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PROPERTY LAW
General
• Property rights in Russia are governed by federal legislation
(other than some more technical privatisation, planning and
construction issues regulated by regional and local rules).
• Property transactions such as conveyancing, leases and
mortgages are subject exclusively to Russian law.
Types of ownership
Ownership (similar to Freehold)
• Ownership is a full title allowing possession, use and disposal
of the property, including leasing it out to tenants. It is in
some respects similar to freehold, although Russian law
recognizes separate ownership of land and of the buildings
and other fixtures erected on land.
• Ownership rights to land extend to the surface (soil) layer of
the land plot as well as to water (with some restrictions) and
plants on the land plot.
• Subsoil is entirely state-owned.
Lease right (similar to Leasehold)
• Lease right is an interest allowing possession and use of the
property for a specified or an indefinite term.
• Leases can be granted for an indefinite period of time
(terminable by either party on three months’ notice) or for a
specified (fixed) term.
• A fixed term lease can be long term (which in relation to land
plots means for over one year and one year or more in relation
to buildings or parts of buildings and immovable facilities) or
short term.
• Commercial leases are usually long term (five to ten years). In
almost all parts of Russia the maximum lease term for land is
49 years.
• Long term lease agreements must be registered with the
state in order to be effective. Short term lease agreements
and lease agreements for an indefinite term do not require
registration with the state (see infra). However, following
a recent liberalisation of the court practice, a long term
lease which has not been registered may still be considered
effective if:
–– the relevant agreement contains all material terms and
conditions; and
–– both parties have been performing their obligations under
the lease (using leased real estate, paying rent etc.).
• Under the general rules governing leases, the tenant has a
right of first refusal to renew the lease on expiration, unless
the agreement provides otherwise, but the parties are free to
alter the terms and conditions of the new lease.
• If the tenant continues to use the property after the lease has
expired and the landlord does not object, the lease is deemed
to be renewed on the same terms and conditions as the old
lease for an indefinite period of time (and is therefore subject
to termination by either party upon three months’ notice).
• As a general rule, the tenant does not require the landlord’s
consent to assign, sublease or mortgage their interest in the
land, unless otherwise stated in the lease agreement.
• Leases of state and municipal land concluded for a term
of over five years cannot, as a matter of law, require the
landlord’s consent for assignment, sublease and mortgage;
conversely, assignment, sublease or mortgage of real estate
other than land is subject to the consent of the landlord unless
the lease provides explicitly that consent is not required.
Other types of property rights
• There are certain rights to property which are at present
primarily reserved for state institutions (such as “permanent
use”). These are no longer granted to individuals and private
entities and are non-transferable.
• In Russia it is not possible to separate the legal interest in
property from the beneficial interest.
Rights affecting ownership
Easement
• Is a burden imposed upon a property, for the use and utility of
another property belonging to another owner.
• As an attribute of the right of ownership, easements are
transferred with the related tenement.
Mortgage
• Is a security encumbering the asset, which entitles the
beneficiary to a preferential right over other creditors in the
event of a forced sale of the relevant asset; long term leases
may also be subject to a mortgage;
• There is no limit on the number of mortgages that may be
created over the same property;
• Where a land plot is mortgaged all buildings and structures
erected or to be erected on such land plot and owned by
the mortgagor will be mortgaged by operation of law in
favour of the mortgagee. Similarly, if a building or structure
is mortgaged, the underlying land plot (if owned by the
mortgagor) will be automatically mortgaged by operation of
law in favour of the mortgagee.
Lease
• If leased real estate is sold by its owner, the lease survives in
full; the new owner assumes the rights and obligations of the
landlord by virtue of law.
• Proprietors of buildings or other immovable facilities situated
on a plot of land owned by another person are entitled by
statute to rights of use as regards the land located underneath
such buildings or facilities.
Pre-emptive rights
• A co-owner of the property has a statutory pre-emptive right
to buy a part of this property sold by another co-owner at a
price not more than was offered to third parties.
• In the case of state or municipal land the tenant has, with
some exceptions, a statutory pre-emptive right to purchase
the land plot if it is put up for sale.
• Where land is privately held, a tenant enjoys a statutory
pre-emptive right to purchase provided it owns a building or
facility located on the leased land plot; where the tenant does
not own a building, the issue will be determined by the terms
of the lease as negotiated between the parties.
Registration of real estate
Unified State Register of Real Estate
• Starting from 1998, the ownership right and other rights in
rem over real estate, most encumbrances and restrictions
of such rights (such as long-term leases, mortgages and
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Investors Guide to Europe 2015