The parking spaces were paid for though!

At the same time, discussion of the Bavarian Administrative Court’s judgement (BayVGH, 8 October 2020, court file no. 2 B 20.301)

“The parking space compensation (Stellplatzablösung) does not only have a project-related, but also a property-related effect.”

A constant companion of real estate projects - not only in Hamburg - is the dispute about the fulfilment of necessary parking space obligations or their compensation in money. The following article uses the current decision of the Bavarian Administrative Court of 8 October 2020 (court file no. 2 B 20.301) to illustrate the extent to which a parking space redemption also works in favour of subsequent owners and developers.

The problem is well known: In the process of obtaining a building permit, the creation parking spaces may be necessary. The basic legal principle is that there is a necessity for parking spaces under certain conditions with a newly constructed building (Article 48 Hamburg Building Code, HBauO). Modifications to the building or its use leads to an extension of the parking space obligation in case of an additional need.

The parking spaces are to be created on the plot of land itself or (secured by building encumbrance) on a plot in the vicinity.

There is however the possibility of paying a compensation amount, in the event that no parking spaces can be created. The amount of compensation may vary; in Hamburg’s city centre, for example, the significant sum of EUR 10,000.00 is set (Article 49 HBauO).

With the payment of the compensation, the developer “fulfils” his parking space obligation (Article 49 par. 1 s. 1 HBauO). In case law this is called the surrogate character of the compensation payment (Federal Administrative Court New Legal Weekly 1986, 600; Hamburgian Higher Administrative Court (OVG), Judgm. of 12 June 2003, court file no. 2 Bf 430/99; BayVGH, Judgm. of. 8 October 2020, court file no. 2 B 20.301, par. 42).

It is important that the compensation amount must necessarily be used by the municipality/city for the creation of parking spaces (Article 49 par. 4 HBauO). From the viewpoint of case law, this leads to the creation of actual parking spaces that benefit the redeeming property as such (par. 42).

The BayVGH states that

“the parking space issue for the building project and thus also for the property has already been settled in the past to the extent of the compensated parking spaces. This – binding – settlement is not affected by the alteration or demolition of a building.” (par. 42)

This finding by the BayVGH is not a novelty; rather, the Senate joins the decades-long line of case law by the Higher Administrative Courts (e.g. OVG Lower Saxony, Judgm. of 26 January 1987, court file no. 6 A 78/85; OVG North Rhine-Westphalia, Judgm. of. 26 February 1991, court file no. 11 A 2284/88) and confirms its own line of case law (BayVGH, Judgm. of 14 August 2008, court file no. 2 BV 06.540).

The parking space compensation therefore has “not only a project-related effect, but a property-related effect”, as the BayVGH emphasised in 2008 and again in 2020 (Judgm. of 14 August 2008, court file no. 2 BV 06.540, par. 25; Judgm of. 8 October 2020, court file no. 2 B 20.301, par. 42). This assessment holds also valid for Hamburg state law, which is apparent from the wording of the Hamburgian legislation and from the relevant case law (OVG Hamburg, Judgm. of 26 April 1990, court file no. Bf II 51/89).

Nevertheless, the practitioner is urged to be cautious, as several state laws have chosen a project-related approach (e.g. on Saxonian law OVG Saxony, Judgm. of 11 April 2019, court file no. A 206/18, par. 38).

The parking space compensation is also not supposed to be subject to time lapse (e.g. 30 years) (BayVGH Judgm. of 14 August 2008, court file no. BV 06.540, par. 26; Judgm. of 8 October 2020, court file no. 2 B 20.301, par. 43).

Despite these unambiguous statements by the Higher Administrative Courts, time and time again local building authorities demand a renewed compensation payment. This is especially the case when existing buildings are torn down and new structures are erected. The disregard of established case law was already criticised more than 10 years ago (Johst, Journal for Real Estate Law 2010, 616, 620) – however, the problem persists and competent advice in dealing with officials is more important than ever.

Chatham Partners’ experienced real estate team advises national and international investors on all aspects of public and private construction law, including all facets of project development. The projects we have advised on include well-known national and international large-scale projects, many of them with city centre locations. Please feel free to contact us to find out how we can assist you.

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