Protection of Title and Other Rights in Rem
Pepeliaev Group advises that Resolution No. 10 of the Plenum of the RF Superior Court and Resolution No. 22 of the Plenum of the RF Supreme Arbitration Court “On Certain Issues Arising in Court Practice When Resolving Disputes Relating to the Protection of Title and Other Rights in Rem” was adopted on 29 April 2010.
To ensure uniform application of legislation on the emergence, termination and protection of title and other rights in rem, the Plenum of the RF Superior Court and the Plenum of the RF Supreme Arbitration Court have clarified a number of issues relating to the protection of rights of economic jurisdiction and rights of operational management of state (municipal) enterprises and institutions; the acquisition of title; the application of rules on acquisitive prescription; unauthorised building; reclamation of property fr om another’s illegal possession; remedy of violated right unrelated to dispossession; release of property fr om distraint; title to real estate and to land plots where apartment houses are located.
The Resolution of the Plenum of the RF Supreme Arbitration Court and the Plenum of the RF Superior Court (the “Courts”) is fairly extensive and clarifies a wide range of issues arising within the framework of protection of title and other rights in rem. Please find below some of the main aspects covered in the Resolution.
Acquisition of title
• The Resolution considers issues relating to the emergence of title. In particular, it provides examples when the title to immovable property arises irrespective of its state registration in the Unified State Register of Real Estate Rights and Transactions (when an investment unit is paid out by a member of a consumer cooperative, or through inheritance and legal entity reorganisation).
• The Resolution considers certain issues relating to the application of the Russian Civil Code provisions on a bona fide purchaser. It clarifies, for example, that an owner may not reclaim property if it was transferred to the subsequent acquirer under a transaction concluded for no consideration.
• The Resolution clarifies that if an interest in a common ownership is sold in violation of the preemptive right of other participants in shared ownership, any participant in the shared ownership is entitled, within three months of the date when he learnt or should have learnt about the transaction, to claim through court action the assignment of the purchaser’s rights and obligations. It also states that in this case the plaintiff may not demand that a court grant a claim on invalidating the transaction.
Acquisitive prescription
• The Resolution resolves certain issues relating to the application of the Russian Civil Code provisions regulating the acquisition of title to property owing to the expiry of acquisitive prescription. In particular, it clarifies the notions of bona fide, openness, continuity and possession as one’s own.
• The Resolution clarifies the procedure for recognising title.
Unauthorised building
The Courts provided clarifications on a number of issues relating to the application of the Russian Civil Code provisions on unauthorised buildings (article 222 of the Russian Civil Code), including:
• The Resolution determines the range of persons that may file lawsuits for the demolition of unauthorised buildings. Prosecutors and the competent authorities in accordance with federal laws have been included in this group.
• The Resolution confirms the position that the statute of limitations does not apply to a claim for the demolition of unauthorised building that puts at risk people’s lives and health.
• The Resolution clarifies that the defendant in a lawsuit for the demolition of an unauthorised building is a person that would have become the owner of the building if it had not been unauthorised (in other words, the client or, in the event of alienation, its acquirer). Furthermore, if the defendant did not carry out the construction, it may file a claim for damages with a court against the party that performed such construction.
• The Courts also note that the provisions on unauthorised buildings should also apply to reconstruction that resulted in the emergence of a new facility. At the same time, these provisions do not apply to relations connected with unauthorised buildings that do not constitute immovable property, and similarly do not apply to alterations, overhauls (refitting) of immovable property, which did not result in a new facility. At the same time, parties, whose title or legal possession is infringed if such properties are retained, may file a lawsuit with a court for the rectification of the violated right unrelated to dispossession (article 304 of the Russian Civil Code). In addition, in cases wh ere an unauthorised building, which does not constitute a new facility or immovable property puts at risk people’s lives and health, interested parties may file a lawsuit with a court to ban operations of such facility based on clause 1, article 1065 of the Russian Civil Code.
Reclamation of property fr om another’s illegal possession
• The Resolution clarifies certain specifics of the resolution of disputes relating to the reclamation of property fr om another’s illegal unlawful possession. In particular, it determines persons against whom such claims should be lodged. For example, a claim may not be lodged against a person, in whose illegal possession the property was held, but who no longer possessed such a property by the date of the legal proceedings. The Resolution considers the possibility of granting provisional remedies and evidence that may be used to prove title. In particular, the Courts clarified that the inclusion of immovable property in the register of state or municipal property, and also the booking of the property on the balance sheet could not per se constitute evidence of title or lawful possession.
Disputes on title to immovable property
• The Resolution considers issues on contesting registered title to immovable property. In particular, it establishes that the state registrar is not the defendant under such lawsuits, but may be involved in the proceedings as a third party. The Resolution clarifies that the filing of an application with the state registrar on the registration of title or encumbrance prior to a lawsuit is not required to contest the registered right. The Resolution considers the lawsuit that should be filed if a claimant’s right cannot be protected through the recognition of title or reclamation of property from another’s illegal possession, the statute of lim itations applicable to such lawsuits and the time when it starts running.
• The Resolution specifically focuses on the matters relating to the transfer of immovable property under a sale and purchase agreement, including purchaser’s claims for the transfer of such property by the seller and filing of a claim for the registration of the purchaser’s title to the property that was not actually transferred to the latter. The Resolution points out that in this case a claim for the performance by the seller of its obligation to transfer immovable property and on the registration of the transfer of rights and obligations should be joined in one lawsuit. The Resolution clarifies the consequences of the conclusion by the seller of a property sale agreement with several buyers and also the statute of lim itations applicable in such cases (in these cases the general statute of lim itations should be applied).
Title to land plots on which apartment houses are located
• The Courts confirmed earlier practice that a land plot under an apartment house constituted the shared ownership of the owners of the premises in said house starting from the date of the state cadastral registration. Until then, the land plot is owned by a public law entity. The Resolution also considers issues on contesting the borders of land plots under apartment houses.
For further details, please contact:
in Moscow – Alexey Konevsky, Head of Land, Real Estate and Construction Practice, at (495) 967-00-07 or by a.konevsky@pgplaw.ru
in St Petersburg – Elena Ryzhkova, Head of Land, Real Estate and Construction Practice, at (812) 333-07-17 or by e.ryzhkova@pgplaw.ru