Estonian company in Riga's Vef quarter tried to prove its property was a "derelict building" in court

Real estate developers usually take the opposite approach to what recently emerged in a Riga court case. Typically, developers do everything possible to prevent their buildings from being classified as derelict, since that status brings higher, penalty-style payments to the municipality.

A foreign investment company from Estonia that owns a property in Riga's Vef quarter, however, desperately tried to convince both the Riga City Council and the court of the poor, dilapidated condition of its property. The goal of the lawsuit was to have the building officially recognized as derelict - a status that would have allowed the company to avoid paying a certain fee.

Court ruling

Despite the company's efforts to prove the building's rundown technical state, the court did not accept its arguments. The case ended in a loss for the foreign investor, confirming the Riga City Council's position on the matter.

Municipalities generally use derelict-building status as a tool to push owners to renovate degraded properties by imposing a higher tax rate. For that reason, most owners try to prove the opposite - that their building is well maintained. In this case, the situation was reversed, as it apparently was more advantageous for the company to obtain derelict status than to avoid it.

The case stands out for its unusual approach - property developers normally do everything to prevent derelict-building status from being assigned, rather than seeking it, since it is usually associated with additional financial consequences rather than benefits.