By Juan Bertomeu Vallés, Lawyer

In the future Ley Urbanistica Valenciana, once awarded a Program of Integrated Intervention (PAI) to a Developer (Urbanizador), a series of fundamental steps remain still outstanding: Approval of the Project of Urban Development,  Approval of the Project of Forced Reparcelation (although it can be a Volunteer Reparcelation) and the Public Auction of the Works of Urban development. These topics will be analyzed in the next articles. Today, for its interest for those affected people (La Llobella in Benissa, Segaria in Ondara…), we will analyze the rights and duties of the owners and of the Developer.

The Payment to the Developer in Plots or in Cash

The relations between Developer and Owners can be agreed in a contract freely negotiated, whenever they respect the current Town-planning and the approved PAI.

At first, the Developer charges for his activity with buiiding plots, except if the approved PAI establishes the payment in cash. The PAI can decide also that parts of  the payment will be in cash and part in plots.

So that the owners could choose, the Developer must notify to them the approval of the Project of Urban Development, together with the necessary information so that the owners could exercise their option and  rights.

The Notification to the Owner.

The recipients of this notification are the registered owners  affected by the Reparcelation (and who not being a registered owners appear in the procedure showing and crediting his owners' condition, by means of a non registered, but valid, title deed).

The notification must include the following documents:

-         The approval of the PAI and the designation of the Developer Agent (Urbanizador).

-         The approval of the Project of Urban Development.

-          Breakdown of the payment due to the Developer, with indication of the unitary cost of the works of urban development, general expenses, benefit of the Developer, and the Value-added tax.

-         The appraisal of the land or the appraisal of the building coefficient used to establish the equivalence between the value of the land and the payment in kind to the developer.

-         The legal requisites for the exercise of the option.

-         Indication that the mentioned amounts will be checked again when are known the exact amounts of the indemnifications by extinction, demolition, cessation or transfer of the goods, activities and rights affected by the Reparcelation.

The payment in cash must be notified to the Developer by means of Notarial affidavit.

 The owners who are not consent to the proportion of Plots that corresponds to them to transfer to the Developer in concept of payment for his activity, can oppose to that requesting to pay to him in cash. The request of paying in cash must be done by means of Notarial certificate, and notified to the Developer and to the Town hall within twenty days following the approval of the Project of Urban Development.

 With the request has to be enclosed sufficient guarantee - mortgage or financier-, to assure the payment to the Developer. The quantity to guarantee will be the one that corresponds in accordance with the estimate of cost of urban development (increased in an equal percentage to the one which, with regard to the estimate cost of urban development, the Developer gives as initial guarantee -normally 7 % of the entire cost of Urban development-).

The payment in Plots materializes in the Reparcelation.

 The approval of the Reparcelation  can take place previous to the approval of the Project of Urban development if the owners agree with the proportion of plots that correspond to receive for the Developer (Volunteer Reparcelation), or when the Developer receives all his rights in cash.

  The changes in the cost of the works by changes in the Project of Urban development, not attributable to the responsibility of the Developer and properly approved, that supervene after the Reparcelation, will be paid by means of compensations in cash.

  In the same step, the owners who expressly refuse to cooperate in the programming of his Plots can resign from it, whenever they communicate to the Town hall or to the Developer his decision to receive, after the Project of Reparcelation is approved, replacement indemnification instead of plot of substitution.

 To be able to exercise his right, the owners must know all the commitments with economic incidence in the Program, for which the notifications have to accompany sufficient information about his building rights and the commitments that the owner assumes  if decides to cooperate with the developer.

   The Developer can exercise the following prerogatives and faculties:

1. To submit to approval of the Town hall Projects of Urban development, Estimate of Charges of Urban development and (for lack of agreement with the affected ones), one or several projects of Forced Reparcelation.

2. To be heard, before the approval of the Forced Reparcelation.

3. To oppose to parcelations and building licenses in the area of the PAI, up to the entire fulfillment of the forecasts of the Program (the granting of these licenses is subject to previous hearing to the Developer). There cannot be granted licenses of parcelation or building until, as soon as the PAI was approved, it is completely executed, and the owners of the plots have proportionally contributed to the charges of the PAI and has been guaranteed the simultaneous urban development of the above mentioned plot, at least, previous to build on it.

4. To demand that the owners pay him by means of urbanisation quotas, or with Building Plots.

5. To request the direct occupation (of the plots subject to the Forced Reparcelation) to develop the infrastructures of urban development.

Guarantees granted by the Developer in favor of the Owners.

The Developer, to be entitled to charge and get paid from the owners, has to make sure, before the Town hall, but in favor of the owners, his specific obligation to turn in building site the correspondent land of whom should remunerate him, by means of guarantees that:

a.  Are granted after the approval of the Forced Reparcelation   in whose virtue the Developer receives, in concept of payment building sites (and, in any case, before the administrative liquidation of the  urban development quotas ), for equal value to the payment it secures. 

b. Consist on  First Mortgage over the awarded Plots to the Developer, or financial guarantee.

c. They are cancelled - previous decision of the Town hall - as become executed, in term, each of the works that are the object of the corresponding guaranteed obligation.

It is not necessary to formalize this guarantees when the Developer and the owners agree on it; or if the payments of the owners to the Developer are leaved as a deposit in power of the Town hall. It is not necessary either if the plots that receives in payment the Developer are subject to Mortgage Guarantee (that prevents the Developer from selling freely) and under resolutory condition that assures the return to the original owner, in case the awarding of the Program should be declared cancelled by the Town hall.

  Finally, the Developer is responsible for the damages caused to the owners or to other persons as consequence of his activity or for lack of diligence in the fulfillment of his obligations (except if the caused damages take place as consequence of direct order of the Town hall or in the fulfillment of a condition imposed by The Town Hall).

Rights of the owners in the phase of execution of a PAI

  The owners have right to receive, at all times, documented information about the costs of urban development that they have to assume, and to cooperate with the Developer, whenever they assume the charges and risks of the execution.

  Also they can propose to the Town hall and to the Developer suggestions and amendments for the making, correction or modification of the Project of Urban development and Estimate of Execution.

  The owners who contribute to the charges of urban development it can be required that the Developer should execute it with the diligence of a good businessman and that the Town hall protect the good execution of the PAI.

  The right of the owners affected by the PAI is fixed according to his buildings coefficient

  In any case, the owners who justify in any moment that the relation between the charges that he must support and the allocation of result is lower than the value of his original property, he has right to move back from the PAI receiving the market value of his initial property, referred to the initial moment of the PAI.

 In case he is an Owner of a consolidated building, the entire payment of the owner cannot be major that the appreciation that experience his property, determined by means of an expert appraisal.