There is a basic right to own property and land in Estonia. land can only expropriated according to some detailed regulations found in the Expropration of Immovables Act. In some ways this law is clearer than, for instance, the US constitution is on this matter in that it clearly defines which public purposes are adequate for expropriation and creates a calculation mechanism for compensation. In addition, there are very few specific restrictions on the ownership of property. These facts demonstrate the high quality of Estonian property law considering how recently Estonia was part of a socialist regime.
Restrictions on the Sale of Property
Despite the relative strength of Estonian property law there are some restrictions on the ownership of property in Estonia. The first is in the aptly named Restrictions on Transfe of Immovable Property Ownerhip to Aliens, Foreign States and Legal Persons Act. Special laws which deal with the denationalization of property are a second source of such restrictions. The law restricting ownership of land by aliens begins with an explanation of what it does not cover. This law does not cover apartment ownership, apartment leases, property that belongs to the government, spouses of Estonian citizens or any international traety obligations which the Estonian Parliament has approved. The importof this initial section is that foreigner can buy apartments, buy property from the government and buy property when the international obligations of Estonia so require.
From the face of remaining provisions, the restrictions on the ownership of the land and commerical assets in Estonia seem to be fiarly absolute, but the exceptions make it fairly easy for foreign companies to own land or to maintain long term commercial leases. This is the case because all Estonian business organizations, including registered branches of foreign companies, may posess Estonian lamnd. The only restriction is that the governor of the respective county must approve the acquisition of the land. Since Esonia has a strongly pro-business political climate, land needed for any sort of business enterprise, even if it is agricultural, is likely to obtain this approval from the county governor. Even if the county governor disapproves the process then recourse is available to the Ministry of Internal Affairs where the test is that the transaction can only be disapproved if it is contrary to the public interest, the security of Estonia or contrary to the Act. As a result, lawful business interests are likely to succeed eventually.
Stricter restrictions still apply in certain areas, where the sale of land may only occur with the consent of the government of the Republic. These include smaller island in the Baltic Sea, and certain coastal areas and towns, but do not apply to Saaremaa, Hiiumaa, or the Vormsi or Muhu islands, which are the most popular areas of tourism. As usual, however, most projects that would create a significant number of jobs would probably pass the generally worded requirement that this action be taken for reasons significant to the state. Despite how complicated the rules may seem, many subsidiaries of foreign enterprises own their own land and Estonia’s land ownership regime is often thought to be one of the most friendly to foreign enterprises in Eastern Europe. (To be continued)
Estonian Business Law pt 7
Archived Articles | 20 Aug 2002 | EL (Estonian Life)EWR
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