act, required to participate in the municipality’s infrastructure costs. Landowners shall be treated equally when the local detailed plan is drafted and when they are offered compensation. The requirement of equal treatment also applies in the commencement of the planning and in the area's purpose of use, number of building rights, traffic planning and compensations. The landowner must be prepared for detailed terms and conditions when negotiating a land use agreement in order to obtain an economically feasible and profitable result.

Expertly prepared land use agreements as a part of local detailed planning have proven to be an effective model in an area’s real estate development.

For further information, please contact:
Leea Salminen

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