Substantial changes in the cadastral valuation system
Law Firm Pepeliaev Group advises that, on 3 July, Russian President signed federal laws on state cadastral valuation (Federal Law No. 237-FZ ‘On state cadastral valuation’ dated 3 July 2016 and Federal Law No. 360-FZ ‘On amending certain items of the legislation of the Russian Federation’ dated 30 July 2016).
A new law on state cadastral valuation has been adopted. The new law makes changes to the system of state cadastral valuation. The law regulates in detail the valuation procedure starting from the preparation stage up to the stage when the cadastral value that has been calculated is entered into the Uniform State Register of Real Estate (the ‘Real Estate Register’), which is to be introduced on 1 January 2017 (Federal Law No. 218-FZ dated 13 July 2015 ‘On the state registration of immovable property’).
The new law provides that, during the transition period between 1 January 2017 and 1 January 2020, a valuation may be performed both under the new and old rules. At the same time, Federal Law No. 360-FZ dated 3 July 2016 actually imposes a moratorium on performing a valuation for a specified period. During this period, in the majority of cases the cadastral value of a real-estate item will be applied that was in effect as at 1 January 2014.
A new law on state cadastral valuation has been adopted. The new law makes changes to the system of state cadastral valuation. The law regulates in detail the valuation procedure starting from the preparation stage up to the stage when the cadastral value that has been calculated is entered into the Uniform State Register of Real Estate (the ‘Real Estate Register’), which is to be introduced on 1 January 2017 (Federal Law No. 218-FZ dated 13 July 2015 ‘On the state registration of immovable property’).
The new law provides that, during the transition period between 1 January 2017 and 1 January 2020, a valuation may be performed both under the new and old rules. At the same time, Federal Law No. 360-FZ dated 3 July 2016 actually imposes a moratorium on performing a valuation for a specified period. During this period, in the majority of cases the cadastral value of a real-estate item will be applied that was in effect as at 1 January 2014.
We would like to draw your attention to what we consider the most significant provisions of the new Law on state cadastral valuation:
1.Only state budgetary institutions are entitled to perform a state cadastral valuation.
Only special state budgetary institutions established by a constituent entity of the Russian Federation will perform state cadastral valuations. In accordance with the guidelines on calculating the cadastral value, budgetary institutions are to collect and process the information required to determine the cadastral value. The new guidelines approved by Order No. 358 of the Russian Ministry for Economic Development dated 7 June 2016 will take effect on 1 November 2016.
Only special state budgetary institutions established by a constituent entity of the Russian Federation will perform state cadastral valuations. In accordance with the guidelines on calculating the cadastral value, budgetary institutions are to collect and process the information required to determine the cadastral value. The new guidelines approved by Order No. 358 of the Russian Ministry for Economic Development dated 7 June 2016 will take effect on 1 November 2016.
Budgetary institutions are authorised to provide individuals and legal entities with clarifications with respect to calculating the cadastral value and to consider requests to correct errors.
However, the law provides that the cadastral value of real estate items may not be changed if the cadastral value obtained as a result of an unscheduled state cadastral valuation exceeds the cadastral value in the Real Estate Register on the date of such valuation.
5. The procedure has been changed for considering disputes concerning a cadastral value that has been calculated.
From 1 January 2017 it will no longer be required first to take a dispute to a commission for legal entities before starting court proceedings. This differs from the previous procedure, under which it was mandatory to do so. Moreover, it will no longer be mandatory for constituent entities of the Russian Federation to establish commissions.
In addition, the composition of a commission has been changed. Now, the commission must include a representative of the Ombudsman for Entrepreneurs' Rights in the relevant constituent entity of the Russian Federation. In total, a commission will consist of at least 5 members. A meeting of a commission is deemed duly constituted if at least half of its members are present.
6. One of the grounds has been excluded for contesting a cadastral value that has been calculated.
The law excludes the possibility of contesting a value that has been calculated on the ground that inaccurate data about a real estate item was used to determine its cadastral value.
7. State cadastral valuations will be carried out under federal supervision.
Rosreestr (the Federal Service for State Registration, the Cadastre and Cartography) is empowered to exercise such supervision. Should any violations be identified that relate to a failure to comply with the procedure for a cadastral valuation, including the relevant guidelines, Rosreestr will issue an order to eliminate the violations identified. Therefore, an additional opportunity will be provided to right holders to submit a claim to Rosreestr in connection with violations identified in the course of a valuation.
What to think about
The moratorium that has been imposed on cadastral valuation does not mean that interested parties may not contest a cadastral value that has been determined. What is more, between 1 January 2017 and 1 January 2020, in most cases the cadastral value applied to real estate items will be the value that was in effect as at 1 January 2014.
We cannot rule out that after 1 January 2017, companies may face practical difficulties with applying provisions of the new law when contesting cadastral values.
Help from your adviser
Pepeliaev Group's lawyers will assess, in conjunction with professional assessors we will engage, the implications of any revision of a cadastral value. We will provide services that involve representing the client before commissions formed by Rosreestr and in court, taking account of the provisions of the new law on state cadastral valuation.
2. There is a possibility to provide a declaration of the characteristics of a real estate item.
A right holder may submit to a budgetary institution a declaration of the characteristics of relevant real estate items. Such declaration contains data necessary for the information to be collected that is required for the cadastral value of the item to be calculated.
A right holder may submit to a budgetary institution a declaration of the characteristics of relevant real estate items. Such declaration contains data necessary for the information to be collected that is required for the cadastral value of the item to be calculated.
3. When the new cadastral value is calculated, information should be taken into account regarding the items of real estate with a cadstral value that has been contested previously.
To prepare to calculate new cadastral values, a budgetary institution must collect, process and record the information about real estate items of which the cadstral value has previously been contested.
To prepare to calculate new cadastral values, a budgetary institution must collect, process and record the information about real estate items of which the cadstral value has previously been contested.
4. An unscheduled state cadastral valuation is possible
As previously, state cadastral valuations are held not more than once every three years (or, for cities with federal status (i.e. Moscow, St Petersburg and Sevastopol), no more than once every two years) and not less than once every five years. At the same time, an option has been introduced to hold an unscheduled state cadastral valuation. Such extraordinary valuation is not taken into account when the frequency of the state cadastral valuation is determined. An exhaustive list has been set of the grounds on which such an unscheduled valuation may be carried out. For instance, an unscheduled state cadastral valuation is held when the real estate market index in a constituent entity of Russia drops by at least 30% from the date of the last state cadastral valuation.
As previously, state cadastral valuations are held not more than once every three years (or, for cities with federal status (i.e. Moscow, St Petersburg and Sevastopol), no more than once every two years) and not less than once every five years. At the same time, an option has been introduced to hold an unscheduled state cadastral valuation. Such extraordinary valuation is not taken into account when the frequency of the state cadastral valuation is determined. An exhaustive list has been set of the grounds on which such an unscheduled valuation may be carried out. For instance, an unscheduled state cadastral valuation is held when the real estate market index in a constituent entity of Russia drops by at least 30% from the date of the last state cadastral valuation.
However, the law provides that the cadastral value of real estate items may not be changed if the cadastral value obtained as a result of an unscheduled state cadastral valuation exceeds the cadastral value in the Real Estate Register on the date of such valuation.
5. The procedure has been changed for considering disputes concerning a cadastral value that has been calculated.
From 1 January 2017 it will no longer be required first to take a dispute to a commission for legal entities before starting court proceedings. This differs from the previous procedure, under which it was mandatory to do so. Moreover, it will no longer be mandatory for constituent entities of the Russian Federation to establish commissions.
In addition, the composition of a commission has been changed. Now, the commission must include a representative of the Ombudsman for Entrepreneurs' Rights in the relevant constituent entity of the Russian Federation. In total, a commission will consist of at least 5 members. A meeting of a commission is deemed duly constituted if at least half of its members are present.
6. One of the grounds has been excluded for contesting a cadastral value that has been calculated.
The law excludes the possibility of contesting a value that has been calculated on the ground that inaccurate data about a real estate item was used to determine its cadastral value.
7. State cadastral valuations will be carried out under federal supervision.
Rosreestr (the Federal Service for State Registration, the Cadastre and Cartography) is empowered to exercise such supervision. Should any violations be identified that relate to a failure to comply with the procedure for a cadastral valuation, including the relevant guidelines, Rosreestr will issue an order to eliminate the violations identified. Therefore, an additional opportunity will be provided to right holders to submit a claim to Rosreestr in connection with violations identified in the course of a valuation.
What to think about
The moratorium that has been imposed on cadastral valuation does not mean that interested parties may not contest a cadastral value that has been determined. What is more, between 1 January 2017 and 1 January 2020, in most cases the cadastral value applied to real estate items will be the value that was in effect as at 1 January 2014.
We cannot rule out that after 1 January 2017, companies may face practical difficulties with applying provisions of the new law when contesting cadastral values.
Help from your adviser
Pepeliaev Group's lawyers will assess, in conjunction with professional assessors we will engage, the implications of any revision of a cadastral value. We will provide services that involve representing the client before commissions formed by Rosreestr and in court, taking account of the provisions of the new law on state cadastral valuation.