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. Last Updated: 07/27/2016

The Land Code's Devil Will Lie in the Details

As the year 2002 begins, Russia is faced with the task of implementing many of the legislative reforms that passed into law during 2001. Of critical importance to the real estate industry is the Land Code. As has been widely reported, it establishes the federal basis for land ownership and provides new rights and opportunities. Although in force from Oct. 30, 2001, significant follow-up is required on both the federal and local levels in order to put the Land Code fully into effect. The efficiency and willingness with which this task is undertaken will have an impact on all those who wish to take advantage of the reform.

So what is required Russia-wide? First, there is no difference in treatment for companies owned exclusively by Russian shareholders and those owned wholly or partly by foreign shareholders. Broadly speaking, foreign individuals and companies are not discriminated against under the Land Code. They will, however, be subject to special treatment in respect of land in border areas and land beneath certain sensitive buildings. Sensitive border areas are thought principally to be those near the Chinese frontier, but until this is clarified, there will inevitably be questions raised. Guidance as to the ownership of sensitive buildings is also required.

Work for the State Duma will involve a review of provisions of the Civil Code that now appear outdated in view of parts of the Land Code. For example, the Land Code seeks to alter the balance of certain aspects of the relationship between the lessor and lessee of a land plot. Only when the Civil Code is updated to reflect these changes will there be legal certainty on these issues. A review of the Civil Code is a major task, however, and although drafting work has begun, the process is bound to take some time.

On a lower level, cities like Moscow and St. Petersburg need to review local laws and procedures to ensure that they comply with the Land Code. This is also likely to take time to complete. In Moscow, both the rates for purchase and procedures for processing applications have yet to be set. The Moscow land committee's position is that it is working hard on these issues. Unofficially, however, some officers seem to see the required additional steps as an opportunity to frustrate early implementation of the Land Code.

The Land Code is a very important reform, but the devil of implementation will be in the details. It is to be hoped that the required detail is quickly provided.

Adrian Moore is a partner at the Baker & McKenzie law firm.