Plan damage: Record investment decision properly!

When you make a verbal agreement to purchase property, you should properly document the investment timing in a written document. Otherwise, you may be thrown foreseeability in a future planning application, like the appellant in the October 9, 2019 ruling.

Plan damage and foreseeability

If a property owner suffers damage as a result of a lawful planning decision, he or she can appeal to the plan damage compensation provided in Article 6.1 of the Wro. However, if the planning damage is foreseeable, it will be borne by the buyer. The Administrative Law Division of the Council of State (The Division) assumes that a buyer takes into account a published plan in his bids, and does not then also proceed to pay plan damage compensation.

The purchase and plan damages

In 2013, the Appellant became the owner of a building and associated land in Groningen's city center. In the same year, the municipalities for the benefit of this area submitted a preliminary draft zoning plan for public inspection. In 2015, the appellant, as owner, is faced with the entry into force of this new zoning plan. The new zoning plan no longer includes the possibility of constructing an additional building on the land surrounding her building. The appellant claims that the expiration of this possibility decreases the value of her land parcel, causing her to suffer damages of €720,000.

When is the investment decision?

The appellant turned to the Municipal Executive of Groningen with a request for compensation for the planning damage that had occurred pursuant to Section 6.1 of the Wro. However, the Board points to the date of the purchase agreement. The purchase agreement was signed on October 3 and 7, 2013, while the new zoning plan had already been made available for inspection as of May 31, 2013. Therefore, according to the college, the zoning plan was already known at the time the agreement was entered into and the planning damage suffered was therefore foreseeable. Although the appellant substantiated with a written statement that the agreement had in fact already been concluded on April 11, 2013, the college still assumes October 7. The college therefore rejects the planning damage request.

Division rules: civil law instrument to public law decision

After proceedings in the District Court with the same result, the parties come before the Division. The Division reiterates its consideration from the September 28, 2016 summary judgment, and indicates that the foreseeability of a planning change must be assessed by the answer to the question of whether, at the time of the investment decision, as at the time of the purchase of a property, a reasonably thinking and acting buyer had reason to take into account the likelihood that the planning situation at the site would change unfavorably.

In the case of this purchase agreement, the Division considers that the date indicated on the agreement should be taken as the time of the investment decision. The Division reaches this opinion based on the observation that the deed of sale entered into on October 7, 2013 states that the term "closing date" indicates the date on which the parties reached agreement on the purchase of the sold property, being September 23, 2013. As a result, the Division assumes that the parties reached agreement on September 23, 2013.

The Division also finds that other indications, which make it plausible that there was another time when the purchase was decided, are lacking. The Division considers the first statement of April 11, 2013 too vague, as no concrete price is mentioned. The second statement is insufficiently weighty because it does not clarify why the deed of sale states Sept. 23.

Tip: put your investment decision in writing!

When purchasing real estate, make sure that the investment decision is properly recorded. This is to prevent you from being faced with planning damage upon (later) delivery that can no longer be recovered. If the investment decision is after the moment of foreseeability, the damage is considered to be discounted in the purchase price.

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