Real estate company sues Estación Central for "lack of service" and demands $17 billion in compensation

A complex case concerning the repercussions that decisions by State agencies can have on private parties is being processed before the 12th Civil Court of Santiago and deals with the real estate market. On September 11, the real estate company Eurocorp, through the entity Eurocorp Dos S.A., filed a lawsuit against the Municipality of Estación Central for "fault of service" and is demanding compensation of 430,224.8 UF (just over 17 billion pesos). The origin of the conflict dates back to 2015, when Eurocorp asked the Works Directorate of Estación Central whether it could build with continuous construction on the properties at Constantino Street N°59 and N°105. The municipality confirmed that it was permitted and approved the preliminary projects. Subsequently, in 2016, Eurocorp bought the properties for more than 119,000 UF and processed the building permits. However, the municipality later invalidated those same permits after acknowledging that it had granted them in violation of urban planning regulations. Subsequently, the Supreme Court confirmed that the DOM of Estación Central had granted permits in contravention of applicable regulations. "By the time the Municipality corrected its irregular action, Eurocorp had already acquired the properties, committed substantial resources, and structured two projects whose execution became economically unviable, suffering damages amounting to 430,224.8 UF," the lawsuit stated. "It is not legally admissible to transfer those consequences to a party that submitted its projects to the examination of the competent body and made its investment decisions based on what that body reported, approved, and finally authorized. The invalidation restored legality, but it did not make the damage that the Administration's irregular action had already caused disappear," it explained. Procedures According to the document, "the possibility of developing both properties under a continuous grouping system did not, then, stem from an interpretation by Eurocorp or from a reading of the urban planning regulations that my client had decided to assume at its own risk." "It came from the Municipal Works Directorate of Estación Central itself: the technical body specifically called upon to apply those regulations and to rule on the urban planning conditions of the properties under its jurisdiction had expressly reported that continuous construction was permitted." In the lawsuit, Eurocorp explained that "nothing allowed anticipating, under those circumstances, that the urban planning criterion that the Municipality had been consistently applying, and which it had embodied in administrative acts issued regarding these same properties, would end up being considered contrary to law." "Eurocorp could reasonably trust that the decisions adopted by the competent municipal technical body had been issued in accordance with the regulations that that same body was legally called upon to interpret and apply," it added. On May 16, 2016, the Urban Development Division of the Ministry of Housing and Urbanism issued Circular N°203, DDU 313. In it, it maintained that in those areas where the territorial planning instrument did not establish a maximum building height, it was not appropriate to authorize buildings subject to a continuous grouping system, a criterion that differed from the one that the DOM of Estación Central had been applying until then. The problem is that Eurocorp at that time —according to the lawsuit— had already obtained approval of its two preliminary projects and disbursed 119,310.8 UF to acquire the properties. "The properties had been acquired and the investment had been made on the basis of the urban planning conditions previously reported and approved by the Municipality itself." On December 10, 2018, the DOM, which had reported the urban planning conditions, approved the preliminary projects, and granted the permits, ordered the initiation of procedures to invalidate the building permits. Eurocorp challenged those resolutions in court. The dispute was finally resolved by the Supreme Court in a final judgment of October 14, 2022, which, upholding the decision of the Santiago Court of Appeals, concluded that the permits had been correctly invalidated, since the DOM of Estación Central had granted them in breach of applicable urban planning regulations. At the close of this article, the Municipality of Estación Central had not responded to the inquiries made. NEWSLETTER Pulso PM Monday to Friday, 12:30 PM The most relevant news on markets, companies and business: timely information, context and content to make better decisions. By subscribing you are accepting the Terms and Conditions and Privacy Policies of La Tercera.