The Ministry of Economic Affairs and Communications has set a goal to reorganize the Building Register, aiming to display all buildings with a building footprint of more than 20 m².

Since the beginning of 2020, all buildings with a building footprint exceeding 20 m² must be entered into the Building Register. In addition to residential buildings, this also includes larger sheds, saunas, garages, and barns. According to §§ 26–29 of the Act Implementing the Building Code and the Planning Act, this requirement primarily concerns the legalization of illegal buildings. The aforementioned provision does not require an occupancy permit for all existing buildings. Building permits issued before the entry into force of the current Building Code (provided that construction was commenced in due time) are indefinite and may not yet have been completed by 2020.

The requirement that a building must have both a building permit and an occupancy permit already derived from the former Building Act valid until 30 June 2015. For example, § 32 of the Building Act in force until that date stipulated that an occupancy permit is the consent of a local authority or the state confirming that the completed building or part thereof complies with the prescribed requirements and may be used for its intended purpose. Under the Building Act valid until 1 July 2015 (§§ 68 and 29), as well as under the currently valid Building Code (§ 139), local authorities have the right to impose fines for using a building without an occupancy permit. According to § 139 of the Building Code, a person may be fined up to 300 penalty units (EUR 1,200) for using a building without an occupancy permit when a building permit was required, and a legal entity may be fined up to EUR 32,000. Under § 47(1) of the Penal Code, the value of one penalty unit is EUR 4.

“This affects an estimated more than 300,000 buildings across Estonia,” says Andero Mardo, co-owner of Projektibüroo, a company specializing in occupancy permits, emphasizing that applying for an occupancy permit is not mandatory for everyone. A building constructed before 1995 that has a correct entry in the register and has not been expanded or reconstructed since then does not require an occupancy permit. However, if a building has been expanded or reconstructed after 1995, an occupancy permit is mandatory.

What Is an Occupancy Permit?

According to the Building Act, an occupancy permit is the consent of a local authority or the state confirming that a completed building meets the prescribed requirements and is safe to use for the purpose specified in the building design. In addition to homeowners, the existence of an occupancy permit is also important for local authorities, as it provides assurance that buildings located within their jurisdiction are safe for use.

Is a Building Permit No Longer Enough?

Decades ago, applying for an occupancy permit was not considered important. Once an owner had obtained a building permit, construction could last indefinitely. Today, the laws have changed. While a building permit grants the right to construct, documentation must later be submitted to prove that the building was constructed in accordance with the permit and that it is safe for use.

Information on whether a building’s documentation is in order can be obtained from the Building Register or by visually comparing the building with the approved design. Special attention should be paid to buildings erected during the real estate boom, as problems may also exist with occupancy permits for apartments built during that period.

So far, local authorities have taken a lenient approach to the existence of occupancy permits due to heavy workloads, but this is changing. An occupancy permit is far more than a formal requirement, as according to the law, a building without an occupancy permit should not be inhabited at all. Therefore, all homeowners should review their documentation, Mardo emphasizes.

Five Key Reasons Why a Building Must Have an Occupancy Permit

1. An occupancy permit proves that the building is safe to use.
It confirms the technical condition of the building’s engineering systems, electrical systems, and load-bearing structures. Fire safety is inspected by the Rescue Board before the occupancy permit is issued.

2. An occupancy permit ensures credibility with banks.
When issuing loans, banks check whether an existing building has an occupancy permit or whether a building under construction has a building permit. Both serve the same purpose—to ensure construction safety. “It provides assurance that the asset against which they grant a loan is a reliable form of collateral,” explains Mardo. If the property documentation is not in order, the bank may not immediately reject the loan application, but the process may become time-consuming.

3. Having an occupancy permit speeds up property sales.
It is difficult to find a buyer for a building without an occupancy permit because banks are unwilling to finance such properties. In simple terms, this means that a buyer must be found who does not require a bank loan. Even then, problems may persist, as such buyers may later wish to resell the property to someone who does need bank financing, at which point the lack of an occupancy permit becomes a serious issue again.

4. Without an occupancy permit, insurance may not compensate damages in case of fire or other accidents.
If a building does not have an occupancy permit, insurance companies may refuse to compensate damages, as there is no assurance that the building’s technical systems and structures are safe. “People have turned to us whose insurers refuse to pay compensation after accidents because the building lacks an occupancy permit. These cases are no longer rare; they are occurring increasingly often,” Mardo emphasizes.

5. The absence of an occupancy permit may result in substantial fines.
If a building is not entered into the Building Register by 1 January 2020 and lacks an occupancy permit, the local authority may impose a substantial fine on the property owner and issue an order to legalize the building, including the possibility of coercive penalties. According to § 133 of the Building Code, enforcement authorities may apply coercive measures in accordance with the Substitute Enforcement and Penalty Payment Act. The maximum coercive penalty is EUR 6,400 for individuals and EUR 64,000 for legal entities. Whether and to what extent fines or coercive penalties are imposed is at the discretion of the extrajudicial authority (e.g., the local government).

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