Easements are special rights that allow a person to use part of somebody else's property for a specific purpose. A classic example of an easement is, for example, the right to cross someone's yard or to lay underground electric cable in someone's property.

In the Energy Act (EA), easements are used to provide for the construction and maintenance of energy facilities such as power lines and gas pipelines. This means that the companies that build and maintain these facilities have the right to use certain parts of private properties to conduct their business - to construct such establishments, to have people and equipment pass through them, to trim and cut trees, if necessary, etc. The easement under the EA also includes restrictions on the owners' use of these properties, such as prohibitions on construction or planting of permanent crops in the easement area except under certain conditions, etc.

Unlike traditional easements, which require the existence of two adjacent properties (dominant and servient) and are created by virtue of a contract, easements under the EA arise by virtue of the law. This raises a number of practical issues, such as exactly how the easement arises and how compensation is determined for the owners of the affected properties. However, in the practice of municipalities there is a misunderstanding of the matter, cumbersome administrative procedures and unpredictable requirements of the administration that carries out this activity - which, in turn, impedes investors and delays RES projects.  

Pursuant to Art. 64, para 1 "In case of extension of existing and construction of new linear energy establishments easements shall arise in favour of the persons who will construct and operate the energy establishment". Although this text refers to linear energy establishments (various conduits for transmission and distribution of energy), the provisions are also applicable to the easements of other types of energy establishments for the production of electricity from renewable sources (wind turbines, photovoltaics, etc.).

The easements under the EA arise after the fulfilment of certain prerequisites, but without the need for establishment by virtue of a contract with the owner or the holder of a limited property right over the affected property. The consent of the owners/holders of the property rights of the affected property is not required for these easements to arise (it is admissible for the person who will construct the energy establishments not to consult them at all) and they arise independently of their will. However, in order for them to arise, it is necessary that both prerequisites under Art. 64, para 4 of the EA are met, namely:

1. presence of a detailed zoning plan in force, specifiying the location and size of the easement areas, and

2. the holder of the easement to pay either in instalments or as a lump sum compensation to the owner and to the holders of other property rights on the affected property.

Whereas the implementation of these prerequisites also depends on the state and municipal administration, it often encounters bureaucratic obstacles that impede the process.

1. Detailed zoning plan in force

The first prerequisite for the arising of easements is that there is a detailed zoning plan (DZP) in force, specifying the location and size of the easement areas. The plan is subject to the general design provisions and must include graphic and textual information on the energy establishment being constructed and the associated easements.

The approval and entry into force of the DZP is a condition and prerequisite for determining the compensation payable. One of the first problems that arise in the practice of municipalities is namely in this connection. In order to approve a DZP, some municipalities make it a condition for all "property rights" with respect to all properties affected by the plan to be settled. In other words, municipalities require proof that the person who will construct the energy establishment either owns all the affected properties or has easements arisen in their favour in respect of those properties. In other words, granting of the easements is made a condition for issuing the order approving the DZP. Thus, in order to prove that easements have been properly granted/arisen, grantors are required to provide evidence that contracts have been executed with the owners, that lump sum compensation has been paid in connection with the affected part of the property, and the like. Such requirements of municipal administrations for the submission of this type of contract as a condition for the subsequent approval of the DZP, put the grantors in an inherent impossibility for the arising of statutory easements under the Energy Act. Such a practice not only unnecessarily delays and impedes the overall investment process, but the same is also contrary to the law precisely because easements under the EA arise by virtue of the law and not on the basis of a contract between the parties.

The Interpretive Decision No. 7/23.04.2014 in the Interpretive Case No. 7/2013 of the General Assembly of the Civil and Commercial Chamber of the Supreme Court of Cassation made a distinction between easements established on the basis of Art. 193 of the Spatial Development Act (SDA) on the one hand and easements under the EA on the other. The decision clearly differentiates the legal status of the two types of easements – the traditional easements under Art. 193 of the Spatial Development Act (SDA) are land easements that are concluded between the owners of the servient and dominant property, but this provision is inapplicable to the construction of energy establishments as there is no dominant property. Even if a contract for the granting of an easement is signed under Art. 193 of the SDA, this will not cause the arising of such an easement if the prerequisites under the special Energy Act are not met.

Further, another requirement of the municipal administrations to provide evidence of lump-sum payments prior to the entry into force of the plan providing for the construction of the relevant energy project would also not be acceptable. The rule is that the DZP must be in force to proceed to the next step of determining compensation for the affected property owners and paying it. The logic of the law is that before a DZP is in effect, there is no way to know with certainty what the intent of the plan would be, thus what easements will arise, what parts of the properties will be affected, etc. While these features can be determined based on the draft DZP submitted for approval, they cannot be accepted as final until the plan is approved and in force. Consequently, it is only after the plan has been in force that all of its easement parameters are clear and then the same could be assessed.

2. Payment of lump sum compensation

The amount of compensation to be paid to the owners of the affected properties and to the holders of property rights over them has to be determined once the DZP comes into force. The law provides for this to be done either through a special procedure under the SDA, which is managed by the municipality, or by mutual agreement between the parties, but on the basis of a market assessment prepared by an independent assessor (Art. 64, para 6 of the EA).

A) Procedure under the SDA

The first option for determining the compensation payable is in accordance with Art. 210-211 of the SDA. The procedure is initiated upon the request of the party concerned (usually the person who will construct the energy establishment), on the basis of which the mayor appoints a commission to determine the compensation payable. The amount of compensation determined shall be made known to the persons entitled to receive it, and they shall have the right to appeal in court.  Specifically, only the amount of the assessment may be appealed, i.e. at this stage the owners/holders of property rights of affected properties may not raise other objections related to the location of the easement, its size, etc. Theoretically, the assessment can be appealed by the person who initiated the procedure if he/she considers that the assessment is too high, but practice shows that this usually does not happen, as it leads to a long delay in the overall project implementation procedure.

The court shall consider whether the commission has complied with the requirements of law in determining the amount of the compensation and shall render a decision upholding or modifying the assessment. An analysis of the case law shows that in the majority of cases the court overstates the original assessments, which is an additional argument for not appealing the assessments determined by the commission to the persons who will pay the compensation payable.

Importantly, an appeal of the assessment does not halt the process of arising the easements. Once the amount of the compensation has been determined, the party concerned may deposit the amount in a bank account in the name of the right holders, this being considered sufficient for the arising of the easement. If the compensation is increased as a result of a possible appeal, the difference must be paid within 1 month. Of course, there is no obstacle to the possibility of waiting for the conclusion of the legal proceedings and then paying the full amount of the compensation payable. In this case, however, it will not be possible to proceed with the implementation of the project, since the easement does not arise before the compensation is paid.

B) Determining of the compensation by mutual agreement

Where the person constructing the energy establishment has a relationship with the owners/holders of property rights of the affected properties, compensation can be determined by mutual agreement between the parties, and this is usually the procedure that is quicker. In this case, the law requires that this is done on the basis of an assessment by an independent assessor. This means that it is necessary for an assessor to be hired in advance to determine the amount of compensation payable, subject to the requirements of the law. The intent of the law to have such an assessment is to avoid disadvantaging the owners of the affected properties, who in most cases would not be able to assess on their own what is a fair amount of compensation they can receive.

Once the assessment has been made, the parties should enter into a contract demonstrating their mutual agreement to settle their relationship in this way. The contract should refer to the assessment made. If there is no express written agreement, it is presumed that no mutual agreement has been reached and the procedure under the SDA, described above, should be initiated.

The law does not provide for a specific penalty if a market assessment is not made by an independent assessor, and instead for example the parties directly sign a contract and determine the amount of compensation themselves. There is also no penalty if an assessment is made but the parties decide to deviate from it, for example by agreeing on a higher or lower amount of compensation. Given the general rule of freedom of contract, it could be argued and defended that in these cases, the existence of a contract meets the requirements of the law and if the agreed compensation is paid, the easement has arisen. However, practice shows some specific practical impediments in such situations where no express assessment has been made. For example, when applying for the registration of an arisen easement in a property register, the Registry Office has expressly required the submission of a copy of the assessment made by an independent assessor. The reasons given by the registry judge for the submission of the assessment were the need to assess whether the compensation paid corresponded to the compensation actually assessed. Consequently, in the event of a discrepancy, this could be grounds for refusal of registration.

A copy of the assessment is also required by some municipal administrations when applying for a construction permit for the establishment. The arguments are that the existence of a valid easement is a condition for the granting of a construction permit. Similar to the situation with the Registry Office, any discrepancy between the assessment and what was actually paid (especially if the amount paid is less than the assessment) could result in a refusal to grant a construction permit for lack of a validly arisen easement. In view of the investors' desire to have the procedures completed as quickly as possible, the requirements of the relevant administrations should be satisfied, or these seemingly unlawful actions should be subject to judicial review.

Beyond these practical issues, theoretically, the lack of an assessment could indeed be grounds for challenging the valid arising of the easements, or a flaw in the subsequent permitting, construction, and operation of the project. As a ground it could be argued that insofar as the law has expressly required that, when compensation is agreed by mutual agreement, this should be done on the basis of an assessment, the absence of such an assessment leads to an unlawful determination of the amount of the compensation, respectively to the impossibility of the arising of the easement. Such an understanding seems to me to be excessive, but it cannot be completely excluded in view of the wording of the law.

At the moment there is no case law on similar issues relating to the need for, and the possibility of deviation from an assessment yet. Given the very laconic legal framework, it seems to me that this is an issue that should be expressly regulated by the legislator in order to have clarity and consistency in the investment process and to avoid such hypotheses where contracting parties are required to provide documents that are not actually necessary.

3. "Disclosure" of arisen easements

Once the compensation has been paid or deposited in a bank in the name of the owners/holders of property rights, the easement arises by virtue of the law and no further cooperation/consent is required from them for the same. The fact of arising of the easements shall be registered in the Property Register, for which purpose an extract from the DZP and evidence of compensation paid shall be submitted to the Registry Office. Subsequently, the existence of an easement shall also be recorded on the cadastral map as a zone of restrictions on the land. These steps have no direct effect on the validity of the easement but objectify its existence. Therefore, it is the registration of easements in the Property Register and their recording in the cadastral map that are considered as the completion of the procedure of their arising and are usually required by municipalities (in connection with the granting of a construction permit), by credit institutions (as a condition for providing financing), etc.

All these issues around easements for renewable energy projects often lead to unnecessary delays and uncertainty, which in turn leads to an outflow of investors and the inability of Bulgaria to position itself as a leading location for the development of such projects, for which there is no doubt that all the prerequisites are in place.

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