On 23 May 2013, the Constitutional Court of the Republic of Serbia decided to scrutinize the constitutionality of Article 103 para. 1 of the Law on Planning and Construction (Zakon o planiranji i izgradnji, Official Gazette RS no. 72/2009, 81/2009, 64/2010, 24/2011, 121/2012 and 42/2013), regulating conversion of the right of use on construction land into ownership. According to the disputed provision, if the right of use on construction land was acquired indirectly by acquiring a company (or a bulk of assets containing, inter alia, right of use on construction land) in bankruptcy, privatization or enforcement procedure, conversion is possible against payment of conversion fee to be determined as a difference between the market value of the land at the time of conversion and the indexed purchase price paid for the entire company or a bulk of assets via which construction land was obtained.
Pending its decision on the constitutionality of the challenged conversion fee determination, the Constitutional Court decided to suspend all pending and preclude all future conversions. Practically, this means that until the Constitutional Court decides on the constitutionality of the relevant provision, no conversion of right of use into ownership will be possible in case of construction land acquired in privatization, bankruptcy and enforcement procedure. This should not, however, impact construction because construction permit can be obtained on the basis of holding a valid right of use on the land.
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