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. Last Updated: 07/27/2016

Looking to Buy a Russian Dacha?

Foreigners living in Russia often consider the purchase of a dacha, or country house, as an alternative to the city apartment lifestyle. People might consider purchasing a dacha either for use during the summer, or, if not too far to commute to work, as a permanent home in Moscow.

Legally, the ownership of land by foreigners in Russia is not cut-and-dried. The dacha building itself can be bought and owned by a non-Russian, but it is not clear if foreigners can own the land beneath it. This stems from the wording of the 1991 Russian Federation Land Code, drafted in the days of the Soviet Union but still in effect until the passage of a new Land Code. Under the Land Code, foreigners are only permitted to lease the land or hold it on a long-term basis.

From a foreigner's point of view, the major difficulty with the Land Code is that it does not specifically provide that foreign persons and companies can own land in Russia; it in fact even restricts Russian persons' and legal entities' ownership and use rights over land. It could be argued that, since the Constitution states that foreigners have the same rights under Russian law as do Russian citizens, and that Russian citizens can own land, then a foreigner can also own land. But since any foreigner contemplating buying a plot of dacha land is unlikely to appeal to the Constitutional Court of the Russian Federation with this question, this will remain a moot legal point for some time.

A number of Russian laws and presidential decrees passed since 1991 have attempted to broaden the scope of land ownership in Russia, particularly if the land is used for agricultural and dacha purposes. In 1993, a presidential decree was promulgated that broadened ownership rights of citizens with respect to their agricultural plots; it permitted the sale, transfer, lease and mortgage of such lands by Russian persons and legal entities. It established a system of registering ownership rights by local administration land authorities. But it appeared that many local authorities did not implement these changes. Consequently, in March and April of this year, other government decrees were passed that reinforced and broadened these rights by providing for a unified system of registration of land rights for Russian citizens, as individuals or through a land cooperative. Land cooperatives have always been the most common way whereby Russian citizens were granted rights to plots of land for dachas. Under this system, all members of the cooperative jointly owned the land allocated to the cooperative.

After the passage of these decrees, probably the most appropriate way for a foreigner to obtain secure rights over an agricultural land holding would be to form a Russian company to be the owner of the land. This may entail its own bureaucratic and administrative problems but would guarantee a secure and established legal right over the land. Alternatively, the foreigner could become a member of a land cooperative and register as the owner of land through the cooperative. Some enterprising foreign citizens have already done so.

Even with the new decrees, registration of land rights is not consistent between regions, and each local administrative authority or cooperative may attempt to impose its own limitations or registration requirements on foreigners. Authorities may also impose restrictions on the types of houses built on the land and the types of land use. Foreigners looking to purchase land would be wise to look into these issues before entering into a contract to buy themselves a dacha.

Eric Michailov is an attorney with White & Case in Moscow.