Who Bears Liability for Unauthorised Construction? A High Court of Albania Ruling on Timing, Investigation and Due Diligence

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Introduction

The decision of 5 November 2025 of the Administrative College of the High Court of Albania (No. 00-2025-3821 (407)) is a useful marker for a sector that has grown rapidly and now carries real weight in the national economy. According to INSTAT, the country’s official statistics agency, 259 construction permits for new buildings were approved in the fourth quarter of 2025, covering a total surface of some 340,477 m² — of which residential construction accounted for around 200 permits and 237,132 m², and non-residential buildings (hotels, commercial and industrial premises) for the remaining 59 permits and 103,345 m². The total value of approved building and engineering projects reached approximately ALL 19.4 billion.

Growth of this kind needs a stable and predictable legal framework. The present decision addresses a recurring and practically important question: when unauthorised construction is later discovered, who bears administrative liability — the party that actually carried out the works, or whoever happens to own the property when the breach is detected? As we explain below, the High Court did not finally answer that question on the facts; rather, it set out the governing principle and returned the case for proper investigation. Both the principle and the reason for the remand carry a clear lesson on the value of due diligence.

The dispute

The claimant, an Albanian company active in the production and trade of detergents, had obtained a construction-site permit for an industrial facility near the Tirana–Durrës highway, and subsequently a permit changing the building’s use into a multifunctional entertainment and commercial centre. In December 2007, it transferred part of the property (21,976 m²) to a third company, with the transfer duly registered at the Immovable Property Registration Office (ZVRPP) in Tirana.

On the basis of a work order of June 2007, inspectors of the National Construction and Urban Planning Inspectorate (INUK, now the National Inspectorate for the Protection of the Territory, IKMT) inspected the site. Their report (No. 20, dated 8 July 2009) recorded several breaches: the absence of a technical and legal documentation file, the absence of a supervising engineer, and unauthorised additional works — specifically 5,269.8 m² built beyond the approved project. On the same day, the Chief Inspector issued Decision No. 09, fining the claimant ALL 131,808,111.4 as the party responsible for those works. The company challenged the fine, contending that by the time the additional works were carried out the property had already been transferred and was no longer in its ownership.

Procedural history

The dispute has a long history. The District Court of Tirana initially dismissed the claim (2011); the Court of Appeal quashed that decision and remanded it; and, following a 2014 High Court ruling on jurisdiction, the Administrative Court of First Instance again dismissed the claim (2015). In 2018, however, the Administrative Court of Appeal reversed course — it accepted the claim and annulled IKMT’s fining decision, holding that liability had not been properly established. It was against that 2018 decision that IKMT and the State Advocate brought the recourse now before the High Court.

The question before the High Court

The core question was one of attribution: does administrative liability for the unauthorised works rest with the party that actually carried out the construction, or with the company that owned the property at the relevant time? On the facts, this turned on whether the additional 5,269.8 m² had been built while the claimant still owned the site, or only after ownership had passed to the transferee.

The High Court’s reasoning and decision

On the principle, the High Court was clear. At paragraph 23, it held that administrative liability for unauthorised construction, or for breaches of a construction permit, must be attributed to the entity that actually carried out the works — with the consequence that the decisive element in identifying the responsible party is the time at which the construction was carried out. Regardless of when a breach is detected, in other words, what matters is who was building, and when.

Applying that principle, however, the High Court found that the Administrative Court of Appeal had not done the work the principle requires. The Appeal court had treated the mere transfer of the property to the third company as decisive, without conducting a complete and thorough investigation into when the additional works were actually built; it had not established whether that company held any construction permit; it had not asked the appointed expert to determine the time of construction, even though that question was decisive; and it had not obtained the relevant legalisation file. The High Court held that a decision resting on such an incomplete investigation did not meet the standard of reasoning required of a judgment, a requirement it grounded in the case-law of the Constitutional Court.

For those reasons, the High Court quashed the Administrative Court of Appeal’s 2018 decision and remanded the case for retrial before a different panel, with directions to conduct a complete and thorough investigation, to characterise the facts correctly, to apply the rules on the burden of proof, and to resolve the merits. It is important to be precise about the effect of this: because the decision that had favoured the claimant was set aside, the question of the claimant’s liability is reopened rather than settled. The High Court established how the responsible party must be identified; it left the identification itself to be carried out on retrial.

The applicable legal framework

Because the contested act dated from 2009, the dispute was assessed under the legislation in force at that time — principally Law no. 9780, dated 16 July 2007, “On Construction Inspection,” as amended, together with Law no. 8405, dated 17 September 1998, “On Urban Planning,” and Law no. 8402, dated 17 September 1998, “On the Control and Discipline of Construction Works,” and the implementing Council of Ministers Decision no. 862, dated 5 December 2007. The High Court’s review was conducted under Law no. 49/2012 “On Administrative Courts and the Adjudication of Administrative Disputes” and the procedural codes. It is worth noting, for context, that this framework has since been superseded: territorial planning and development is now governed by Law no. 107/2014, and the inspection functions formerly exercised by INUK now rest with the IKMT, which replaced it in 2015.

Practical takeaway: why due diligence matters

For investors, developers and purchasers, the decision carries a clear and practical message. Administrative liability for unauthorised construction does not simply follow current ownership; it attaches to the party that actually carried out the works, assessed at the time they were performed. That principle cuts in both directions. A purchaser who acquires a partially built or recently completed property may find that liability for earlier unauthorised works remains with the original builder — but establishing that fact depends on evidence of who built what, and when, which is precisely the kind of evidence that is difficult to assemble after the event. Equally, a party that carried out works does not shed its exposure merely by transferring ownership.

The case therefore underscores the value of rigorous due diligence in construction-related transactions: verifying the permits in place, the works actually carried out and their timing, and the documentary record (including any legalisation files) before completing an acquisition. Sound, contemporaneous documentation is the most effective protection against precisely the evidential uncertainty that left this dispute unresolved after more than a decade of litigation.

At Oracle Law Global, we advise clients on compliance and due diligence in construction and real-estate transactions, and represent them in administrative and judicial proceedings, with a focus on practical, results-oriented solutions. We welcome the opportunity to assist on future matters.

Source: Administrative College of the High Court of Albania, Decision No. 00-2025-3821 (407), 5 November 2025 (case No. 31003-02981-00-2018). Construction statistics: INSTAT, Building Permits, Q4 2025.

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