Unfortunately at the moment the practice regarding public auction is not uniform or clear, often leading to contradictory solutions. The set of legal provisions that governs public auction procedure establishes certain sine qua non conditions to success in fulfilling your public auction procedure.
When you areinterested in buying, leasingor concessioningof a land whichis part of theprivate domain ofthe State,as a diligent investor, you should consult thelegal provisionson theprocedure to be followedinsuch cases. Law 215/2001 on local public authority refers to how “the localand county councils decide that goods belonging to the [...] private domain of the State can be given in administration, for concession or rented. They decide on buying, selling or renting the goods belonging to the private domain, under the law. The sale, lease and concession are made by public auction, organized under the law.”So, it is clear that the land which is part of the private domain of the State can be sold, leased or rented only through public auction, this being a requirement, which has to be done “under the law”. But, what does“under the law” mean, given that Law 215/1991 does not provide any regulation on the procedure to be followed?
We can turn our attention to the provisions of Law 50/1991 regulating the authorization of execution of construction works, where the procedure to be followed in case of land concession for construction can be found.
For example, landowned by thestate orlocal government units, for construction purposes, can be sold, leased orrentedthrough public auction according to the lawand the legal provisions regardingtown planning documentation of landscaping.
The statutory provisionsoflaw50/1991permitandregulatecertainexceptions, listing thecases wherebuilding landcan beleasedwithout auction, and these cases represent the exception to the rule.
The identification details of the landwhich makes the object of the auction shall be published by the mayors ofthe territorialadministrative unitswhere they arelocated, throughnoticesdisplayedat their officesand publishedin at least twonewspapersofnationalcirculationat least20 daysbeforethe auction date. The published information concerningthe auctionwill includethe dateand place oftheland,the surfaceand destinationset by theplanningdocumentationandthe minimum annualroyaltyfee.
A pre-feasibility or a feasibility study will accompany the offer, as appropriate, including themandatorytechnical elementsnecessaryto describethe building functionalityand capacity,the occupancy rateof the land, and the other elementsof the certificate ofurban planning. Offerswill not be acceptedonlyon the basis that they correspond to theprovisionsof the urban planning documentation,approvedby law. Obviously, this information is not sufficient.
The auction is organized in accordance with the legal provisions which thecommissionhas establishedfor this purposeon the basis of the decisionof the localCouncil or, if the case may be, on the basis of the decision of the General Councilof Bucharest, inaccordance with the powersof authorizationset out by the law. The commissionsoperateat thelocal councilrelated to the location of the land.
There is aminimum limit ofthe concessionpricewhich is established by the decision ofthe local councilorthe General Councilof Bucharest, in order to ensurethe recoveryin25 yearsof the sale priceof the land, under market conditions, plusthecostof the worksregarding the infrastructure.
Based onthe minutesof theaward of tenderorthe decisionofthe local councilor of the General Councilof Bucharest the concessionagreement is concluded, and will be recorded by theconcessionaireinthe real estate advertising records, within 10days from the awarding date or from the date the decision wasissued.
The conditions for the concession of landare providedinaccordance with the law, the duration of which beingdetermined bythe local andcounty councils, respectively the General Councilof Bucharest, according to the provisions of thetown planning documentation andthe nature ofconstruction.
Natural and legal personsreceivinglandunder the above mentioned conditionsarerequired toapply fora building permitand beginthe constructionwithinone yearfrom the date the actof leasing was issued. If these conditions are not met, the contract becomes invalid and consequently stops to produce any effects.
The question that normally comes in everybody’s mind is what happens if the conditions for undertaking the public auction procedure are not all observed? In this case, the risk might be significant and the consequences might go to even have the entire procedure cancelled. This situation involves besides the loss of money invested in fees, training materials and all the costs needed in order to prepare the bidding offer, the fact that if you stillwant to buy, lease or rent the land you will have to take from the very first start, the long and heavy procedure of the public tender.
Therefore, the biggestdisadvantage when it comes to start all over again with the public auction, are not necessarily all the money spent, which are not few, but mostly the time lost, and when we talk about investments and project development, loosing time might destroy any business.