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LAND AND MONETARY CONTRIBUTION

What is the Land and Monetary Contribution?

In order for an area to be recognised as residential and to be activated for town-planning purposes, the properties included within it participate compulsorily, without compensation from the relevant authority, in the allocation of the areas necessary for the creation of streets, squares and spaces for general public-benefit uses and purposes, as well as in the expenses for the execution of the basic shared town-planning works. The act imposing the monetary contribution is issued following the ratification of the implementation act, after assessment of the value of the properties to which it relates, with the critical time of calculation being the time of ratification of the aforementioned implementation act.

The monetary contribution imposed by authority of the competent local authority (OTA) bears the character of a specialised financial burden with the future consideration of the town-planning upgrading of the area in which the property is located, and consequently constitutes a revenue of that authority with a targeted purpose. It therefore meets the elements of a contribution falling within the framework of municipal taxation, as a compulsory levy on those burdened, who derive a benefit from the result of the achievement of the purpose for which it is established.

Is there a limitation period for the assessment by the local authority of the Monetary Contribution?

The right of local authorities (OTAs) to assess taxes, fees, charges, contributions and the equivalent of personal labour is exercised by Municipalities and Communities within a limitation period (aposvestiki prothesmia) of five (5) years from the end of the financial year to which they relate, while certain cases are specified in which assessment is possible even after the lapse of the above period.

What is the prescription period for the assessed claims of local authorities for the Monetary Contribution?

The prescription period for the collection of assessed claims of Municipalities and Communities is twenty (20) years, commencing from the end of the financial year within which the claims were definitively assessed, while by way of exception the claims of local authorities for the collection of assessed receivables arising from taxes, fees, charges, contributions and the equivalent of personal labour are time-barred after the lapse of five years from the definitive assessment of those claims.

The five-year limitation period for the right to assess the claims of local authorities and the five-year prescription for the collection of the aforementioned assessed claims respectively cover, according to the express wording of the said legislative provisions, among other revenues of the Municipalities and Communities, also the contributions established in their favour in general, which include monetary contributions, since no distinction is made — given the general character of the regulation — as regards the type of contributions subject to the above-mentioned five-year prescription.

Related to the above is the separate question of the obligation of the Administration to complete the town-planning expropriations within a reasonable time from their declaration, by determining the compensation owed to the owners of the expropriated properties. This is because the monetary contribution in question does not constitute compensation for the owners of the expropriated land, but a financial obligation of the owners of the non-expropriated land that is included in the town plan, due to the compulsory participation of their properties in the allocation of the areas necessary for the creation of shared town-planning works.

If the Owner does not have the funds for the Monetary Contribution, what happens?

Upon the inclusion of a property in a town plan, instead of paying the monetary contribution intended to cover the expense for the construction of the basic shared town-planning works, a portion of the surface of the property of equal value may be offered, following an application by the owner to the competent authority. This option is granted either before the ratification of the implementation act and until the realisation of the contribution in land, or after its ratification, and is subject to conditions which are predominantly of a town-planning nature. In this case, after the ratification of the implementation act, the issuance of a corrective implementation act and an amendment of the approved town plan are also required.

Jurisdiction for these annulment disputes lies with the relevant Administrative Court of Appeals.

The administration enjoys a very broad discretionary power as to whether or not to accept the request to convert the contribution in land into a monetary contribution, and in principle no specific reasoning is required for its rejection.

How does the Monetary Contribution affect property transfers?

To every notarial act concerning an inter vivos legal transaction whose object is the transfer of ownership of a property that owes a monetary contribution, in accordance with a ratified implementation act, there is attached a certificate from the relevant Municipality confirming the payment of at least the amount of instalments corresponding to thirty per cent (30%) of the total obligations attributable to the transferred property.

The unpaid balance of the owed monetary contributions is borne by the person acquiring the right of ownership over the property, and the claim of the relevant Municipality for the aforementioned unpaid balance is not subject to prescription. Thus, only the imprescriptibility of the claims of local authorities against the person acquiring ownership of the property burdened with the monetary contribution by means of an inter vivos legal transaction is established, provided that the relevant act imposing the monetary contribution has previously been issued by the competent local authority against the original owner.

FREQUENTLY ASKED QUESTIONS ON THE LAND AND MONETARY CONTRIBUTION

1. What does the imposition of a contribution in land and money on my property mean?

When an area is included in a town plan, owners are obliged to participate, without compensation, in the creation of shared spaces (streets, squares, public-benefit uses) and in the costs of the basic town-planning works. The contribution in land removes a portion of your land, while the monetary contribution constitutes a financial obligation towards the Municipality, calculated on the basis of the property’s value at the time of ratification of the implementation act. It is a burden bearing the character of a municipal contribution, in exchange for the town-planning upgrading of the area. The owner cannot refuse to participate, but may challenge the amount or the lawfulness of the calculation.

2. How do I challenge the act imposing the contribution by the Municipality?

The act imposing the monetary contribution is challenged by an application for annulment before the relevant Administrative Court of Appeals, which has jurisdiction over such annulment disputes. Typical grounds for annulment include the erroneous calculation of the property’s value, breach of the five-year limitation period for assessment, non-compliance with the prescribed procedure, insufficient reasoning, or erroneous application of the implementation act. An application for suspension of execution may also be filed, so that the cash assessment and the collection measures do not proceed until the judgment is issued. In the event of an unfavourable ruling, the route of cassation before the Council of State (StE) is open.

3. How quickly must I react and when does the debt become time-barred?

The application for annulment against the act imposing the contribution is generally filed within sixty (60) days from its service or full knowledge of it. The Municipality’s right to assess the contribution is subject to a five-year limitation period from the end of the financial year to which it relates. After the definitive assessment, the right to collect is also time-barred after five (5) years, despite the general twenty-year prescription of local authorities’ claims. Important exception: when the property is transferred and the balance of the contribution burdens the new owner, the relevant claim of the Municipality is not subject to prescription. Compliance with the deadlines is critical, and seeking a lawyer’s advice is essential from the moment of service.

4. If I do not have the funds, can I give a part of the property?

The law allows the owner to request, by application to the competent authority, the conversion of the monetary contribution into a contribution in land, by offering a portion of the property’s surface of equal value. This option is granted either before the ratification of the implementation act or after it, in which case a corrective implementation act and an amendment of the approved town plan are required. The Administration enjoys very broad discretionary power as to whether to accept the request, and as a rule is not required to provide specific reasoning for its rejection. For this reason, the application must be accompanied by full documentation of the town-planning conditions that make the proposal feasible and beneficial for the town plan.

5. I am buying a property that owes a monetary contribution — what risk do I face?

Before the transfer, a certificate from the Municipality is required confirming that at least 30% of the total obligations attributable to the property has been paid; this certificate is attached to the deed. The remaining balance of the debt is transferred to the buyer and burdens them personally, while the Municipality’s claim against the new owner is not subject to prescription. When purchasing a property within an area covered by a ratified implementation act, the verification of the owed contribution is just as critical as the title and encumbrances check. Legal intervention before the formal pre-contractual due diligence ensures that the buyer will not, after the transfer, be called upon to pay significant sums for the debts of previous owners.

6. What is the role of the lawyer in these cases?

Our firm undertakes the preventive examination of the implementation act, the verification of the correct calculation of the contribution, the drafting and filing of the application for annulment before the Administrative Court of Appeals, and an application for suspension of execution to protect the property from compulsory collection. In parallel, we draft applications to the Municipality for the conversion of the monetary contribution into a contribution in land, handle petitions against cash assessments, and ensure the verification of debts before any property purchase. In the event of an unfavourable ruling, we file cassation before the Council of State (StE). With long experience in administrative and town-planning law, our firm represents the owner at every stage of the dispute with the local authority.


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