The Civil Code Subject To New Regulation
- By Natalia Stenina
- Sep. 17 2013 00:00
Laws on leasehold provide new forms of ownership title butá proposals to automatically transfer leases to the new kind of title could be a headache as much as a benefit.
The main change going on in Russia is the new civil code and this has huge implications, inter alia, for constructioná and development.á Generally the legal system is developing, the government is trying to make the regulations more efficient, transparent and honest.
A number of new types of "limited" property rights to the land have been adopted from the European codes and practice, for exampleá the right of permanent enjoyment of the land plot known as emphyteusis (mostly used for agricultural lands) on condition that the right holder takes care of the estate and pays rent; the right of enjoyment, enabling a holder to derive profit or benefit from property that either is owned by another person or which is held in common ownership, as long as the property is not damaged or destroyed (usufruct)., etc.
It is probably the case that now that there are two or three other titles comparable to ownership title, the most remarkable new title is superficies (the right to possess and use a land plot owned by a third party to develop a building which such tenant will then own). It provides a right to construct, meaning that if you are constructing the building on the land you have certain limited rights to the land. However in 50 or 100 years you have to give the building and the land to the landowner
It needs to be noted that the draft civil code is not yet approved; it's being widely discussed in conferences, in the duma, and of course among lawyers.
There is also a proposal to make all developers transfer their lease into this new kind of title. If they don't transfer it to the new "right to construct" (superficies) then it would be automatically transferred to such a right, granted for 50 years.
Such significant chang- es hardly correspond to one of the principles of the legal system, which is stability.
Such significant changes hardly correspond to one of the principles of the legal system, which is stability, but investors do realise that Russia is still an emerging market. With the world crisis developing in the background, it remains one of the markets with potential for investment.
Foreign tenants andálandlords are used toábeing able toáapprove more or less any term ináa contract unless it violates general legal principles.
TheáRussian Supreme Commerşcial Court issued aálegal opinion clarifying theálegal framework ofálandlord-tenant relations on March 21, 2013.
Ináits attempts toátailor its approach toáthe developing practice onáthe Russian market, theácourt is trying toámeet theáneeds ofáboth tenants andálandlords.
Theáopinion covers both specific andágeneral issues, theámost notable ofáwhich are:
Aálease agreement may be entered intoáfor future real estate, meaning that theálease agreement may apply toápremises or aábuilding that does not physically exist when theálease agreement is made (e.g. buildings under construction). Theásame applies toábuildings that have already become operational but whose ownership title has yet toábe registered. Importantly, theácourt ruled that theátenant may recover damages if theálandlord fails toáhand over theápremises because theábuilding has not been constructed (Resolution No.13 ofáthe Plenum ofáthe Russian Supreme Commercial Court dated 25.01.2013 OnáAmending Resolution No. 73 ofáthe Plenum ofáthe Russian Supreme Commercial Court dated 17 November 2011á OnáSeveral Issues ináApplying theáRules ofáCivil Code Related toáLease Agreements).
Nevertheless, no lease agreement may be entered intoáfor future real estate (and any lease that is concluded will be void) should it be proved that theápremises/the building are, ináfact, anáunauthorized construction (According toáRussian legislation, this term denotes structures erected onáa land plot that was allocated foráother purposes, as well as facilities constructed without theárequisite permits being received or inámaterial breach ofátown planning andáconstruction rules andáregulations: such structures should be demolished (article 222 ofáthe Russian Civil Code).