May 27, 2019

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Real Estate Law in Moscow

Property investment in Russia is becoming increasingly attractive. Foreign persons and legal entities are permitted to obtain ownership rights to buildings in Russia and, in limited circumstances, to land. The procedure for foreign acquisition of Russian property rights is the same as that that must be followed by Russian individuals and legal entities.

Sources of law

Real estate law in Moscow is governed by the Constitution of the Russian Federation, which sets out overarching principles. The Civil Code sets out the rules governing the administrative and transactional facets of real estate law.

On a more specific level, the Land Code governs the relationship between individuals or legal entities and land. The Town Planning Code contains provisions governing the development of vacant land.

In addition to the above legislation, there are various federal laws in operation that regulate mortgages and the registration of land and property rights.

In Moscow specifically, local legislation has been enacted that imposes procedural rules upon the transfer of land and property rights as well as land development.

Land rights

Individuals or legal entities may acquire either ownership rights or leasing rights to land. Some leases are for relatively long terms and may be seen as almost as valuable as ownership rights. Russian legislation affords a high degree of security to the lessors of such long-term leases. Such lease agreements cannot be terminated unless the lessee is found guilty of a significant breach of the terms of the lease. Termination in these circumstances can only be enforced by the courts.

The Land Code provides for the possibility of reclamation of land by the state where doing so is in the public interest or for state needs. This possibility is faced by land owners and lessors of leases both long term and short.

Procedure of acquisition of land rights

In order to acquire land rights, one must ensure that the plot of land has been registered with the state cadastre. Without such registration, it will not be possible to delineate the scope of the land being transferred or leased.

A valid sale and purchase agreement or a lease agreement setting out the terms and conditions of the transfer of rights must then be executed. Sale and purchase agreements should be in writing. They must also be signed by each party to be validly executed. Salient terms such as the price of the land being transferred and the details necessary for the identification of the plot of land must be contained in the agreement.

In certain cases, notification must be made or consent sought before a sale and purchase can be successfully concluded and registered in accordance with the anti-monopoly provisions contained in the Federal Law on Protection of Competition, otherwise known as the Competition Law. In general, this rule does not affect the transfer of land rights to individuals.

Following completion of the sale, the transfer of land rights must be registered with the state and the relevant fees paid. Registration of rights marks the final step in a successful real estate transaction.