Budapest - developer building extra unauthorised apts

Hi all,

Here's a story with a sad ending - or maybe not if experienced players can advise......

I bought a two-bed courtyard-facing top-floor apartment in District VI, (Hunyadi Sq, off Andrassy) in 2004 and rented it until 2006. In that year, the residents agreed to sell the roof space to a developer who planned to build two extra floors, renovate the facade and interiors, install a lift and create a roof garden. So no rent last year while works are ongoing. But... a nice modernised building afterwards, or so we all thought.

Two days ago, I received a letter from a Hungarian friend who lives in an apartment on the same floor. This is what it says:

<<<<<<<<Hi Alastair,

The reason why I'm contacting you is that we have issues with the ongoing construction in our house. The constructor decided, without authorization, even without asking anyone in the house beforehand, to build two more apartments on the seventh floor, essentially a whole new level. This violates our agreement at several points:

- we agreed on building max two more levels
- max number of new apts is 16 (now it's 18 or 19, because he intends to split one of the larger flats into two smaller)
- we agreed on keeping a community terrace on the front side of the building accessible to every tenant. Now it's gone.

His authorized construction plan does not allow him to build these extras. I had the house rep to write him a letter asking for immediate cessation of the illegal construction. He declined on the basis of economic interests. I filed a complaint to the local authorities, which halted the construction and imposed a fine of about 15000 Euros. This will not stop him on the long run since he hopes to realize 500,000 Euro+ extra profit from this two extra apt alone.

Now he stopped construction in the house claiming that without roof he cannot protect his investment (in the original plans it was flat top insulation).
In the last storm my flat was badly damaged, walls and ceiling are soaked (I guess this is a real threat to you apartment too). Therefore we have to take immediate actions.

We called a condo meeting on the 4th of September to vote about these issues. I personally object the construction of any further levels. Beside being aesthetically very displeasing, it will further decrease levels of illumination for those having apt facing the court. I am sending a proxy to allow me to cast your vote on motions I would like to pass at the meeting if you would agree to let me use it.

László
>>>>>

I sent my friend the proxy vote. I also sent notification of the meeting to the management company who look after the apartment for me and asked them to take the following actions:
1. Attend the meeting to represent me.

2. Make contact with my friend who wrote the letter above at the meeting and check if he has received my proxy vote from Ireland in the post.

3. Speak to the meeting for me and make known
a) my disgust for the way the developer is treating the residents and
b) my full support for whatever my friend proposes including any legal action and
c) convey my thanks to the meeting for the way he is dealing with this serious matter.

4. If the proxy vote was not received in time for the meeting then I asked them to vote for me, supporting any action my friend proposes and conveying my thanks to him publicly.


I also emailed the solicitor who helped in the original purchase to ask if there anything he can do to have the developer keep to the original approved plans or compensate the tenants for the changes? The value of the courtyard-facing apartments will be reduced if this goes ahead. I'm not sure how effective he is or how motivated he might be to help, though.



Is there anything more effective I can do? I apologise for the long post but I was thinking that experienced folk might need all the relevant facts.

Thoughts welcome, as ever. Thanks

Alastair

Should you not be thinking of heading over there to check on things first hand rather than emailing people?

Sorry to hear about your position. I'm surprised that it was allowed to get this far. The Hungarian legal system is open and secure and in projects like this, the developer will have had to meet various deadlines along the way.

I know the development well. I thought it was a strange one from the start as the prices being quoted are crazy - street facing properties are priced at 800,000-900,000HUF/sqm. These are probably the most expensive loft apartments in Pest at the minute, so I would worry about the saleability/feasibility of the project. To put it in context, in a recent (2006) loft development in a much nicer building at Hunyadi Tér 12, street-facing apartments sold for around 375,000HUF/sqm.

This link suggests that on the fifth and sixth floors, there are indeed 19 apartments. In addition, it seems to me that the two new apartments on the seventh floor may have already been sold: [broken link removed]

Seeing as the developer has violated the terms of the house's contract with him, you should be entitled to compensation. Based on his attitude to date, the house will probably have to take legal action against him, which will no doubt delay the process, which nobody wants. At the house meeting, owners will have to decide what they would prefer: 1. Allow the process to continue and reach a compromise, whereby the builder pays more money to the house, because of contractual changes or 2. Take legal action against the builder, which will more than likely delay or possibly stop the project and prevent your apartment being secured or rented in the short term.

I haven't heard of such blatant disrespect of house members by a loft conversion company in Hungary and really hope that the problem is resolved at your house meeting next week.

Finally, I'm sure that the house will have a lawyer who can assist with this process, but should they need a referral, just let me know.

Clubman,

The issue was could not rather than will not, I'm afraid. Personal matters this last while meant that I couldn't be there. Wanted to have any possible immediate action take asap. Leaving in a few days, though, to meet management company, lawyer and developer.

Thanks for your interest. If anybody has any constructive advice or contacts I'd be glad of them. Have PM-ed "Budapest".

It's an incredible situation. Demolition seems unlikely, but it's a bit of a war of nerves now in terms of who will give in first.

According to the drawings on the link in my previous post, some of the front apartments seem to have been altered to allow for two new apartment (18 and 19). Not a great problem it seems as no extra building took place. It's difficult to know based on the facts available, however it does appear that at least part of a third storey was planned for from the start of the project. The only addition to the original plans (according to those in the link anyway) seems to be the additional 195sqm apartment (17) on the third level, which has already been sold! I assume that this is where the communal roof terrace was supposed to go.

At this stage, the most likely outcome appears to be that you are properly compensated for this breach of contract. The additional estimated income, which the developer is likely to receive for apartment 17 is, as you say, approxiately 1.2M (almost €500,000). I'm not sure what was originally signed for, but at least a further 15-20M HUF would appear to be reasonable, which the house could then use to reduce the common charge or to invest. Cash compensation is probably unlikely. The developers have effectively stolen this 200sqm from the house so the case seems to be very clear, but proving this and dealing with an antagonistic builder makes it into a very complex situation, which needs significant legal involvement. Sorry I can't be of more help. If you need recommendations for lawyers, etc., just let me know.

If it were me, I'd encourage the house to push for a real compensation of 15-20M to be paid to the house management company and move on. I don't think it's worth giving in without a bit of a fight but the house already received 75M HUF(?) for the attic already, which is not so bad. Good luck with it!