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. Last Updated: 07/27/2016

Investigate Occupancy Rights Before You Buy an Apartment

For companies operating in Moscow, purchasing housing for expatriate workers may represent significant savings over renting. Last month, we examined steps for checking an apartment owner's title and right to sell the apartment.

Even if the apartment has one owner who has properly privatized or otherwise obtained the apartment and there are no third-party lessees, Russian law provides an additional hurdle to purchasing an apartment: The owner may sell an apartment, but his family members may maintain their right to continue living there.

Article 292 of the Civil Code states that the rights of family members of owners of housing living with the owner may not be terminated by a transfer of title to their apartment.

Existing occupancy rights in the apartment need to be annulled to the extent possible in the process of purchasing an occupied apartment. In Moscow, the following steps may be taken to clear the apartment of such rights:

?To learn about existing occupancy rights in the apartment, a due diligence search begins with a request of the owner to list all persons who are registered at the apartment. To verify this list, the purchaser visits the local police department and housing management organization where the apartment is located. Occupancy rights are recorded at the "passport table" in each of those organizations. The police department's passport table takes its information largely from the housing management organization, but its records are superior. The purchaser should request an "extract from the housing management organization register" as documentary proof that the seller and family have vacated the apartment.

?The owner/seller must request that her and her family members' names be taken off the register at the housing management organization. This is not an easy task since the housing maintenance organization requires that the owner prove possession of adequate housing to substitute for the unit they are leaving. Sometimes a purchaser will withhold the last 25 percent of the apartment purchase price until the seller performs this step in the transaction. Proof is required to show that the occupants of the apartment have found housing and registered at a new address. This historically takes the form of a new entry in the owner's and other occupants' internal passports. Generally, this is the same proof that housing management organizations require before they remove people from a register.

?If minors, elderly or other "risk group" members occupy the apartment, a certificate from the city commission that makes decisions on the sale of apartments of such persons must be obtained. Representatives from the Social Protection Committee of Moscow and the local medical administration comprise such commissions, according to early legislation on this issue.

?A final check at the passport tables of the police department and housing management organization should be conducted immediately prior to forwarding final payment on the apartment to ensure that no additional persons have registered there.

Melissa Chavin is a lawyer with Clifford Chance Moscow.