Investor Guide to Europe 2014
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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).
TYPES of oWnERSHIP
Î
ownership (similar to freehold)
•
Ownership is a full title allowing possession, use and disposal of
the property, including leasing it out to tenants.
•
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.
Î
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 (ter-
minable by either party on three months’ notice) or for a
specified (fixed) term.
•
A fixed term lease can be long term (over one year in relation
to land plots 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)
.
•
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.
•
Should the tenant continue using the property after the lease
has expired and the landlord does not object, the lease is dee-
med to be renewed on the same terms and conditions as the
old lease for an indefinite period of time (and is therefore sub-
ject 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 do not require the landlord’s consent for assi-
gnment, sublease and mortgage as a matter of law; 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.
Î
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 pro-
perty from the beneficial interest.
RIGHTS affECTInG oWnERSHIP
Î
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 trans-
ferred with the related tenement.
Î
Mortgage
•
Is a security encumbering the asset, which entitles the benefi-
ciary 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.
Î
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.
Î
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.
Î
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 liens), their
accrual, transfer and termination are subject to state regis-
tration in the Unified State Register of Real Estate
(Russian
abbreviation is EGRP)
.
•
Rights which arose before 1998 are not required to be regis-
tered and will be recognised as valid by the state. These rights
must, however, be registered upon transfer or encumbrance.
•
Some agreements under which rights in rem and encum-
brances which must be registered arise are also subject to
state registration (as provided by law) and are null and void
without such registration (mortgages are the most notable
examples).
•
The Unified State Register of Real Estate is, for the most part, a
matter of public record and any person may request an extract
from this register in relation to particular property.
PRoPERTY LaW
