”The authorities acted to allow for one extension of the building permits of up to 24 months, free of charge, with the deadline for filing the request being increased from 15 to 45 working days prior to the initial expiry date of the building permit. The new provisions also apply to the building permits already extended and which were valid upon entry into force of the amendments above” explains Ioana Waszkiewicz, Senior Associate in Real Estate & PPP.
However, the latter provision is subject to possible different interpretations. Thus, PeliPartners warns that the authorities should proceed to adapt the Methodological Norms to the new legal provisions in order to ensure the correct application of the law and avoid unjustified discrimination between the holders of building permits.
Law no. 176/2022
In response to the negative effects of the Covid-19 pandemic on the construction sector - construction materials crisis, price increase, workforce deficit, restrictions generated by the emergency status, all of which created economic hurdles and impossibility to finalise construction works within the initial targeted dates – the authorities adopted Law no. 176/2022 entered into force on 13 June 2022.
Prior to enactment of Law no. 176/2022, the Constructions Law no. 50/1991 allowed a single extension of the validity period of a building permit, by no more than 12 months, subject to a fee representing 30% of the fee paid for obtaining the initial building permit. The new provisions of Law no. 176/2022 currently allow for one extension of up to 24 months, free of charge.
As to procedure for obtaining an extension, the deadline for filing the request was increased from 15 to 45 working days prior to the initial expiry date of the building permit. In order to accommodate this procedural change, building permits expiring sooner than 30 days computed from 13 June 2022 have been extended with 90 days, enabling the beneficiaries to comply with the new deadline of 45 working days for filing the extension request.
Article IV of Law no. 176/2022 enacted a special rule for building permits which had already benefited from one extension of the validity period prior to the entry into force of Law no. 176/2022. As an exception to the rule that building permits may be extended only once, those permits could be extended with a period equal to the difference between the first extension (obtained prior to 13 June 2022) and the new maximum extension period of 24 months.
The authorities considered the amendment of article IV of Law 176/2022, shows the PeliPartners analysis. Thus, the reference to the extension of building permits only with a period ”equal to the difference up to 24 months” was repealed and the law currently provides that building permits already extended and which were valid upon entry into force of Law no. 176/2022 (i.e., 13 June 2022) are subject to the same legal regime as that provided under article III (i.e., they may be extended, free of charge, by maximum 24 months).
The amendment was introduced through Law no. 316/2022, which entered into force on 24 November 2022.
Various interpretations requiring clarification
Considering the amendments enacted by Law no. 316/2022, it may be inferred that a building permit already extended once prior to 13 June 2022, and which obtained a second extension under the terms of Law no. 176/2022 between 13 June 2022 and 24 November 2022, may be extended again after 24 November 2022. Under this interpretation, all building permits in force on 13 June 2022 when Law no. 176/2022 entered into force would benefit from the same possibility of extension by 24 months, with no discrimination based on existence or inexistence of a previous extension of the validity term.
“Another interpretation has been taken by some authorities, who consider that a single additional extension is allowed by article IV of Law no. 176/2022. Under this interpretation, building permits which fall under article IV of Law no. 176/2022 (i.e., they had already received one extension prior to 13 June 2022) and which were extended a second time during 13 June 2022 and 24 November 2022, will not benefit from a new extension after 24 November 2022 in order to bring the total post-pandemic extension to 24 months. We believe this interpretation defeats the purpose of Law no. 316/2022 and creates an unjustified discrimination between investors who requested a post-pandemic extension of their building permits before 24 November 2022 and investors who requested the extension after 24 November 2022,” explains Ioana Waszkiewicz.
Legal correlation needed
The Methodological Norms of the Constructions Law no. 50/1991 were also amended on 5 October 2022 following enactment of Law no. 176/2022, but they were not updated after enactment of Law no. 316/2022, shows the PeliPartners analysis. The template forms for extension of building permits falling under article IV of Law no. 176/2022 currently refer to the extension of a building permit with a period equal to the difference between the already extended period and the new limit of 24 months.
Thus, the law firm warns, the authorities should proceed to adapt the Methodological Norms to the new legal provisions of Law no. 316/2022 in order to ensure the correct application of the law. Also, the authorities should consider repealing article 7 paragraph 19 which still refers to the tax for extending a building permit of 30% of the initial building permit tax, despite the fact that Law no. 176/2022 establishes that extension is free of any taxes.