Hidden Costs of REURB: Works, Compensations, and Budget Surprises

Urban Land Regularization (REURB) is often perceived by residents and investors as a merely bureaucratic procedure: drafting a site plan, obtaining municipal approval, and registering it with the land registry.

However, practice shows that the costs of REURB go far beyond administrative fees and attorney’s fees. There are hidden costs, often unforeseen, that can significantly impact the collective budget.

This article analyzes these costs, why they arise, and how they should be planned for in order to avoid unpleasant surprises throughout the process.

1. Direct Administrative Costs

These are the costs expected from the outset:

·         Municipal fees (project review, site plan approval, incidental ITBI and ISS taxes);

·         Notarial and registry fees (registration of the CRF, opening of individual property records);

·         Attorneys’ and technical fees (engineers, surveyors, architects).

These costs are generally anticipated and apportioned among the residents or condominium owners.

2. Hidden Infrastructure Costs

Regularization laws require compliance with minimum urbanization and safety standards. This may generate additional expenses such as:

·         Installation or reinforcement of water, sewage, and electrical networks;

·         Stormwater drainage works;

·         Basic paving of internal roads;

·         Implementation of accessibility features in buildings and common areas.

Practical example: a building without fire hydrants or emergency staircases may be required to carry out works before issuance of the CRF.

3. Collective Safety Costs

The Fire Department requires the issuance of a Fire Safety Certificate (AVCB). This often entails:

·         Installation of alarm and sprinkler systems;

·         Emergency signage and lighting;

·         Structural renovations for escape routes.

These costs frequently exceed initial expectations but are indispensable to ensuring the safety of occupants.

4. Environmental and Compensatory Costs

In certain cases, the REURB process may involve environmental requirements, such as:

·         Environmental impact assessments;

·         Compensation for vegetation removal;

·         Implementation of green areas or community facilities.

Example: a subdivision built near a protected area may be required to offset the impact through reforestation or preservation of an adjacent area.

5. Property and Tax Adjustment Costs

Regularization may also generate property and tax-related effects:

·         Retroactive collection of property tax (IPTU);

·         Updating of the property’s assessed market value;

·         Possible levy of a betterment contribution due to related public works.

6. Financial Planning and Management of Hidden Costs

To avoid surprises, it is recommended to:

·         Obtain a preliminary assessment by an engineer and an attorney regarding likely requirements;

·         Hold a residents’ assembly to deliberate on a specific reserve fund for works;

·         Establish clear contracts clarifying that technical fees and administrative costs are not included in legal service retainers.

Conclusion

REURB is not just a registry procedure: it is a multidisciplinary project that may involve construction works, safety adaptations, environmental compensations, and tax impacts.

These hidden costs must be anticipated and communicated from the outset; otherwise, they risk undermining the process or triggering disputes among residents.

In short: regularizing a building or subdivision is an investment in safety, property appreciation, and legal stability — but it requires realistic and transparent financial planning.