Maksim Popov
Associate Director, Real Estate and Construction, Goltsblat BLP
With real estate the new code also brings in some significant changes. These include the mandatory notarization of all real estate transactions, neighbors rights and limited new forms of property rights, and a prohibition on the separate sale of buildings and grounds in the same location.
Mandatory Notarization of Real Estate Transactions
After the adoption of new laws on notary activities mandatory notarization of real estate transactions will come into force. This will outline the notary function of verifying the lawfulness of transactions, and underline the liability of notaries for losses to parties, with notaries in private practice having full financial liability for unlawful acts.
Prohibition on Separate Disposal of Land and Buildings Where a Building is on a Particular Site
The Civil Code has previously permitted both the sale of buildings without the sale of the underlying plot of land, and the sale of plots of land without the sale of buildings constructed upon them, with the Land Code setting out the principle of unity of land and buildings constructed upon it at a particular site. This contradiction has been ended by an amendment which sees land and buildings constructed on it, which are owned by the same entity, being treated as a single entity for sale purposes.
Premises as a Separate Type of Real Estate
The new Civil Code also identifies premises as a separate form of immovable property. This kind of property exists after it has been duly separated from a building. The current Civil Code previously recognized apartment owners in an apartment building as having common shared ownership of premises in a building. With the new Civil Code, all owners of premises (residential or non-residential) will have a share in the ownership of a building's common areas, including the underlying land.
The Rights of Neighbors
Land owners will need to be aware of 'neighbors rights' when exercising their property rights, with these rights potentially applying to both adjoining and non-adjoining land plots. These restrictions include: erection of buildings or structures that create impermissible effects on neighboring land plots or premises; the placement of plant which causes deterioration or degrading of neighboring land or buildings and structures on it; undertaking earthworks on a plot of land which causes subsidence on neighboring land plots; building wells which prevents water reaching neighboring wells; and installing sewage systems that contaminate neighboring land plots.
New Forms of Limited Property Rights
The amended Civil Code will see the introduction of limited property rights including: perpetual tenancy; land plot development right; personal usufruct; preferential acquisition of immovable property; pecuniary benefit; and limited title of a building owner to underlying land.
New Encumbrances on Real Estate
Among the newly introduced encumbrances are personal usufruct (individual benefit) and pecuniary benefit (similar to rent). The right of individual benefit (personal usufruct) is a right to hold and use something provided by the owner of an immovable thing for payment. A pecuniary benefit may also be created by a rent agreement or permanent maintenance agreement with a dependent.
New Form of Mortgage
The new Civil Code introduces the non-accessory, transferable form of mortgage used in Europe, providing a creditor a much stronger legal position concerning obligations secured by mortgage.
In general the amendments relating to real estate and property are what the Russian real estate sector has been looking for and will bring the Russian property sector generally into line with the best developed international standards.
The changes are dramatic, indeed. Some of them I also perceive as a change for the worse, especially those pertaining to mandatory notarization of real estate transactions. I am afraid that, once the new laws on notary services are enacted, it will be a long time before there are enough qualified notaries capable of handling complex real estate contracts.
Many revolutionary changes may be viewed as positive from the theoretical viewpoint (land development right, for instance) but, given the objective conservatism of realty market participants, including state and municipal officials, there is no doubt we have a difficult transitional period ahead of us, during which we will have to learn by practice how apply the new rules.
A Message from The Moscow Times:
Dear readers,
We are facing unprecedented challenges. Russia's Prosecutor General's Office has designated The Moscow Times as an "undesirable" organization, criminalizing our work and putting our staff at risk of prosecution. This follows our earlier unjust labeling as a "foreign agent."
These actions are direct attempts to silence independent journalism in Russia. The authorities claim our work "discredits the decisions of the Russian leadership." We see things differently: we strive to provide accurate, unbiased reporting on Russia.
We, the journalists of The Moscow Times, refuse to be silenced. But to continue our work, we need your help.
Your support, no matter how small, makes a world of difference. If you can, please support us monthly starting from just $2. It's quick to set up, and every contribution makes a significant impact.
By supporting The Moscow Times, you're defending open, independent journalism in the face of repression. Thank you for standing with us.
Remind me later.