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Key to Buying Municipal Property: Thoroughness

Key to Buying Municipal Property: Thoroughness

9.10.2012 15:11
Autor: KŠB, KSB

Otherwise, it can be deemed invalid.

According to the Supreme Court, mayors must respect and adhere to a city council’s resolutions. In a recent Supreme Court case, a city council approved a plan to sell certain property to an individual buyer – in this case the claimant. The council set the purchase price and due date for payment, and required that the contract take the form of a notarial deed. The council also provided that if the buyer did not conclude the contract by a certain deadline a selected company would be able to buy the property under the same conditions.

Since the buyer did not meet the deadline, the municipality – acting through its mayor – entered into a contract with that company rather than the buyer. But the contract was now somewhat different: it did not take the form of a notarial deed and included only some of the property defined in the council’s resolution. The remaining property, which had not yet been surveyed and transferred to the municipality, was subject to an agreement on a future contract between the company and the municipality.

No Mere Technicality

The claimant argued that the court should rule that the municipality still owned the property. He claimed that the contract contradicted the council’s resolution since it did not take the form of a notarial deed. The municipality claimed that the discrepancy between the contract and resolution was merely technical and that no harm was done since the municipality did not suffer any damage.

The Supreme Court, however, agreed with the claimant. It stated that if a mayor undertakes a legal act on behalf of a municipality that contradicts the relevant council resolution, the legal act is invalid pursuant to § 39 of the Civil Code, since mayors representing the municipalities vis-a-vis third parties are required to follow and are bound by such decisions. Mayors may not amend or add finishing touches to a council’s stated intentions, even if these intentions were not formally and legally expressed to the outside world.

So buyers beware: when planning to buy municipal property make sure that the purchase contract and council resolution match up in terms of property, price and conditions of sale. Otherwise, your contract may lack a key component: validity.

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