LATVIA Law and Practice Contributed by: Jānis Kārkliņš, Annija Kārkliņa, Ēriks Krēsliņš and Rihards Strads, BERG
2.5 Typical Representations and Warranties In Latvia, commercial real estate transactions are mainly governed by the Civil Law of Latvia. Typically, the seller represents ownership, absence of undisclosed encumbrances, leases or disputes, com - pliance with law, and accuracy of key property data. Latvian law itself provides general protection – mainly liability for legal defects and hidden physical defects, rather than detailed statutory warranties. If the seller has fraudulently concealed defects or misrepresented the property, they are liable for all losses; otherwise, the buyer may request rescission or a price reduction. Statutory limitation periods are short: six months for rescission and one year for price reduction. Buyer remedies for misrepresentation include dam - ages (especially in cases of fraud), price reduction or termination. Representation and warranty insurance is uncommon, and is mainly used in larger or cross-border transac - tions rather than standard, small-scale deals. 2.6 Important Areas of Law for Investors In Latvia, an investor purchasing real estate should focus on several key areas of law that together deter - mine the legality, risks and usability of the property. For example, the Civil Law of Latvia and the Land Register Law are fundamental, as they govern own - ership rights, transfer of title and registration. These ensure that the investor acquires valid and enforce - able ownership. Another key aspect is planning and zoning law, par - ticularly the Spatial Development Planning Law and the regulations of the municipality in which the real estate is located, which is crucial to understanding how the property may be used or developed. This is especially important for commercial or develop - ment projects, as there are multiple restrictions for construction in areas close to the beach, endangered areas, etc. Construction law, including the Construction Law of Latvia, regulates building standards, permits and com - pliance, which directly affects development potential and liabilities.
to respect the lease or rental agreement only if it has been duly registered in the Land Register. In addition, the Law on Land Privatisation in Rural Areas and the Law on Land Reform in the Cities of the Republic of Latvia set out various additional restric - tions on land transactions. 2.3 Effecting Lawful and Proper Transfer of Title In Latvia, a lawful transfer of real estate is carried out through a two-step process under the Civil Law of Latvia and the Land Registry Law. First, the parties conclude a valid contract (which may be notarised if the parties mutually agree thereto). Second, owner - ship is transferred only upon registration in the Land Register, which has a constitutive effect. To this end, a corroboration request must be submitted and, as a general rule, the signatures on the corroboration request must be certified by a sworn notary. All real estate is formally registered, and transfers of title are recorded in the Land Register, which ensures legal certainty and public reliability – ie, the register is publicly accessible. Title insurance is not common, as parties can rely on the accuracy of the Land Register. 2.4 Real Estate Due Diligence Overall, due diligence is relatively fast and straightfor - ward due to the reliability of public registers. In Lat - via, real estate due diligence mainly involves reviewing public records and key legal aspects before purchase. Buyers typically start with the Land Register under the Land Registry Law to verify ownership and check for encumbrances such as mortgages or servitudes. Depending on the type and location of the property, buyers also examine cadastral data and zoning rules under the Spatial Development Planning Law. In addi - tion, buyers may conduct a basic technical inspection as well. Additionally, anti-money laundering (AML) checks are a mandatory part of real estate transactions in Latvia, requiring verification of the parties, their beneficial owners, and the source of funds alongside standard property due diligence.
420 CHAMBERS.COM
Powered by FlippingBook