The title of the painting:
Workshop of marinus van reymerswaele, two tax collectors, c. 1540-50.
Does the municipality ask you for a change of use for a real estate agency?
In this article I want to tell you about a measure that the municipality of Verona has taken against owners of store walls leased to real estate agencies.
Actually I think it also affects all landlords who have leased commercial property to a business that really isn't really commercial, but of course I'm talking to you about my area and not what I couldn't verify...
It was any morning in April 2018. The phone rings, it's a colleague of mine.
Me: Hi Artemistocles! -fictional name (ed.)-how are you doing?
A: Hi Alexander! All good thanks...I wanted to ask you one thing;
Me: Sure! Tell me...
A: The owner of the walls of the store where I'm renting got a strange letter from the municipality--they're asking him to change the use of the store from "commercial" to "business" because they say my business is not related to the business sector--do you know anything about that?
Me:...
Me:...
Me: BUT ARE WE JOKING?
Me: Do you have a copy of the communication?
A: Of course!
Me: Let's see that I want to understand what they are contesting with you
A few days later, we manage to arrange for coffee, where Artemistocles shows me the text of the missive delivered to the estate and by copy knowledge to him as well.
The letter, sent by registered mail, is a dispute by the municipality of the wrong use by the property owner with respect to the classification of the property.
The object of the communication is
"Request for submission of deeds of update under Ministry of Finance Decree 19/04/97 No. 701 and communication of cadastral data building"
The reason for this communication is made clear in the next lines where the municipality specifies that among its "programmatic goals" is the "pursuit of increasingly widespread and extensive tax equity"
The challenge is made pursuant toArt. 1 paragraph 336 L 30/12/04 n 311, for which the administration finds
"the existence of factual situations no longer consistent with cadastral classifications due to intervening changes in construction"
I quote the paragraph quoted in the registered letter:
Municipalities, having ascertained the presence of privately owned real estate not declared in the cadastre or the existence of factual situations no longer consistent with cadastral classifications due to intervening changes in construction, shall require holders of real rights to the real estate units concerned to submit deeds of update drawn up in accordance with the regulations referred to in the Decree of the Minister of Finance April 19, 1994, no. 701. The request, containing the elements ascertained, including, if ascertained, the date to which the non-submission of the cadastral report is to be referred, is notified to the interested parties and communicated, with the notification details, to the provincial offices of the Land Agency. If the interested parties fail to comply with the request within ninety days of the notification, the provincial offices of the Land Agency shall, at the expense of the interested party, register the unregistered property in the land register or verify the classification of the reported real estate units, notifying the results of the classification and the relevant annuity. The penalties provided for violations of Article 28 of Royal Decree Law No. 652 of April 13, 1939, converted, with amendments, by Law No. 1249 of August 11, 1939, as amended, shall apply.
The request being made is that of the "submission of updating acts drawn up in accordance with the regulations of Ministry of Finance Decree No. 701 of 19/4/94"
Upon notification of this deed, issued on the letterhead of the municipality of Verona in the name of the 'Tax Assessment and Collection Office, the property and my colleague went to the indicated office, asking for enlightenment about this change of course taken by the administration of our beautiful city.
How come in all these years it has always been fine for a real estate agency to occupy a store, and today suddenly it is not?
Unofficially, the official said that this initiative arose from the disproportionate misuse that many firms ( legal, professional, technical, associate and sometimes medical ) make of some homes, which are intended as offices even though they are "residential" class.
A sacrosanct battle I would add!
That there is an office in an apartment is an improper use that the landlord makes for obvious reasons of tax savings ( the cadastral rent of an apartment is significantly lower than that of an office ) but that one contests the use of a store on a COMMERCIAL street for which it is used NOT FOR HABITATION but in the TERTIARY sector for the provision of SERVICES, seems to me a stretch all right!!!
That then, if the real estate agency business is challenged then should we also go and check all employment agencies, insurance companies, travel agencies and all those businesses that do not conduct a direct sale of a consumable good?
The questions I ask myself are:
- Why should there be incompatibility in the operation of a service business and a lease of commercial premises?
- Why is it that if it was not a problem until yesterday, it is a problem today, even though no specific regulations have intervened?
- Are the reasons given in paragraph 336 of Art. 1 L 30/12/04 n 311 sufficient to intimate a change of use to the landlord?
- Is it fair to intervene in contracts that are already in place by changing owners' economic conditions out of the blue?
The disadvantages of this operation are many:
1 The landlord will have to pay charges for CUF ( functional change of use/without works ) and will end up with a cadastral rent, in most cases, significantly increased. ( In Verona the cadastral rent of offices is usually higher than a store of equal area )
2 By changing the use, the landlord, should the property become vacant, would see the pool of potential tenants significantly reduced. Few businesses, in fact, need glazed offices on the ground floor ( which are known to have higher rents than an office on the upper floors without windows )
3 By changing the landlord's profit and loss account, which will result in the landlord having to pay more fixed property taxes, the rent currently received will be inadequate, with the possibility of widespread rent increases.
4 certain historic commercial premises ( perhaps constrained ) do not have the technical characteristics to be considered with the current regulations of commercial premises, so once changed to offices the property may find itself unable to carry out the reverse process and turn it back into a store.
To date, it seems that the only alternative route to an administrative appeal is to proceed with a zoning variance, or (unfortunately for my colleagues) to change tenants.
This measure was created with a noble purpose, to counter the misuse of real estate, but is this not going too far?
If you have also received this communication, please let me know if there have been any special implications!
If you need help making a lease, please contact me!!!
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