News & Articles
January 19, 2026
From debts to building permits: an overview of the most significant changes in the real estate sector in 2026
The apartment sale is complete, but old debt comes with it? The principle of “debt follows the apartment” is already in force, creating a new and very practical risk for the acquirer. At the same time, the legal status of the apartment owners' community is being strengthened to facilitate related processes, and there is a new accelerated approval process of small construction projects. More on this and other important legal nuances in the field of real estate in 2026 - below.
The principle of “debt follows the apartment”
On January 1, 2026, amendments to the Law on Residential Properties came into force, introducing a new logic in apartment transactions: from now on, debt "follows" the apartment, not its previous owner. In practical terms, this means that the acquirer becomes responsible for the management fees of the apartment building, utilities, contributions to the reserve fund, and land use/rent fees, if such debts have been incurred no earlier than three years prior to the acquisition of the property. In addition, late payment interest and contractual penalties, if applicable, will also be charged.
This principle is a real charge (reālnasta) that is not specifically recorded in the land register. Therefore, when acquiring an apartment, it must be considered that the property may be encumbered, and in this case, “I didn't know” or “I wasn't told” will not be valid excuses.
What does this mean for the acquirer?
In addition to the usual checks (technical condition, land register, taxes, etc.), the acquirer definitely need now request a statement of debts from the apartment owner, which at the request of the apartment owner, will be prepared by the service provider and/or building manager.
The statement will indicate the payment obligation from which the debt arises and the amount of the debt. It is important to be aware that if the seller avoids, delays or tries to trivialise the process of obtaining this statement, it is often the first sign that debts exist. If such a statement is not requested, the acquirer of the property risks acquiring property with debts that will have to be covered after the transaction.
Does the discovery of debt mean that the transaction should be abandoned?
No, the discovery of debt does not automatically make the transaction voidable. On the contrary, the potential acquirer has the opportunity to evaluate possible solutions and the risks involved and choose the most acceptable option - to continue with the purchase or abandon the planned transaction. In other words, each situation requires an individual assessment and solution:
1. Price adjustment: the parties may agree to reduce the purchase price by the amount of the debt. The acquirer pays the “acquired” debt, but will not lose anything economically.
2. Subrogation action: unless the parties have agreed otherwise, the acquirer has the right to bring a subrogation action against the previous owner, but it is important to assess whether the court decision will be enforceable in practice if the claim is upheld (i.e., whether it will be possible to recover the debt).
This is where the most important point lies - each transaction is individual. For some, it will be a rational solution, for others - a risk they do not want to take. Consequently, real estate transactions cannot be standardized, which requires the involvement of a lawyer.
Status of apartment owners’ community
On January 5, 2026, amendments to the Law on Residential Properties came into force, significantly changing the role of apartment owners’ community in civil law transactions. Whereas until now the community was more of a “technical term”, it now has real legal weight – both in business relationships and in everyday life, including renovation projects. These changes address a long-standing problem: unclear responsibilities, complicated renovation financing, and unnecessary bureaucracy in apartment buildings.
The community of apartment owners is equated with a legal entity – not only in terms of tax and administrative obligations, but also in accounting and relations with credit institutions. This significantly expands the ability of apartment owners' community to “operate” in the market and enter into commitments on their own behalf.
Financing for renovation – finally more realistic
The greatest benefit of clarifying the legal status of the community is the facilitation of obtaining financing. Namely, whereas credit institutions previously did not issue loans to apartment owners' communities (which is why residents had to form associations), in future the community itself will be able to obtain loans from credit institutions, as it is recognized as a legal entity.
This regulation and the resulting rights will significantly reduce the time, costs, documentation, and intermediate steps involved in obtaining financing. It is important to note that renovation projects are precisely those where bureaucracy most often “stifles” the initiative of owners, with the result that building renovation often ends before it even begins.
Accounting and income – more transparent and honest
Currently, apartment owners' communities must report their income (e.g., income from advertising on buildings), and it can no longer be “hidden” in the managers' annual reports. Until now, communities did not keep separate accounts, so their income appeared directly in the managers' annual reports. The “transfer” of such income to the apartment owners' community was organized in various ways - as discounts on management fees or by transferring the income to the community's reserve fund.
Such amendments to the law are only logical - if the community earns money, it should also receive and use these funds; this is now possible because, by granting the community legal entity status in relation to credit institutions, the community can open a bank account. Thus, if the community's annual income exceeds two minimum monthly wages, the community will have to register with the State Revenue Service as a taxpayer.
Register of apartment owners' communities
Along with the adopted amendments to the law, a Register of Apartment Owners' Communities has been created. In this register, each community is identified by name, assigned an identification number (identifier), and its representative (manager) is also indicated. The identifier and name in the register are automatically assigned to any apartment owners' community - to existing ones and those that arise in new buildings after the division of apartments into separate properties.
The information included in the register about apartment owners' communities will be public and available in the Construction Information System. In practice, this means:
Beneficial owners – a requirement that regulates the market
Finally, along with the changes already mentioned, apartment owners’ communities are also treated as legal entities regarding the obligation to identify and disclose their beneficial owners (BO).
Namely, each apartment owners' community is obliged to identify and disclose its BO (by registering the legal entity in the BO register of the Register of Enterprises) before entering civil law relations with third parties (before concluding any legal transaction).
Therefore, apartment owners must be aware that failure to comply with the obligation to disclose the BO may have legal consequences. Namely, it may become difficult for apartment owners' communities to fully participate in civil transactions, as information about their BO will not be clarified and registered.
What do these changes mean for the market? Overall, these changes bring real benefits, not just a “legal correction” on paper:
Disclosure of beneficial owners when registering real estate
In its decision of October 14, 2025, in case No. SKC-836/2025, the Senate of the Supreme Court of Latvia clarified the disclosure requirements for legal entities and legal arrangements that acquire real estate in Latvia. From January 1, 2025, the Land Register Law stipulates that when securing rights to real estate, the BO must be disclosed, including foreign entities:
The Senate of the Supreme Court has indicated that the land registry must verify compliance with the obligation to disclose the BO, rather than wait for a specific person to be indicated - if the subject has reasonably indicated that it is not possible to ascertain (disclose) the BO, then the obligation is considered to have been fulfilled.
Changes and simplifications in the construction sector
The year 2026 has begun with a major change in the construction sector: a unified construction process has come into force, finally connecting state systems and reducing bureaucracy. In practical terms, this means that a single application in the Construction Information System becomes a complete set of all necessary documents - for construction, cadastre, and land registry entry. It is no longer necessary to submit separate applications to several institutions - information exchange is centralized.
As a result, inventory file no longer needs to be ordered separately from the State Land Service, which means lower costs, shorter deadlines, and less bureaucracy. This is a significant step for private builders and small developers, who have often been held back by the administrative burden.
Another important part of the changes concerns small construction projects. Amendments to the Building Regulations stipulate that in many cases no documentation is required for the construction of small buildings up to 25 m² – for example, a sauna, garage, workshop or small modular house. The construction of everyday necessities is becoming faster and simpler.
In addition, even in situations where documents are still required, the process has been simplified: a notification of construction is sufficient, without a formal decision by the building authority. For example, for residential buildings in the first group, auxiliary buildings, small agricultural buildings, as well as the renovation and reconstruction of one or two-apartment houses, if the building volume or type of use does not change.
When assessing these changes in context, the new construction regulations significantly shorten the time to start construction, reduce bureaucracy and transaction costs. For private individuals, this means faster project completion, while for small developers it means fewer unplanned costs and delays.
The information in this article is general and not intended as legal advice. It is for information purposes only and does not reflect any particular situation or circumstances and should not be relied upon as a source of professional advice.
Author: Agnese Kacare, Lawyer at Venture Faculty
